Your inventory is an asset on the balance sheet and a cash problem in the bank account. Here is how to size the gap, and what a modern ERP actually changes about it.
You funded that buy nine months ago. It is still on rack 14, still counted as an asset, still earning nothing. Meanwhile you are drawing on the line of credit to cover a payroll that the same money could have covered.
The stock that quietly stopped being an asset
Every distributor carries slow movers. The question is how much, and whether anyone is watching the number between physical counts. In a March 2026 survey of more than 100 wholesale distributors by Phocas, 22% were holding inventory that exceeded 90 days of stock, and just over a quarter reported deadstock running 6 to 10% of total inventory Industrial Distribution, March 2026. On a $10 million inventory position, the low end of that deadstock range is $600,000 of cash standing still. It shows up as a healthy current ratio and a cash conversion cycle that keeps stretching, and finance usually gets the full picture at the annual write-down.
Why the reorder points keep missing
Ask where the reorder points came from and the answer is often that someone set them a few years ago based on what felt right at the time. Legacy systems report what already happened. They do not tell you that a customer has been tapering for two quarters, that a seasonal item is peaking three weeks earlier than last year, or that two SKUs should be bought together. Planners fill that gap with spreadsheets and experience. In the same Phocas survey, 54% of distributors said they were looking for new demand planning techniques Industrial Distribution, March 2026. That is a lot of teams who already know their method is gut-feel with extra steps.
What better forecasting is worth in cash
McKinsey’s November 2024 work on AI in distribution operations puts AI-enabled forecasting and inventory planning at reductions of 20 to 30 percent in inventory, with fill rates improving 5 to 8 percent McKinsey & Company, 2024. Apply the low end of that range to a $10 million inventory position and you free up $2 million in working capital. The dollar figure is our math on McKinsey’s published percentages, so treat it as directional. The part worth your attention is both numbers moving at once: less stock and better service. Those two usually trade against each other when planning is done by hand.
What Business Central gives a finance team
For most distributors in the $30M to $2.5B range, Dynamics 365 Business Central covers this without adding more system than the team can run. Item availability views show what is on hand, what is already committed, and what is inbound, broken out by location, by period, and by event, so a buyer sees the shortage while there is still time to act on it instead of paying to expedite. The cash flow forecast works off real data in the system: open sales and purchase orders, payables and receivables with their due dates, and your own manual entries. That turns a buying decision into a cash question you can answer before you commit.
Where F&SCM earns the step up
The picture changes with more locations, more selling channels, or an outside warehouse in the mix. Dynamics 365 Finance & Supply Chain Management adds the Inventory Visibility add-in, which holds one global view of on-hand stock across sites and connected systems and supports available-to-promise, so a cross-location commitment to a customer is one you can stand behind. Its Demand Planning app adds generative insights that detect seasonality and signal correlations across your planning items and describe the pattern in plain language, with confidence scores attached. That capability is a production-ready preview today, worth knowing before anyone builds a business case on it. The pattern we see is simple: buy the tier your operation actually runs at, not the one on the roadmap slide. If that question is open for you, our Dynamics 365 Finance & Supply Chain Strategic Assessment maps your processes against both tiers before anyone talks license counts.
Proof that the number moves
Aquatic AV manages more than 500 items across multiple warehouses. After layering demand planning onto Dynamics 365 Business Central, it raised its fill rate from 79% to 99% within the first year and cut inventory holding by more than $1 million Netstock case study. Aquatic AV is not our customer and that case is published by someone else, so take it as outside validation rather than a Western Computer result. The shape of it is what to look for: service up, cash off the rack.
Where to start
You do not need a new system to find the number. Pull your on-hand value by SKU, flag anything that has not moved in 180 days, and set that total next to your line of credit balance. Most finance leaders we talk to have never seen those two figures on the same page.
Western Computer has spent nearly 40 years and more than 1,750 Dynamics implementations helping distributors right-size the system to the operation, which in practice means not selling a tier the team will never use. Inventory and cash is one of six places an aging ERP quietly charges you. We put the rest in writing.
Read The CFO’s Hidden Tax: What an Aging ERP Really Costs a Distribution Business
Prefer to size the money side first? The Microsoft Dynamics 365 pricing estimate gives you a self-guided read on which product fits and what it would cost, before you talk to anyone
