Unlock Inventory Management Success
through Key Performance Indicators
Inventory management KPIs (Key Performance Indicators) help measure and evaluate the effectiveness and efficiency of inventory management practices in a business.
Here are some commonly used KPIs in inventory management:
Inventory Turnover Ratio:
This measures how quickly inventory is sold and replenished within a given period. It is calculated by dividing the cost of goods sold (COGS) by the average inventory value. A higher turnover ratio indicates efficient inventory management.
Gross Margin Return on Inventory Investment (GMROII):
Stockout Rate:
Carrying Cost of Inventory:
Order Fill Rate:
Lead Time:
Accuracy of Demand Forecast:
This assesses the accuracy of demand forecasts by comparing the forecasted demand with actual demand. It helps in optimizing inventory levels and avoiding excess or insufficient stock.
Supplier Performance:
Cycle Time:
Dead Stock:
This quantifies the value or percentage of inventory that has not been sold within a specified period. Identifying and minimizing dead stock helps optimize inventory and reduce carrying costs.
Cross Reference:
These are just a few examples of inventory management KPIs, and the selection of KPIs may vary depending on the industry, business model, and specific objectives of the organization. It is important to align the chosen KPIs with the overall business strategy and regularly track and analyze them to drive improvements in inventory management processes.
Partner with RIGSERV and we will help you establish your industry specific inventory management KPIs. We have experienced people, documented and proven processes, and modern in-house design technology to help you lift and move your inventory to the next level.
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