Track Your Key Inventory Metrics

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An industrial engineering axiom states that what isn’t measured can’t be improved. From an inventory perspective, the metrics are the same for online sales as for catalogs, although the forecasting systems requirements for Internet promotions may be different from those for catalog inventory. The metrics include:

  1. Age of inventory
  2. Cost of backorders
  3. Final fill rate/returns/cancellations
  4. Gross margin return on investment (GMROI)
  5. Initial customer order fill rate
  6. Maintained gross margin
  7. Measures of overstock
  8. Top-line and bottom-line growth
  9. Turnover
  10. Write-downs as a percentage of costs.

Key metrics for stores would include:

  1. Top-line and bottom-line growth
  2. Comparable-store sales (year over year)
  3. Maintained gross margin
  4. Turnover
  5. GMROI
  6. Weeks of supply
  7. Markdowns/margin loss from write-downs
  8. Age of inventory
  9. Sell-through percent
  10. Stock-to-sales ratios.