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Operations7 min read

Inventory Planning Is Cash Flow Planning

For most e-commerce businesses, inventory is the single largest use of cash. Growth is therefore constrained less by demand than by the accuracy of the forecast and the discipline of the reorder process.

Forecast at SKU level with lead time reality

Blended averages hide the products that actually move. Forecast each SKU using recent velocity, seasonality, planned promotions and the true lead time from purchase order to marketplace availability, including inbound receiving.

Reorder points should be expressed in days of cover, and reviewed as lead times shift.

Protect rank on your top items

A stockout on a top-ranking product is not a pause in sales. It is a loss of position that takes weeks and advertising spend to rebuild. Higher safety stock on a small number of critical items is usually the best risk-adjusted use of cash.

Deal with slow movers early

Ageing inventory quietly compounds storage cost and blocks capital that faster products could use. Set a review threshold and act on it with bundles, price action or exit, rather than waiting for long-term storage fees to force the decision.

Key takeaways

  • Forecast per SKU with real lead times.
  • Over-protect stock on rank-critical products.
  • Set an ageing threshold and act before fees decide for you.

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