This is the first installment in our four-part series exploring how inventory directly impacts your bottom line. Follow along as we unpack the various ways "Inventory IS Money" and discover strategies to maximize your profitability.
What Do We Mean By "Inventory IS Money"?
We all know the old adages. Time is money. Save for a rainy day. A penny saved is a penny earned. But these truisms can feel a bit existential.
That’s why at NomadGo we try to be definitive. When we say "Inventory IS Money," we're not speaking metaphorically. For every business inventory represents real dollars on shelves – it’s money sitting in your storerooms or traveling through your supply chain – because every item in your inventory has been purchased with company funds and represents capital that could be deployed elsewhere until that inventory generates revenue.
We think about it like this: until an item sells, it's essentially cash frozen in product form. And unlike investments that might appreciate over time, most inventory items either maintain their value or, worse, depreciate, especially perishable goods.
Real-World Examples: When Inventory Problems Become Money Problems
So, if we know that inventory IS money, then why don’t we count it like money? At NomadGo one of our core tenets is that counting is everywhere and everything should be counted. Counting happens in stores, in warehouses, in spreadsheets, heck, have you ever looked at a stat page in a video game? Counting. And in nearly every case accuracy isn’t just standard; it’s mandatory. If you’ve ever worked a shift in a retail environment, you know what we’re talking about. Just try to report a till that’s off at the end of a shift and see how a manager reacts.
Yet when it comes to inventory, accuracy isn’t mandatory, in fact inaccuracies of up to 15% are pretty much industry standard, and even though they’re baked into the bottom line, those inaccuracies represent real impact.
Consider Chipotle Mexican Grill, which in their 2023 Annual Report stated that "Food, beverage and packaging costs were 29.7% of revenue in 2023."¹ For a company with revenue exceeding $9.1 billion, even a 5% inventory inaccuracy could represent staggering $135 million of acceptably mismanaged resources annually.
In another example, we can showcase the value of being able to accurately predict and stock goods for another kind of service-based business. According to research from the Zurich University of Applied Sciences on "Fuel Economy as a Function of Weight and Distance," we can calculate that weight reduction directly impacts airline fuel consumption.² Based on their findings, for a medium-sized airline with 250 aircraft each flying daily routes, reducing just 1kg (2.2 pounds) of excess weight per aircraft could save approximately 625,000 gallons of fuel annually—translating to millions in unnecessary costs from carrying excess inventory.
For perishable goods, the stakes are even higher. According to the USDA's statistics on food loss and waste, "31% food loss at the retail and consumer levels" occurs, which, in 2010, equated to "$161 billion worth of food."³ That's literally throwing money in the trash.
How NomadGo Finds Profits Hidden on Your Shelves
NomadGo Inventory AI transforms traditional, error-prone inventory counting into a streamlined, highly accurate system. With just the wave of a smartphone or tablet, inventory is instantly counted, tracked, and analyzed.
For QSRs and other inventory-dependent businesses, this means:
- Cash isn't unnecessarily tied up in excess inventory
- Storage costs decrease as inventory levels match actual needs
- Perishable waste approaches zero as items are used before expiration
- Customer satisfaction improves with fewer out-of-stock situations
- Valuable shelf space can be spared from the burden of overstocking
- Staff time shifts from counting inventory to serving customers
The results aren’t just better for inventory management; they’re a direct improvement in profitability. When inventory accuracy improves from the industry-standard 80-85% to over 99%, the financial impact is immediate and substantial.
A New Normal for Inventory Management
Imagine running your business with the same confidence in your inventory figures as you have in your financial statements. No more "approximately" or "give or take 15%" in your inventory reporting.
With this level of inventory precision, your business can:
- Make purchasing decisions based on actual usage patterns rather than guesswork
- Negotiate better supplier terms with precise volume commitments
- Reduce emergency orders and associated premium shipping costs
- Minimize storage space requirements, potentially reducing real estate costs
- Redirect capital from excess inventory to growth initiatives
In short, better inventory management doesn't just save money—it makes money.
Looking Ahead
In this first installment of our "Inventory IS Money" series, we've examined the literal financial connection between inventory and your bottom line. In our next post, we'll dive deeper into how the accuracy and frequency of inventory counts directly impact your profitability.
We'll explore how even small improvements in inventory accuracy can generate significant financial returns and how modern inventory management solutions revolutionize this critical business function.
Stay tuned for more insights on turning your inventory challenges into profit opportunities!
Ready to transform your inventory into money? Learn more about NomadGo's revolutionary Inventory AI at NomadGo.com.
1 Chipotle Mexican Grill. (2024). "Annual Report 2023." Retrieved from https://stocklight.com/stocks/us/nyse-
cmg/chipotle-mexican-grill/annual-reports/nyse-cmg-2024-10K-24606220.pdf
2 Zurich University of Applied Sciences. (2019). "Fuel Economy as a Function of Weight and Distance." Retrieved from https://digitalcollection.zhaw.ch/server/api/core/bitstreams/c3d88565-1104-47d4-8954-
3419a85bc3c9/content
3 United States Department of Agriculture. (2023). "Why Should We Care About Food Waste?" Retrieved from
https://www.usda.gov/about-food/food-safety/food-loss-and-waste/why-should-we-care-about-food-waste
