GITNUX MARKETDATA REPORT 2023
Must-Know Inventory Performance Metrics
Highlights: The Most Important Inventory Performance Metrics
- 1. Inventory Turnover
- 2. Days Sales of Inventory (DSI)
- 4. Fill Rate
- 5. Stockout Rate
- 6. Backorder Rate
- 7. Carrying Costs
- 8. Order Cycle Time
- 9. Inventory Accuracy
- 10. Safety Stock
- 11. Sell-through Rate
- 12. Economic Order Quantity (EOQ)
- 13. Average Inventory
- 14. Lead Time
- 15. Shrinkage Rate
Table of Contents
Inventory Performance Metrics: Our Guide
Understanding your inventory’s performance is key to the success of any business dealing with products. In our latest blog post, we explore the essential Inventory Performance Metrics that drive profitability and efficiency. Join us as we delve into these metrics’ wonders, helping you better comprehend their importance and how you can utilize them to optimize your business operations.
This metric tracks inventory turnover: high is good (strong sales, efficient inventory), low is bad (weak sales, excess inventory).
Days Sales Of Inventory
DSI measures the average number of days it takes a company to sell its inventory. A lower DSI indicates a more efficient sales process and inventory management.
Gross Margin Return On Investment
This metric calculates ROI from inventory decisions. Higher GMROI means more profit from inventory investment.
This measures the % of stockout-free customer orders. A high fill rate signals effective inventory control and meeting customer demand.
This metric calculates item stockout percentage. Higher stockout rate signals inventory issues or supplier and demand forecasting problems.
This measures the percentage of orders not fulfilled on time due to the item being out of stock. A lower backorder rate indicates better inventory management and higher customer satisfaction.
These are inventory holding costs, like warehousing, insurance, personnel, and obsolescence. High carrying costs may indicate inventory management inefficiencies.
Order Cycle Time
This measures order processing and delivery time. Shorter cycle time signals efficient inventory and order management.
This metric shows item accuracy in your warehouse. Higher accuracy means a better inventory control system.
This measures buffer stock to prevent stockouts and meet demand spikes. Higher safety stock indicates conservative inventory management.
This measures the percentage of units sold in relation to the initial stock on hand. A higher sell-through rate indicates strong sales performance or effective inventory management.
Economic Order Quantity
EOQ is the best order quantity to minimize costs and enhance inventory management.
This metric finds the average inventory held. Optimal levels cut costs while meeting demand.
This is the time from order to warehouse arrival. Shorter lead time prevents stockouts and aids inventory decisions.
This measures the percentage of inventory lost due to damage, theft, or other causes. A lower shrinkage rate indicates better inventory control and warehouse management practices.
Frequently Asked Questions
What are inventory performance metrics and why are they important?
What are some common inventory performance metrics that businesses should monitor?
How can businesses use inventory performance metrics to improve operations?
How often should inventory performance metrics be monitored, and do they vary by industry or business size?
Can technology play a role in tracking and improving inventory performance metrics?
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.