In today’s volatile supply chain environment, inventory planning is no longer just about stocking enough product. For fast-growing and product-driven businesses, the new reality includes long lead times, rising tariffs, and unpredictable demand. The margin for error is shrinking, and many companies are still using outdated tools and assumptions to make multimillion-dollar decisions.
“Inventory is one of the biggest areas where businesses are flying blind,” says HCVT Principal John Manoogian. “They know how much they’re selling, but they often don’t fully understand what it’s really costing them or how much more they could be selling if they simply had the right product on hand at the right time.”
When tariffs hit or change unexpectedly, many businesses struggle to react quickly. “A 20% tariff might sound minor, but if your product cost was 30% of your sale price, now it’s 36%. That’s a 6% drop in margin,” John explains. “If your original gross margin was 50%, now it’s 44%. That can add up fast, especially at scale.”
The problem is compounded when businesses aren’t tracking the full scope of their variable costs, like freight, fulfillment, returns, or even payment processing fees. “Most companies are calculating margins based on unit cost alone,” John says. “That’s not giving them the full picture. When you factor in all the extras—shipping, storage, returns—some of your best sellers might actually be your worst performers on margin.”
What separates the businesses that survive from the ones that thrive is their ability to plan based on real data, not assumptions. “Scenario modeling is where analytics really becomes a game-changer,” says John.
Strategic data analytics can help businesses run simulations based on different pricing strategies, lead time scenarios, or tariff increases. “We might look at how a $1.00 price increase would affect your volume. If you raise prices and lose 5% of your orders, you might still make more money because your margins are higher,” John explains.
For companies preparing for a sale or looking to scale rapidly, inventory visibility becomes even more critical. “You can’t sell what you don’t have,” says John. “And if your best products are constantly selling out, you’re leaving revenue on the table and hurting your valuation in the process.”
He shares a case study of a direct-to-consumer company that was consistently underbuying inventory. “They were growing so fast they didn’t realize how far behind their purchasing habits had fallen. I told them, ‘The data says you need to be buying 30% more than what you're planning for, probably more.’”
This forward-thinking approach helped the company maximize revenue and improve their financial optics ahead of a potential exit. “Buyers don’t give you credit for being out of stock,” John warns. “They look at your revenue and margins. If you could have sold more, but didn’t have the inventory, it doesn’t help your valuation.”
If your business is scaling, importing goods, or dealing with rising costs, it’s time to get serious about inventory planning. The old way—ordering based on gut instinct or last year’s sales—is no longer good enough.
As John puts it: “If your spreadsheet isn’t cutting it anymore, or if you’re placing orders today based on a business size from six months ago, you’re already behind.”
Need help navigating the post-tariff supply chain? Connect with HCVT’s data analytics team to see how better insights can lead to better outcomes.
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