Inventory Blind Spots: The Hidden Data Mistake Costing Australian Manufacturers Thousands

• · However, new data from inventory management platform, Unleashed shows that average Stock on Hand fell to $185,134 in Q2 2026, down 60% year-on-year from $462,735 in Q2 2025, and down a further 11% since Q12026
• · Manufacturers are being urged to address hidden inventory mistakes that can cost thousands, with poor visibility, inaccurate forecasting and inefficient processes contributing to overstocking, shortages and wasted capital

As global shipping disruptions and geopolitical uncertainty dominate headlines, experts say the biggest inventory challenges facing manufacturers today stem from internal processes that can be addressed immediately.

New data from Unleashed's Manufacturing Health Index Q2 2026, shows manufacturers are beginning to reduce their Stock on Hand values, signalling a shift away from the elevated safety stock levels businesses adopted throughout 2025. As the cost of imported raw materials and components continues to rise, businesses are increasingly looking to unlock cash while maintaining reliable supply.

The data, drawn from anonymised records across hundreds of Australian manufacturers, shows that Australian manufacturers are now holding less than half the inventory they carried at the same point last year, with average Stock on Hand falling to $185,134 in Q2 2026, down 60% year-on-year from $462,735 in Q2 2025, and down a further 11% since Q1 2026.

Jarrod Adam, Head of Product at Unleashed, says while businesses can't control global supply chain disruption, they can take control of how they prepare for and respond to it. "Global uncertainty isn't going away, but manufacturers don't have to be at the mercy of it. The businesses performing strongest today are the ones focusing on the operational levers they can control," Mr Adam says.

"Inventory should be one of your greatest competitive advantages, not a hidden liability. When supplier lead times aren't configured correctly, businesses risk making purchasing decisions based on outdated or inaccurate information, leading to costly stockouts, excess inventory and unnecessary pressure on cash flow."

Despite inventory remaining one of the largest working capital assets for manufacturers, the data reveals that Australia's small businesses are contracting inventories to free up cash. The inventory contraction is happening against a backdrop of sustained revenue pressure. In fact, average sales revenue across all industries fell to $385,395 in Q2 2026, down 33% year-on-year from $573,859 in Q2 2025.

Mr Adams says that, for those high-revenue products, the cost of running inventories too lean is far greater.

"Environmental factors can quickly affect input costs and margins, so purchasing may need to be more conservative, supply contingency needs to be built in, and stock decisions should be backed by accurate, real-time data. The businesses that perform strongest are the ones that understand where stockouts will have the biggest commercial impact and manage those risks deliberately."

Mr Adam says many businesses unknowingly inherit default inventory settings that remain unchanged long after implementation. Combined with generic supplier lead time assumptions that fail to reflect actual delivery timeframes, these outdated settings create avoidable inventory and purchasing inefficiencies.

"Something as simple as reviewing supplier lead times can have a significant impact on purchasing accuracy, customer fulfilment and cash flow. It's one of those operational improvements that doesn't require major investment but can deliver meaningful business outcomes," says Mr Adam.

By improving supplier lead times, forecasting accuracy and inventory visibility are practical steps businesses can take to strengthen supply chain resilience. Rather than focusing on global disruptions they cannot control, manufacturers should prioritise operational improvements that increase efficiency, preserve cash flow and support long-term growth.

Mr Adam continues saying that reducing inventory isn't simply about carrying less stock, but about carrying the right stock. "We've seen many manufacturers move away from the large safety-stock buffers they built during periods of uncertainty. The next step is making sure every purchasing decision is backed by accurate data so businesses can remain agile without increasing risk.

"When businesses are running lean and holding lower Stock on Hand, the priority must be identifying and managing their key revenue drivers more closely. That means stocking according to risk, accepting a higher tolerance for stockouts on slower-moving or lower-value products, while staying much closer to the margins, demand patterns and supply requirements of top-performing lines."

With the new financial year underway, now is an ideal time for manufacturers to review the health of their inventory systems and strengthen supply chain resilience before future disruptions arise.

"There will always be global events outside a business's control. The manufacturers that will thrive are those that invest in the operational disciplines they can control, from accurate forecasting and supplier management through to inventory visibility and planning," Mr Adam concludes.

As businesses continue navigating cost pressures and unpredictable supply chains, the most successful manufacturers are focusing on the factors they can control. Improving inventory accuracy, configuring supplier lead times correctly and using real-time inventory data to guide purchasing decisions are three practical steps that can free up working capital, reduce stockouts and build a more resilient operation for the year ahead.

To see the data from Unleashed's Q1 2026 Manufacturing Health Index head here. The Q2 report will be available from August.

About Unleashed

Unleashed is a cloud-based inventory management platform that helps manufacturers, wholesalers and distributors gain real-time visibility across their inventory and operations. Designed to streamline complex stock management from procurement through to finance, Unleashed combines intelligent inventory control, production management and reporting to help businesses improve accuracy, optimise stock levels, protect margins and make more informed decisions. Trusted by thousands of businesses worldwide, Unleashed integrates with leading accounting, e-commerce and business applications to provide a single source of truth for inventory management.

About the Research & Citations

All data from Unleashed' s Manufacturing Health Index Q2 2026