10 Inventory KPIs You Should Know
10 Inventory KPIs You Should Know
1️⃣ Inventory Turnover Ratio
→ How often inventory is sold and replaced.
→ Formula: Cost of Goods Sold (COGS) / Average Inventory
2️⃣ Days Inventory Outstanding (DIO)
→ Average days to sell inventory.
→ Formula: 365 days / Inventory Turnover Ratio
3️⃣ Inventory Carrying Cost
→ Costs of storing and maintaining inventory.
→ Formula: (Inventory Holding Cost / Total Inventory Value) x 100
4️⃣ Stockout Rate
→ Frequency of running out of stock.
→ Formula: (Number of Stockouts / Total Demand) x 100
5️⃣ Fill Rate
→ Percentage of immediate order fulfillment.
→ Formula: (Total Orders Fulfilled / Total Orders) x 100
6️⃣ Lead Time
→ Time to receive inventory after order.
→ Formula: Order Placed Date – Order Received Date
7️⃣ Inventory Accuracy
→ Accuracy of recorded vs. actual inventory.
→ Formula: (Total Actual Inventory / Total Recorded Inventory) x 100
8️⃣ Stock-to-Sales Ratio
→ Inventory levels relative to daily sales.
→ Formula: Current Inventory / Average Daily Sales
9️⃣ Obsolete Inventory
→ Percentage of unsaleable inventory.
→ Formula: (Value of Obsolete Inventory / Total Inventory) x 100
🔟 GMROII
→ Profitability of inventory investments.
→ Formula: (Gross Margin / Average Inventory) x 100
Understanding these KPIs is crucial for managing inventory effectively and ensuring operational efficiency.