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Cycle Time

Inventory cycle time is the duration from placing a purchase order and investing capital into inventory until the inventory is sold. It measures how quickly product moves through the supply chain and sales cycle, not when cash is received.

Why It Matters

•Determines how many product cycles can occur per year.
•A shorter cycle increases the number of opportunities to earn profit.
•Highlights delays in production, transit, or internal processes.
•Reveals inefficiencies that affect capital return even when margins are good.

Connection to Capital

A shorter inventory cycle increases the speed at which capital can be redeployed, improving capital efficiency and annualized return.

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