Expert: Inventory management can affect cash flow

Implementing an efficient and intelligent inventory management system can have a significant effect on a manufacturing company's bottom line, an expert has suggested.

Nadeem Mazher, CEO of Custom Technology Solutions, told Supply and Demand Chain Executive that business owners who "treat inventory as a significant asset line item on the balance sheet" will reap a number of rewards.

He suggested that firms facing cash flow issues should begin by reviewing how they manage their supply chain.

They may then make changes that include resizing inventory, reducing holding costs, synchronizing supply chain management and monitoring key performance indicators.

"Inventory holding costs have a negative impact on overall financial performance, not just operations," Mazher explained.

Some asset-based lenders will even want to examine aspects of a company's inventory - such as composition, quality and velocity - to settle upon advance rates, he added.

A recent report in the Lawrence Journal-World described how smaller manufacturing firms are adopting more efficient practices to save money.