As a busy wholesaler and distributor, in between receiving purchases and fulfilling orders, I’m sure you must wonder how you’re business is doing. You can with inventory metrics. Why should you care about inventory metrics? Because as an indicator of stock control, they give you an insight into how your stock touches every part of your business operations. With these indicators, you can benchmark your operations performance over time and against the industry average. We’ve done all the hard work for you. We think these are the top 10 inventory metrics that you need to know right now.

1. Inventory
Metrics You
Need to Know
Right Now
10
THIS 2018

2. HOW’S YOUR
BUSINESS DOING?

3. As a busy wholesaler and distributor, in
between receiving purchases and fulfilling
orders, I’m sure you must wonder how
you’re business is doing

5. TOP TEN INVENTORY METRICS
Let’s start with the most critical one that
everyone talks about first when this
topic comes up

6. Inventory Turnover
1

7. Inventory turnover is the number of times inventory
is sold within a period of time, typically a year

8. Ideally, you want to increase your inventory
turnover and reduce your holding of
inventory for a couple of reasons
Firstly, increasing your
turnover means
reducing your holding
cost
Secondly, reducing your
holding cost means
increasing net income
and profitability
Finally, stocking items
that turnover quickly
means being responsive
to the market and
customer demand

9. Gross Margin
Percent
2

10. Gross Margin Percent = (Sales – The Cost of Sales) / Sales
Gross margin percent works hand in hand with
inventory turnover. If you have weak gross
margins, you might want to focus on increasing
your inventory turnover

11. Customer Order Fill
Rate
3

12. Customer Order Fill Rate = Orders that are Shipped in Full /
Total Number of Orders
The customer order fill rate shows how you are
servicing your customers. It shows what orders
your customers are getting on time

13. HOW CAN YOU IMPROVE THE
CUSTOMER EXPERIENCE?
Invest in a software solution that shows
you real-time inventory levels

14. Cost Of Carrying
4

15. Cost of Carrying = Carrying Costs / Overall Cost
The cost of carrying is the percentage that
represents the cents per dollar that is spent on
inventory overhead per year

16. Average Days To Sell
Inventory
5

17. Average Days To Sell Inventory = (Your Average
Inventory/The Cost of Goods Sold) x 365
The average days to sell inventory is how long
it takes a company to turn its inventory into
sales, that is, the average length of time that
your cash is tied up in inventory

18. Return On
Investment
6

19. Return On Investment = (Sales / Average Cost of
Inventory) x Gross Margin
This is also known as Gross Margin Return on
Investment (GMROI). It shows how much you are
earning for every dollar invested in your inventory

20. Item Fill Rate
7

21. Item Fill Rate = Received Quantity / Ordered Quantity
The item fill rate can be used to measure the order
fulfillment performance of a single delivery or for all
deliveries during a time period

22. Cycle Time
8

23. Cycle Time = Actual Ship Date – Customer Order Date
The item fill rate can be used to measure the order
fulfillment performance of a single delivery or for all
deliveries during a time period

24. Average Inventory
Level
9

25. Average Inventory Level = (Current Inventory + Previous
Inventory) / 2
The average inventory level is the mean value of
inventory throughout a certain time period

26. Inventory Accuracy
10

27. Inventory Accuracy = Regular Stock Takes
Inventory accuracy refers to how closely your
inventory records match your physical inventory

28. Most importantly, sophisticated inventory
management systems require high accuracies
of at least 95% to function well and generate
the ROI on your software investment

29. START BENCHMARKING
YOUR BUSINESS NOW
EmergeApp.net/Inventory-Reports/10-Inventory-
Metrics-For-SMBs/

30. Now it’s your turn to apply
them to your business
operations and gauge your
performance and
efficiency with stock
control