Inventory days of supply (IDS) is a measure of how long it takes for a company to sell its entire inventory.
Reducing IDS means that the company is selling its inventory faster, which increases the inventory turnover ratio. Inventory turnover ratio is the number of times a company sells and replaces its inventory in a given period. A higher inventory turnover ratio indicates that the company is more efficient in managing its inventory and generating sales. Reducing IDS also means that the company is reducing the time between paying its suppliers and receiving payment from its customers, which reduces the cash-to-cash cycle time.
Cash-to-cash cycle time is the number of days a company's cash is tied up in its operations. A lower cash-to-cash cycle time indicates that the company is more efficient in converting its inventory into cash and improving its liquidity. Therefore, reducing distribution network inventory days of supply will have the impact of increasing turnovers and reducing cash-to-cash cycle time. References:
Gartner's Top Actions for Supply Chain Inventory Reduction
Inventory Days Of Supply | Supply Chain KPI Library | Profit.co
Maximizing Efficiency: Understanding Inventory Days of Supply in - oboloo