TL;DR
- LeanDNA's 2026 Manufacturing Research study reported that 77% of manufacturers report pressure from leadership to improve capital flow, and 47% report 10% or more of revenue lost or at risk from execution failures.
- Most CFOs still see inventory as a cost to reduce. The manufacturing leaders winning the working capital conversation see it as a capital allocation decision. Modern inventory planning solutions are the bridge between supply chain operations and the working capital metric the CFO reports to the board.
- Cash outcomes from global discrete manufacturers using modern inventory planning solutions like APEX:
The downside of treating inventory as a cost line.
For many manufacturers, inventory shows up on the balance sheet as a line item, and the CFO would prefer it to be smaller. That framing has not changed in 40 years. What has changed is the cost of treating inventory as an expense to minimize instead of as capital to manage.
LeanDNA's 2026 Manufacturing Research study of 150 senior decision-makers found that 77% of those manufacturers report pressure from leadership to improve capital flow. The same study found that 47% report 10% or more of revenue is lost or at risk from execution failures. Those two numbers are the same problem viewed from two seats. The CFO sees pressure to free capital. Supply chain sees execution failures driving the inventory needs. Neither side has the tool that translates between them.
The fastest way to close that gap is an inventory planning solution that surfaces the working capital implication of every buy decision, in real time, alongside the operational one.
The problem: where the CFO and supply chain see inventory differently.
Three patterns show up in nearly every manufacturer where the CFO and supply chain are not aligned on inventory:
- The balance sheet view and the shelf view do not reconcile. The CFO sees one number per quarter. Supply chain sees thousands of decisions every week. Without a tool that translates between them, the conversation may default to "lower inventory" without a path to get there without risking stockouts.
- Site-level metrics lean towards holding more, not less. Each plant's KPIs measure stockouts and OTD. Few measure the cost of capital on the inventory that prevents stockouts. The system optimizes for what it measures, and most manufacturers do not measure capital efficiency at the plant level.
- Inventory planning lives in operations, not finance. When inventory planning is a tactical operations function, finance has no seat at the table for the decisions that determine working capital. The result is a CFO who finds out about working capital problems quarterly when the report lands instead of in the workflow that creates them.
Where's cash? Inventory.
Darren Hill, Vice President of Supply Chain at Radius Aerospace, shares his perspective on where cash lives in the supply chain and why supply chain leaders need to move fast or freeze millions in capital:
"Where’s cash? Inventory. Say a customer needs to push out an order by 6 months. If you don’t get that indicator, and stop your supply chain, it just keeps piling (I’m talking millions of dollars). The faster you can get in front of that, the better. And that’s what LeanDNA did for us.”
What Hill is naming is the strategic pivot most supply chain organizations are still working through. For 30 years, the working capital conversation belonged to finance. Supply chain showed up to defend the inventory line, not to lead the cash conversation. That arrangement does not work when inventory is the single largest pool of working capital a manufacturer controls.
The bridge is operational. Modern inventory planning solutions surface the cash implication of every buy decision at the moment the decision is made. The buyer is no longer just placing an order, they are allocating capital. APEX is built specifically to make that translation visible inside the workflow, so the cash conversation happens upstream of the quarterly report.
From cost center to growth driver.
Once inventory is reframed as capital, the next question is whether supply chain is positioned to lead the conversation or react to it. Vatsal Gandhi, Global Director of Supply Chain at Modine, has spent the last several years making this reframe:
"We want to shift supply chain perspective from a cost center to having a strategic value for our team. That has been a shift on the communication to our C-suite leaders. To have a large skill digital transformation you need buy in top up and bottom down."
The cost-center framing made sense when supply chain was downstream of strategy. The shift Gandhi is describing reaches across the whole function: inventory carry, OTD, capital efficiency, and ultimately the working capital metric the CFO reports. Modern inventory planning solutions are one of the operational tools that make the shift real.
Why inventory planning solutions matter to a CFO.
Inventory typically represents 15% to 25% of a discrete manufacturer's working capital base. A 20% reduction in inventory on a $1B inventory position is $200M in freed working capital. That is not an operations KPI, it’s a capital allocation event.
What stops most manufacturers from getting there is the operational reliability question underneath the math. Most CFOs hear "lower inventory" and most supply chain leaders hear "higher stockout risk." The reason that trade-off feels inevitable is that operations are not reliable enough to run lean. When the line stops once a quarter for a missed part, the safety stock buffer has to stay. That buffer is the working capital the CFO is trying to free.
Michael Terry, Supply Chain Director at Daher, runs the kind of operation that breaks the trade-off:
"We utilize LeanDNA in order to master all of our purchasing functions as well as give communications to our production control team and warehouse team. We have a 98% proficiency week over week at our facility. I would say if you are interested in cost performance, you should probably look into LeanDNA."
98% weekly proficiency is the operational floor that makes lean inventory possible. When operations clear that bar week over week, the buffer comes out of safety stock, working capital comes free, and the CFO conversation changes. When operations are unreliable, the buffer has to stay, and the working capital stays trapped.
This is the case the supply chain leader needs to bring to the CFO. Not "lower inventory." Not "higher OTD." Both at the same time, because the inventory planning solution underneath is doing the work the spreadsheets cannot.
What this looks like in practice is small but specific. The supply chain leader who walks into the next CFO conversation with the working capital impact of every active part decision, not just the quarterly inventory total, changes the conversation. That real-time visibility into capital impact at the buyer level is what modern inventory planning solutions deliver. It is what gets supply chain to the table when capital strategy is being decided.
Proof: companies that turned inventory into cash.
The case for inventory planning solutions as a capital lever is built in the cash outcomes manufacturers report after they move:
- $7.2M working capital win at a leading commercial kitchen equipment manufacturer that unified inventory planning across its multi-site network.
- $2.1M in inventory savings at Stanadyne, where supply chain leader Meagan Long used APEX to drive cross-site visibility into the buyer workflow.
- $3M purchased inventory reduction in 3 months at a leading medical device manufacturer, capital that funded the next product development cycle.
- 24% excess inventory reduction at Husky Shanghai, where the working capital freed reset the conversation about supply chain's role in capital strategy.
FAQs
How do inventory planning solutions improve working capital?
Inventory planning solutions improve working capital by surfacing the cost of capital alongside every buy decision, in the buyer's daily workflow. Most manufacturers carry excess inventory because buyers cannot see the working capital implication of an order at the moment it is placed. A modern inventory planning solution shows existing inventory across sites, calculates the capital tied up in the proposed buy, and surfaces alternative actions before the order is submitted. Documented results include $10M in savings in 15 months at a leading automotive and trucking manufacturer and $3M purchased inventory reduction in 3 months at a leading medical device manufacturer.
What should a CFO look for in inventory planning solutions?
A CFO evaluating inventory planning solutions should look for three things. First, the solution must surface working capital impact in the buyer workflow. Second, it must integrate with every site's ERP, because working capital often becomes trapped in inventory when sites lack visibility into each other's stock and unknowingly carry duplicate inventory. Third, it must surface revenue impact when it comes to shortages. There may be delayed revenue due to late shipments on orders, lost revenue and customer retention due to late order, or unnecessary cost associated with premium freight. An inventory planning solution can free up cash that may be getting buried or lost due to shortages.
Conclusion: inventory is the CFO conversation supply chain has been waiting for
Historically, supply chain has been positioned downstream of the CFO conversation. Modern inventory planning solutions reverse that position. When inventory planning surfaces capital impact in real time, supply chain is no longer reporting to finance. Supply chain is leading the capital conversation that defines the next quarter.
The cost of not making this pivot is paid in working capital sitting on shelves and in CFO conversations where supply chain is defending the inventory line instead of leading the cash strategy.
Want to see how APEX surfaces working capital impact inside the buyer workflow? Book a demo.
