Change is a constant in life, and retailers that do not change are stuck, literally. Failure to adapt and grow amounts to stale margin, and with the advent of AI, change is happening faster than ever. But inventory planning and management are still often stuck in boring spreadsheets and assumptions.

Retailers pour millions (even billions) into inventory management, yet many have no clear view of how long products really sit before they’re sold. Mismanaging your days of inventory can lead to several problems: tying up working capital, depleting cash flow and putting you at a disadvantage against competitors who manage their stock more efficiently with lower overhead.

But it’s not just about the overall flow of goods. Instead, retailers from all walks of life, including some of the largest brands on the planet, are tapping into AI to do more with less and keep customers happy. According to Retail Dive, “Having accurate inventory data to determine if an item’s available and eligible for a customer’s preferred order fulfillment method is key, in addition to displaying that availability on the retailer’s app.” It’s not surprising that accurate inventory data is useful in much more than its upfront value; the biggest value comes from the business effect. After all, inventory in the right place at the right time means more sales, and since retail is a cyclic and customer-driven industry, doing it right every time is absolutely essential. 

Here are the facts. 

What are days of inventory and why do they matter?

Your days of inventory (or days sales of inventory) shows how many days, on average, you hold products before they’re sold. It’s calculated using your cost of goods sold and average inventory levels. It’s not a literal day but the idea of inventory taking up so many days and being available. Lowering your days in inventory means faster cash returns, fewer markdowns and less wasted capital sitting idle. It also helps to reduce churn by keeping customers happier, and tighter inventory turnover keeps your products moving and your balance sheet healthy. 

Understanding your days of inventory is more than a finance metric. It’s a live signal of how well your inventory management supports your bottom line. And with the right tools, you can tighten your average stock position, lower inventory holding costs, avoid costly stockouts and build a foundation for stronger margin. But what exactly does inventory management mean and how does it influence your decision-making? 

Done well, it protects cash flow while freeing up working capital for growth. It’s clearly non-negotiable, but it is still useful to know exactly what to do to improve your inventory levels.

1. Connect demand forecasting to POS systems to keep stock lean

The best way to optimize days of inventory is to get proactive about demand. Strong demand forecasting connects local trends, seasonal signals, weather data and other external data sources with your verified sales data to help you keep the right balance.

For example, a spike in seasonal demand should pull more product into stores that need it, not swell your backroom with excess orders. Better forecasting also prevents stockouts that cost you loyal shoppers. Together, forecasts with the just-right sales projections sharpen inventory efficiency, so your days on hand shrink naturally. It’s the ultimate win-win for inventory optimization. 

2. Evaluate replenishment around-the-clock

Static ordering bloats your average inventory and drags up your inventory carry cost. Strategic replenishment that flexes daily, driven by actual sales, keeps shelves stocked without waste.

Pair that with faster order fulfillment and you cut inventory days on hand even further. And the value is real: you lower capital investment tied up in dead stock and open up room for margin-driving products.

3. Use inventory visibility to tighten your working capital

Knowing what you have is just as important as knowing what you’ll sell. Clear enterprise visibility helps you see exactly where inventory is stalling so you can shift it before it becomes a burden. Software integration with sales data ensures you’re not waiting for stale reports. Instead, you adjust in near-real-time, trimming inventory holding costs and boosting inventory turnover where you need it most.

4. Leverage agentic AI for next-level inventory optimization

Optimizing your days of inventory shouldn’t rely on gut feel. Agentic AI uses hedge-fund style math to weigh risk factors, predict what will sell and protect every piece of your inventory optimization plan. In other words, it’s considering all potential scenarios and modeling outcomes to create the most margin-protective decisions possible. This makes your entire inventory management process, from replenishment to associated transfers, more resilient. You run leaner without fear of gaps or lost sales.

Protect your margin by optimizing days of inventory with invent.ai

Long (inventory) days mean locked cash. Shorter days mean your stock is working for you, not against you. By controlling your days of inventory, you build stronger margins, healthier cash flow and more freedom to invest where it matters—growing the brand and spending less time in endless spreadsheets. Get the inside scoop on invent.ai's value in optimizing days of inventory now.