As you grow, you will go through several stages of S&OP maturity. Sales always conservatively estimate the inventory as they don't want to miss any opportunities. But finance executives want to reduce the inventory as much as possible as that has carrying costs. While you might be aware of the inventory issues, solving them is hard, as they require cross-functional collaboration and agreements across teams. Inventory turnover is one metric that could help you achieve your goals if you included it as part of the compensation plan for every stakeholder across the company.
In today's episode, our guest, Hugo Fuentes, shares the nuances of inventory turnover and how that could help optimize the inventory and cash flow. He also discusses stages of S&OP maturity for various companies and how they must enable cross-functional KPIs tied to compensation plans to solve the S&OP challenges. Finally, he discusses how to perform the SKU segmentation across industries and categories to find the appropriate inventory turnover targets for each SKU.
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