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.