Key inventory metrics to track
Posted: Wed Jan 22, 2025 4:30 am
Let's look at the different types of inventory metrics you should track to make informed decisions.
Inventory Metrics: Sales KPIs
Sales KPIs show how quickly your inventory is converted into sales . They act as a checkpoint, helping you determine if your stock is aligned with what customers want, your product is priced correctly, and you have optimal inventory levels.
Essentially, they tell you whether your inventory is helping you reach your sales finance directors email list goals or holding you back. Here are the top sales KPIs to help your sales team monitor their sales goals:
Inventory turnover ratio
The inventory turnover ratio measures the number of times inventory is sold and replaced during a specific period . Think of it as a way to check whether your products are selling out quickly or just sitting there collecting dust.
Determines how much of the company's stock is being sold and whether there is too much inventory compared to sales. The metric also helps identify slow-moving products, allowing inventory levels to be optimized.
Inventory turnover ratio = Cost of goods sold (COGS) / Average inventory
Note : COGS is the direct cost of producing goods/services. It includes material and labor costs and direct factory overhead.
Example: If your COGS is $300,000 and inventory at the beginning and end of a year is $100,000 and $8,000 respectively, your inventory turnover ratio is [ $300,000 / (100,000 + 8,000) / 2 ] = 5.55
Use ClickUp's Cost Analysis Template to get a detailed view of your material, labor, and other direct costs so you can identify unnecessary costs and areas for potential savings.
ClickUp Cost Analysis Template
Download this template
ClickUp Cost Analysis Template
Download this template
Percentage of direct sales
The sales percentage calculates the percentage of stock sold compared to stock received. For example, if your sales percentage is 70%, it means that you have sold 70 out of every 100 units of a product.
A high sales percentage usually means your products are in demand , while a low percentage could be a sign to rethink your inventory or marketing strategy. It can help you identify popular and underperforming products and make informed purchasing decisions.
Sales rate = (Number of units sold / Number of units received) x 100
Inventory Metrics: Sales KPIs
Sales KPIs show how quickly your inventory is converted into sales . They act as a checkpoint, helping you determine if your stock is aligned with what customers want, your product is priced correctly, and you have optimal inventory levels.
Essentially, they tell you whether your inventory is helping you reach your sales finance directors email list goals or holding you back. Here are the top sales KPIs to help your sales team monitor their sales goals:
Inventory turnover ratio
The inventory turnover ratio measures the number of times inventory is sold and replaced during a specific period . Think of it as a way to check whether your products are selling out quickly or just sitting there collecting dust.
Determines how much of the company's stock is being sold and whether there is too much inventory compared to sales. The metric also helps identify slow-moving products, allowing inventory levels to be optimized.
Inventory turnover ratio = Cost of goods sold (COGS) / Average inventory
Note : COGS is the direct cost of producing goods/services. It includes material and labor costs and direct factory overhead.
Example: If your COGS is $300,000 and inventory at the beginning and end of a year is $100,000 and $8,000 respectively, your inventory turnover ratio is [ $300,000 / (100,000 + 8,000) / 2 ] = 5.55
Use ClickUp's Cost Analysis Template to get a detailed view of your material, labor, and other direct costs so you can identify unnecessary costs and areas for potential savings.
ClickUp Cost Analysis Template
Download this template
ClickUp Cost Analysis Template
Download this template
Percentage of direct sales
The sales percentage calculates the percentage of stock sold compared to stock received. For example, if your sales percentage is 70%, it means that you have sold 70 out of every 100 units of a product.
A high sales percentage usually means your products are in demand , while a low percentage could be a sign to rethink your inventory or marketing strategy. It can help you identify popular and underperforming products and make informed purchasing decisions.
Sales rate = (Number of units sold / Number of units received) x 100