It’s also important to look at capital expenditure intensity. Spending $100k to make .01% could make sense but spending $1B to make .01% is much tougher, from an NPV perspective.
Isn't ROIC the more important variable? Let's say I want $100k of profit per year. With 5% margins, I need to do $2M of business. But that doesn't mean I need to pay for all the inventory I'm going to transact up front. I don't have to have $2M capital invested in the business.
I might even be post-paying for the inventory (net 30 terms, for example). I post-pay the labor as well. In this case, it's kind of meaningless how much the inventory that I'm turning over costs, given a fixed margin. What matters is how much capital I have invested in the business. It also matters how quickly I can adjust to changing market conditions. If I can respond to changing conditions instantly, it's impossible for me to lose money. In practice this is not possible because of leases and delivery schedules, though. That's where the risk comes from.
Of course, variability of demand is also an important factor. That's where the risk comes in, because there are fixed costs that don't vary with business.
I think the issue is that ROIC is harder to assess and harder to understand than a simple profit margin calculation. For reference, in it's heyday Windows-and-Office Microsoft had a 42% ROIC.
