Do You Want High Stock Value or Lost Revenue at Year End?

…and why neither outcome is as simple as it sounds.

You can’t win. Buy too much stock and you’re sitting on inflated end‑of‑year inventory that finance calls an asset but ops sees as a liability. Buy too little and you’ve handed easy revenue to your competitors. Somewhere in the middle lies the sweet spot; just enough stock to ride out demand without choking your cashflow, but in reality, no one can predict that point with any accuracy.

We pretend we can. Forecasts are built months out, rooted in historic sales curves, marketing hopes, and last‑minute gut calls. Then weather, a celebrity mention, or a supplier delay blows the numbers apart. What’s left is a brand scrambling to reconcile decisions already made with outcomes nobody saw coming.

It’s Not Just About the Numbers

The real problem isn’t the spreadsheet. It’s the conversation, or rather, the lack of one.

Merchandising buys to hit a seasonal vision. Finance wants leaner stock to keep the balance sheet looking healthier at year‑end. E‑commerce pushes for depth on the SKUs that drive promos. Ops just want to avoid having containers stuck in a warehouse they’ve already outgrown. Each team thinks they’re acting rationally. They are, but they’re working from different assumptions, different targets, and sometimes entirely different datasets.

When those assumptions collide, the result is either a warehouse full of unsold goods or empty shelves during peak demand. Both are expensive. Both undermine the customer experience. And both trace back to poor communication more than to bad forecasting models.

A False Choice

We often frame this as a binary decision; do you carry high stock value into the new financial year, or risk lost sales because you bought too little? That framing hides the real issue. High stock value might look good on paper but locks up cash, drives up storage and handling costs, and leaves teams fighting for markdown budgets. Lost revenue is rarely just a missed sale; it’s disappointed customers, weakened loyalty, and a ripple of demand you can’t quickly fulfil.

Neither scenario happens because someone in merchandising mis‑clicked a formula. They happen because finance, ops, and commercial teams aren’t aligned on what success looks like, whether that’s cash freed up for new ranges, or the confidence to chase demand without overextending.

Fixing the Conversation

There’s no magic formula for perfect forecasting, but there’s a practical way to make the trade‑offs less brutal: stop treating forecasting as a departmental sport.

Agree on a single source of truth for demand planning; even if that’s just the same spreadsheet everyone actually uses. Bring finance, ops, merchandising, and e‑commerce into pre‑season alignment sessions so everyone can stress‑test scenarios together. If marketing’s Q4 campaign promises a 15% lift in sell‑through, make sure buying and ops plan for that before containers leave the port. Set shared KPIs that balance cashflow health with demand fulfilment rates.

The work isn’t in the maths. It’s in building trust between teams who often speak different operational languages. The closer those teams get to a shared definition of risk and success, the narrower the gap between having too much or too little stock.

Closing Thought

Predicting demand will never be perfect. It’s a moving target shaped by factors you can’t fully control. But you can control how well your teams talk to each other, and that’s often the difference between carrying stock you can’t shift or missing the sales you desperately need.

You can’t buy certainty. But you can buy yourself fewer surprises, if your teams stop trading forecasts like poker chips and start planning as if they’re on the same side of the table.