GITNUX MARKETDATA REPORT 2023
Must-Know Inventory Accuracy Metrics
Highlights: The Most Important Inventory Accuracy Metrics
- 1. Inventory Turnover Ratio
- 2. Days Sales of Inventory (DSI)
- 4. Stock-to-Sales Ratio
- 5. Sell-through Rate (%)
- 6. Average Age of Inventory
- 7. Order Fill Rate
- 8. Inventory Accuracy
- 9. Stockout Rate
- 10. Excess Inventory Ratio
- 11. Carrying Cost of Inventory
- 12. Shrinkage Rate
Table of Contents
Inventory Accuracy Metrics: Our Guide
Keeping an accurate handle on your inventory is a critical aspect of managing a successful business, and recent studies have highlighted some key metrics that can make this task more manageable. This blog post explores these must-know inventory accuracy metrics that will enhance your understanding and control over your inventory. From cycle counting to stock discrepancy rates, we delve into the recent study’s revelations that will help optimize your inventory management.
Inventory Turnover Ratio
Shows how many times a company’s inventory is sold and replaced over a specific period. A higher turnover ratio indicates better inventory management.
Days Sales Of Inventory
Measures the number of days on average it takes a company to sell its inventory. Lower DSI indicates efficient inventory management and higher product demand.
Indicates the profitability of a company’s inventory by comparing the gross margin of sales to average inventory cost. Higher GMROII values mean better inventory performance.
Compares inventory to projected sales. Lower ratio = efficient stock management; higher ratios may mean overstocking or potential sales loss.
Shows the percentage of sold inventory versus total stock. Higher percentage = efficient inventory management and demand- supply matching.
Average Age Of Inventory
Measures the time in days an item sits in inventory before being sold. A lower average age indicates faster-moving inventory and better management.
Order Fill Rate
Percentage of completed customer orders, considering out-of- stock items. Higher fill rate = improved customer service and inventory management.
Compares physical counts of inventory to system records to measure inventory tracking accuracy. A higher inventory accuracy percentage indicates better inventory management.
Measures stockout percentage from total inventory observations. Lower stockout rate = improved inventory planning.
Excess Inventory Ratio
Indicates the percentage of total inventory value considered excess (i.e. not needed for immediate sales). A lower excess inventory ratio signifies better inventory control.
Carrying Cost Of Inventory
Inventory holding costs: warehousing, insurance, taxes, etc. Lower costs = efficient inventory management.
Measures the percentage of inventory lost due to factors like theft, damage, or administrative errors. A lower shrinkage rate implies better inventory control and security measures.
Frequently Asked Questions
What are the key inventory accuracy metrics that help businesses manage their inventory effectively?
How can cycle counting accuracy contribute to better inventory management?
How is the stock accuracy percentage calculated, and why is it important?
What does the inventory turnover ratio indicate, and how can organizations improve it?
How can the order picking accuracy rate impact customer satisfaction, and what steps can businesses take to improve this metric?
How we write these articles
We have not conducted any studies ourselves. Our article provides a summary of all the statistics and studies available at the time of writing. We are solely presenting a summary, not expressing our own opinion. We have collected all statistics within our internal database. In some cases, we use Artificial Intelligence for formulating the statistics. The articles are updated regularly. See our Editorial Guidelines.