Walk into most mid-market manufacturers or distributors today, and you'll find sophisticated ERP systems, demand planning modules, and inventory management tools. The software is there. The data is there. Yet 80% of small and mid-sized businesses still struggle with slow-moving inventory, according to Netstock's 2024 benchmark study of 2,400+ companies.
This isn't a technology problem. It's a skills gap—a disconnect between what tools can do and what organizations are equipped to extract from them. The financial consequences vary significantly by company size and industry, and understanding these differences reveals where the real opportunities lie.
Tools vs. Reality
Modern demand planning software offers powerful capabilities: statistical forecasting, safety stock optimization, ABC/XYZ segmentation, and automated parameter adjustment. Yet the Netstock research reveals a striking pattern: 72% of companies report unpredictable lead times from suppliers, while most ERP systems continue running on static parameters that haven't been updated since implementation.
The Core Issue
The gap isn't in the software—it's in the translation layer. Extracting value from these tools requires skills that sit at the intersection of demand analytics, statistical forecasting, and operational execution. These capabilities are often spread thin across organizations already stretched by day-to-day demands.
The result is predictable: systems keep ordering based on last year's logic, and inventory accumulates in the wrong places. But the magnitude of this effect isn't uniform—it varies significantly based on company size and the specific industry.
The software is there. The data is there. What's often missing is the specialized capacity to translate capability into action.
The Impact by Company Size
A 2025 analysis by Cart.com quantified how inventory carrying costs differ across company sizes. The data shows a clear pattern: smaller companies bear proportionally higher costs.
| Industry | SMB <$10M revenue | Mid-Size $10M-$100M | Enterprise >$100M |
|---|---|---|---|
| Healthcare / Medical Devices | 31.8% | 26.2% | 21.5% |
| Apparel | 30.3% | 25.8% | 20.4% |
| OEM / Industrial | 29.7% | 25.0% | 19.8% |
| Beauty / Cosmetics | 28.0% | 22.5% | 20.0% |
| Healthcare Supplements | 24.5% | 20.0% | 16.5% |
Annual inventory carrying costs as percentage of inventory value. Source: Cart.com 2025 analysis.
The Math for a Mid-Size OEM
A mid-size industrial manufacturer with $15M in inventory paying 25% carrying costs faces $3.75M annually in holding costs. If they could operate at enterprise-level efficiency (19.8%), that same inventory would cost $2.97M—a potential savings of $780,000 per year.
Enterprise organizations have dedicated teams focused on demand planning, inventory optimization, and continuous improvement. Mid-size companies rarely have this luxury. The same individuals managing daily operations are also expected to optimize reorder points, tune safety stock parameters, and implement segmentation strategies—often without specialized training.
Where Industries Diverge
The data also reveals significant variation across industry verticals. Some sectors face inherently more complex inventory challenges, amplifying the impact of the skills gap.
Healthcare & Medical Devices
Highest carrying costs across all company sizes (21-32%). The combination of regulatory requirements, expiration dating, and wide SKU variation creates forecasting complexity that requires specialized analytical capabilities.
Apparel & Fashion
Seasonal demand, style obsolescence, and size/color variations create high forecast uncertainty. Companies operating without statistical demand sensing tools face rapid inventory aging.
OEM & Industrial Manufacturing
Long lead times, make-to-order vs. make-to-stock decisions, and bill-of-materials complexity require sophisticated planning. Without dedicated analytical support, companies default to over-stocking as insurance.
Stars vs. Stragglers: The Execution Gap
The Netstock benchmark data segments companies by performance level, revealing dramatic differences in execution. "Stars" represent the top quartile; "Stragglers" represent the bottom.
| Business Type | Stars Excess Inventory | Stragglers Excess Inventory | Gap |
|---|---|---|---|
| Manufacturing | 25-30% | 47-49% | ~20 pts |
| Retail Trade | 25-30% | 47-51% | ~22 pts |
| Wholesale Trade | 25-28% | 47-52% | ~24 pts |
Excess inventory as percentage of total stock. Source: Netstock 2024 Benchmark Report.
The Magnitude
In wholesale trade, the gap is nearly 25 percentage points. A wholesaler with $20M in inventory operating at "Straggler" levels (50% excess) has approximately $5M more tied up in non-working stock than a "Star" performer with the same business.
What separates Stars from Stragglers isn't primarily software—both groups have access to similar tools. The difference lies in how effectively those tools are configured, maintained, and acted upon.
Bridging the Gap
The path forward isn't buying more software—it's building capability. The Netstock research identified specific practices that distinguish top performers:
- Dynamic parameter management: Regularly recalculating safety stock and reorder points based on actual demand variability, not historical averages
- SKU segmentation: Applying differentiated strategies to A/B/C items rather than one-size-fits-all policies
- Exception-based management: Focusing attention on the items that matter most, rather than reviewing all SKUs equally
- Supplier collaboration: Working with vendors on lead time reliability rather than just accepting variability
A May 2025 case study from Crowe documented a global manufacturer that achieved $10M+ in inventory reduction by implementing these practices—not through new technology, but through focused work on stocking strategies, procurement parameters, and lifecycle management.
The Opportunity
For mid-market companies, the skills gap represents an opportunity, not just a problem. The practices that drive "Star" performance are well-documented. What's typically missing is the dedicated analytical capacity to implement them—capacity that can be built internally or brought in externally.
The data is clear: companies that close the skills gap don't just reduce carrying costs—they release cash, improve service levels, and create competitive advantage. The tools are ready. The question is whether the organization is equipped to use them.
Sources
Founder, Précis Flux
Industrial executive with a strong background in engineering and applied mathematics, and 20 years of experience across the industrial value chain—from R&D to P&L management. Having worked on inventory optimization and demand variability analysis in his executive roles, Gunnar founded Précis Flux to help mid-market companies release trapped working capital through data-driven methods.