16/8/2017 10 Inventory Metrics to Strategize Retail Operations on Behance

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10 Inventory Metrics to Strategize Retail Operations

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Metrics seem boring but they are the actual intelligence which
gives you the alarming call to save a slump and identify the
opportunities to leverage as well. Inventory control metrics are
most crucial as they from the base for the whole supply chain of
your retail business.

Now, if the question is how do I recognize the retail inventory

management metrics, we have the answer for your right away. The
following areas of discussion throws light on key inventory metrics
for retail businesses that can be obtained using Contalog inventory
management system.

1. Available Inventory

The current inventory or inventory on hand is amount of stock that

is up for grabs. This is one of the key inventory metrics as it
calculates the total number of available stock by subtracting the
stock numbers which are committed (ready to be shipped) from the
total number of stocks that are physically present.

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16/8/2017 10 Inventory Metrics to Strategize Retail Operations on Behance

2. Turnover

Turnover provides the frequency in which a inventory is replaced. It

is calculated by dividing the total sales figure by the average value
of available inventory. If the turnover figure is high, your inventory
is replenished more frequently. This also reflects the fact that your
tocks are eating up less inventory holding costs.

3. Fill Rate

The rate at which an inventory gets refilled after a placing a

purchase order. In other words the time taken for a product to get
into storage shelf. Fill rate is one of the key inventory management
metrics which gives the information for a retail business owner to
perfectly time purchase orders in order to avoid stock out situation.

4. Current Fulfillment Capacity

Inventory on hand divided by the orders fulfilled per day. Current

fulfillment capacity should be calculated for each product as it is
inventory key performance metrics that evaluates the total number
of stocks which has to be maintained in order to fulfill the daily
demands for a certain period of time.

5. Sell-Through Rate

Sell through rate is one of the inventory control metrics which can
be known by dividing the sales figure by total number of stock in
hand. Sell through rate tells you two important information i) How a
product is performing and ii) compare products against each other
to find the best performers

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6. Purchase or Manufacturing Cost

One of the basic inventory metrics for retail businesses which

informs them the selling pricing of each product. The
manufacturing cost or the cost spent on procuring a product is key
towards setting up the selling price of it.

7. Revenue Per Unit

This is simply the profit / loss statement of each product. As you all
know, this retail inventory management metrics that is too direct.
The total revenue generated by a product by the total number of
sales gives you the revenue of each product. Using this inventory
management metric, you can decide on whether or not to expand
or discontinue a product.

8. Order Processing Time

Time taken for a product to be tracked, picked, packed and

shipped from a storage facility right from the time of order being
received to the fulfillment done. This metric will inform how well
your inventory is organized in order to maintain a hiccup free
fulfillment network.

9. Gross Profit

Gross profit is a retail business total revenue minus the purchase

or manufacturing cost of the goods sold.

10. Shelf Life

Shelf life determines how long a product procured can be stored

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without a dip in its quality. Retail businesses dealing with

perishable good should have a keen eye on shelf life in order to
prevent their stocks from becoming obsolete.

Inventory management metrics needs to be monitored in real-time

in order to keep in par with the changing scenario of your business.
Demands, downsides, opportunities and essentials for your retail
business can be best known only with a good knowledge of these
key inventory performance metrics.

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Sundar Krish
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B Chennai, India

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