Working Capital Trapped in Your Inventory? Here's Proof You Can Free It

$120K freed, zero extra sales. This is the story of a DTC brand that liberated $120K in working capital without selling a single additional unit. Not by raising prices, not by cutting costs, not by launching a new product, and not by some magic marketing hack, but by fixing how they manage inventory. A $2.4 million DTC skincare brand growing 35% year over year, profitable on paper but always broke. If this sounds familiar, yeah, I thought so. In this video, I am breaking down exactly what we did, tactic by tactic, dollar by dollar, and at the end, I am giving you the exact audit checklist so you can find trapped cash in your own inventory this weekend. And this is the finale of our inventory month. Everything we have talked about this month, the formulas, the frameworks, the mindsets, This is the proof that it works. So let's get into it. I'm Lara, 17 years in supply chain, from enterprise brands with 9-figure supply chains down to DTC startups doing their first production run. This case study is one of my favorites because it proves everything we have talked about this month is not theoretical. It is real money from a real brand doing real things. So quick context on the brand: $2.4 million annual revenue, DTC skincare, 47 active SKUs growing 35% year over year. On paper, a success story, except their cash conversion cycle was 94 days. And if you watched week 2, you know what that means. Nearly $650K trapped in inventory at any given time. 27% of their annual revenue is just sitting in boxes. They could not fund ads, could not restock new products, could not build cash reserves, and growing and suffocating at the same time. The classic successful but broke syndrome. 4 tactics changed everything. None of them required selling a single additional unit. And let me show you exactly how they did it. Tactic number 1, it's SKU rationalization. First thing we did, a complete SKU level analysis. Every product, every variant, pull the last 90 days of data and look at what is actually moving. 47 SKUs total seemed reasonable for a skincare brand, but the data told a very different story. 12 SKUs had not sold a single unit in over 60 days. Not low sellers, Zero sellers, nothing, for 2 months straight. 8 more were selling less than 5 units per month. 5, that is 1 unit per week, and that is not a product, that is a storage fee with a label on it. Nearly half the catalog was barely contributing revenue but was definitely trapping cash. The founder looked at me and said, but what if someone wants it? And I said, how much is that what if costing you? We calculated it. $38K sitting in maybe someday products. Liquidation plan. First, bundles. We paired slow movers with bestsellers as complete routine sets. Moved 60%. Second, B2B discount channels. Off-price retailers, subscription box companies. Another 30% at wholesale pricing. Third, samples and gift with purchase. The remaining 10% became value adds on orders over a certain amount. Actually increased AOV. Within 6 weeks, all 12 zero-selling SKUs cleared. $38K freed. That's the first tactic. By the way, if you're wondering why this brand was holding on to SKUs that were not selling, A lot of it came down to obsessing over the wrong numbers. They were so focused on getting the best possible unit cost that they kept ordering more than they needed to hit price breaks. That is exactly what this week's podcast episode covers. I just launched a podcast called Supply Chain Moves. Season 1 is called 12 Supply Chain Mistakes You Start in Pre-Revenue. This week is episode 4, mistake number 4, obsessing over landed cost and why precision on unit cost at low volume is actually the wrong priority. If you are under $3 million, that whole season is built for you. Link in the description. Tactic number 2, reorder timing. We saved $42K. So next, reorder behavior. This is where last week's video connects directly. I asked, How do you decide when to place a purchase order? And the answer is gut feel. It looks like we are running low. And we pulled the data, every PO over the last year. We compared when they ordered to when they actually needed product based on sell-through rate. And the result consistently 4 to 6 weeks too early on every single purchase orders. And every time they order, new inventory arrived and sat for 4 to 6 weeks before they needed it across every SKU all year long. We implemented the reorder point system: daily rate times lead time plus safety stocks. The hero SKU, 40 units per day, 35-day lead time, 400 units safety stock. Correct reorder point is 1,800 units. They were ordering at 3,000. 1,200 extra units sitting there every single cycle. Total across all SKUs: $42K trapped by ordering too soon. The fix took one afternoon. Calculate reorder points for every SKU. Set reminders. The new rule: do not order until the system says so, not when it feels slow, but when the math says go. $42K freed. That's the second tactic. If you want the reorder calculator that does this math automatically, it is in this week's Unboxed Weekly, One Supply Chain Fix Per Week, free, link in the description. Now, tactic number 3 is safety stock. This one is emotional because a safety stock is where fear lives in your supply chain. I asked, why 8 weeks of safety stocks? And she said, we stocked out once 2 years ago, and it was terrible. And I said, what is your actual lead time variability? How often is your supplier actually late? She did not know. Now we pulled 12 months of data. Worst delay in 12 months is 9 days. That was one time. Average delay is 2 days. Most orders on time or early. She was holding 56 days of buffer against a worst case of 9 days. 47 extra days of inventory at current volume, $22K in cash just in case, based on something that happened once 2 years ago. We reduced to 3 weeks. Still conservative, still more than data suggested. $22K freed. That's the third item. Safety stock should be based on data, not trauma. Your cash flow does not care about your feelings. It cares about the numbers. Now, tactic number 4 is strategic liquidation. Final tactic: aged inventory. Even after the SKU rationalization, there was still $30K in inventory over 120 days old. Products selling but very slow, losing relevance, costing storage every month. The founder: I do not want to discount my brand. I get that brand integrity matters in skincare. You do not want to be always on sale. Here's how we moved it without damaging the brand. Bundles. Paired aged inventory with bestsellers in curated sets. Not clearance, curated. The complete evening routine, 340 units in 3 weeks. Not flash sales, 48 hours only. Email list only, no public codes, private Thank you to loyal customers. $8K at 40% off. Customers felt special. Brand stayed premium. Now, B2B channels, off-price retailers, subscription boxes, corporate gifting. $12K, roughly 50 cents on the dollar. Samples and gift with purchase. Everything remaining became free gifts on order over $75. It cleared the last of it while increasing AOV. Now, total $18K recovered. From $30K deadstock. 60 cents on the dollar. Not ideal, but that cash is working now instead of collecting dust. $18K freed. Fourth and final tactic. So let's add it all up. Tactic number 1, SKU rationalization, $38K. Tactic number 2, reorder timing, $42K. Tactic number 3, safety stock right-sizing, $22K. And tactic number 4, strategic liquidation, $18K. Total $120K freed without selling a single additional unit. Where did that $120K go? $40K paid down outstanding supplier debt, immediately improved vendor relationship and opened the door to better payment terms. $50K funded Q4 ad spend, their biggest revenue quarter ever because now they have the budget. $30K went into a cash reserve. First time in the company's history they had a financial cushion. Same revenue, same products, same team, different relationship with inventory. Complete different business. Now it's your turn for checks. We can do this in an afterward. Check number 1: SKU analysis. Pull 90 days of sales by SKU. Flag anything with zero sales. Flag anything under 5 per month. Add up the dollar value sitting in those products. That is your trapped in maybe this number. Check number 2, reorder timing. Look at your last 5 purchase orders. When did you order versus when you actually needed the product? Were you using a formula or a feeling? Calculate what the reorder point should have been. Check number 3 is safety stock. How much buffer are you holding? Now look at the actual data. Worst delay, average delay. Is your safety stock based on numbers or based on something scary that happened once. Check number 4: aged inventory. Everything over 90 days, total dollar value, can it be bundled, liquidated, or repurposed? Add it up, that is your trap cash. And most brands find $30K to $50K minimum. Some find 6 figures. If this case study lit a fire for you, I really want you to listen to the podcast this The video gives you the what, the podcast gives you the why. The show is called Supply Chain Moves. It is brand new series, and I'm telling you, this is the most honest supply chain content I have ever made. Season 1 is 12 supply chain mistakes you start in pre-revenue. Every week, one mistake that seems smart but compounds into an expensive problem 12 to 18 months later. This week is episode 4, Obsessing Over Landed Costs. The COGS obsession you saw in this case study. The reason they overordered to hit price breaks, the reason they held products that were not selling, and the podcast goes deeper on that root cause. If you're under $3 million, season 1 is built for you. 12 episodes, 12 mistakes, each one with the fix. Link in the description. Apple Podcasts, Spotify, or wherever you listen. Inventory Month is complete. Week 1, the inventory is a loan you took from yourself. Week 2 is cash conversion cycle. Week 3 is reorder time and system. And week 4, the proof, $120K fee. The through line: inventory is cash with a timer. Every day it sits, it costs you. If you did the work this month, you are ahead of 90% of TTC brands. If you want the full audit checklist as a template, Subscribe to Unbox Weekly for free, link in description. You also get the 7-day practical welcome series, negotiation scripts, COGS playbooks, carton optimization, all of it. Coming next month, the hidden costs killing your margins. Subscribe so you do not miss it. Drop your audit results in comments, I read every single one, or email me at lara@mulesupplychain.com. I'm Lara, see you in April.