Key inventory management metrics and KPIs to track

[Ehsanuls55]

A single mishap in inventory operations can create a domino effect throughout your entire business.

Suppose you forecast sales demand for 1,000 units of a product, but actual demand is 2,000 units. The result? Stockouts, dissatisfied customers, increased shipping costs, lost revenue, and other operational inefficiencies.

For this reason, you need to track the right inventory metrics and key performance indicators (KPIs) to maintain inventory balance, reduce operational costs and errors, and improve the overall effectiveness of your inventory management process.

In this comprehensive guide, we'll walk you through the key metrics you need to track to ensure seamless finance directors email list inventory operations and provide you with the steps to effectively track your KPIs.

60 second summary
Poor inventory management leads to stockouts, customer dissatisfaction and lost revenue
Tracking inventory metrics/KPIs is essential to maintaining optimal stock levels and efficiency.
Key metric categories include sales, receiving, operations, employee performance, and other important metrics such as shrink and backorder rates.
KPI selection should be relevant to company goals, provide actionable insights, and align with industry specificities.
Effective KPI implementation involves setting SMART goals and focusing on metrics that answer the company's key questions.
Avoid vanity metrics and track trends over time to gain insight into inventory performance
Understanding inventory management KPIs
Inventory management KPIs are quantifiable metrics that assess the effectiveness of your inventory management. They help you monitor and analyze inventory levels, turnover rates, and overall inventory health to achieve your business goals.

Tracking inventory management metrics and KPIs also helps you control inventory costs, forecast customer demand, and ensure operational efficiency.

For example, you can analyze inventory carrying costs to identify the costs associated with inventory storage and take action if costs are too high.