From cost center to value driver: rethinking inventory in Medtech

A summary of McKinsey & Company’s perspective on inventory optimization in medtech

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"With more efficient inventory management,medtechs can reduce inventory by up to 30 percent—freeing up cash and reducing write-offs. — McKinsey &Company

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This bold statement from McKinsey highlights a compelling opportunity for medtech companies: to transform inventory from a financial burden into a strategic asset. In an industry where supply chains are complex and product availability is critical, many medtech firms carry excess inventory—often two to three times more than companies in other sectors.

In a recent article,McKinsey outlines how medtech organizations can unlock significant value by optimizing inventory. Their framework focuses on operational and structural improvements that, if executed well, can increase agility, reduce waste, and free up millions in working capital.

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💡 Key Insights to keep in mind:

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• ✅ Operational Improvements

1. SKU-Level Demand Planning: Shifting from broad forecasts to detailed, SKU-specific demand planning can minimize forecasting errors and prevent overstocking.
2. Enhanced Inventory Visibility: Implementing systems that provide real-time, granular visibility into inventory across all locations helps in accurate tracking and management.
3. Aligned Manufacturing Incentives: Adjusting incentives for manufacturing teams to focus on producing the right product mix, rather than just volume, can     prevent imbalances between supply and demand.

 "Without granular visibility and coordinated planning, inventory levels tend to swell far beyond what’s needed—draining cash and creating operational drag."

• ✅ Structural Improvement:
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1. Product Development Integration: Incorporating inventory considerations early in the product development process can reduce surplus and obsolete stock.
2. Flexible Consignment Models: Adopting consignment inventory models tailored to specific business conditions, such as elective surgeries, can optimize stock levels and reduce waste.
3. Streamlined Supply Chain Networks: Reducing the number of nodes in the supply chain and centralizing strategic safety stock can lower overall inventory levels     while maintaining service quality.

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• ✅ Maximizing  Planning Systems:

1. Data-Driven Decision Making: Utilizing advanced planning systems with accurate data inputs     enables better forecasting and inventory optimization.
2. Cross-Functional Collaboration: Establishing a cross-functional team to oversee inventory     management ensures alignment across finance, manufacturing, supply chain, procurement, and commercial operations.

"Inventory optimization is a strategic effort, not a siloed one—it demands coordination across the enterprise and systems built on real, usable data."

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By implementing these strategies, medtech companies can reduce inventory levels by 10 to 30%, freeing up cash for innovation and enhancing shareholder value.

🔗 For a comprehensive understanding, you can read the full article here: How Medtech Companies Can Create Value via Inventory Optimization

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👉 How Ventory Helps Turn Strategy Into Execution

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McKinsey’s recommendations are clear: to reduce excess inventory and unlock working capital, medtech companies must start by gaining full visibility—down to theSKU level. At Ventory, we couldn’t agree more. This is exactly where Ventory delivers immediate, measurable impact.

Our field inventory management platform is designed specifically to give medtech companies exactly that: real-time visibility and control at the SKU level, across the entire supply chain—from distribution centers and service hubs to consignment stock in hospitals and field-based locations.

This level of transparency is not a luxury—it’s foundational. As McKinsey notes, once a company can see inventory at the SKU level, it can create an "inventory health map" to identify where excess stock is tying up capital, and where shortages might impact patient care.

Ventory makes this possible with:

• 👁️ Real-Time Inventory Visibility
           Track products across all supply chain nodes with accuracy, expiration control, and full audit trails.
• 🚛 Mobile Field Inventory Management
           Equip field reps and service teams to manage inventory from any location, eliminating spreadsheet-based tracking and blind spots.
• 💊 Usage-Based Replenishment and Demand Insights
           Collect real-time data at the point of use to fuel more accurate SKU-level forecasting and reduce overstock.
• ⚙️ ERP and Logistics Integration
           Close the gap between planning and execution by syncing field-level inventory with existing ERP and logistics systems.

Check our all our features and use cases!

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What also sets Ventory apart is our pricing model—built to support this strategic approach.Rather than charging by user or transaction, Ventory charges based on the number of SKUs actively managed. This ensures that companies only pay for whatthey track—and are encouraged to unlock value SKU by SKU. For medtech organizations looking to reduce write-offs, free up cash, and improve service levels, starting with SKU-level clarity is critical. Ventory helps you get there—and empowers you to go further.

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