How to Reduce Inventory Carrying Cost

Carrying cost = storage + capital locked + insurance + obsolescence. Typically 15–25% of inventory value per year.

Part of our inventory management guide.

Ways to Reduce

1. Order smaller, more often – Lower average stock
2. Improve turnover – Sell faster, hold less
3. Drop slow movers – Don’t carry dead stock
4. Negotiate lead time – Shorter lead time = less safety stock
5. Better forecasting – Order what you’ll sell

Balance

Too little stock → stockouts. Too much → high carrying cost. Find the sweet spot with reorder points and EOQ.

Use our Carrying Cost Calculator. Stockkeeper helps optimize stock levels. Join the waitlist.