Where should I start?

Start with an ABC-XYZ segmentation, then set coverage policy per segment rather than per item.

Managing Inventory Health

A practical framework for judging whether inventory is working for the business.

By SupplyChain.management · Last updated September 17, 2026

Inventory health is the combined view of coverage, excess, obsolescence and service risk across the portfolio.

Inventory is usually the largest controllable balance sheet item in a supply chain, and poor health shows up as both cost and lost sales.

Segment inventory by movement and margin before judging any single coverage number.

Set differentiated service targets, review excess monthly, and connect safety stock to measured lead time variability.

Applying one blanket coverage target to every item.

Run the numbers on SupplyChain.tools - this page covers the management decision.

Where should I start?: Start with an ABC-XYZ segmentation, then set coverage policy per segment rather than per item.