As a young business professional, I was told repeatedly that inventory is a bad word and possibly the dirtiest in business.

As I became more seasoned as a consultant, I preached that message without using the term dirty in my discussions. But something was afoul. I’m the guy who finds cracks in every blanket statement. Why wasn’t I questioning this seemingly accurate truism in any business? More inventory means greater cash requirements.

In this brief discussion, I’ll clarify whether inventory is the dirtiest word in business and even offer why more inventory is okay for some business owners. My thinking is based on a pair of owners who are swimming in the deep waters of positive operating cash flow. Yet, they constantly run high inventory levels that could easily be halved without jeopardizing customer service and revenues.