Maximising sales of existing inventory is a strategic approach focused on increasing the efficiency and profitability of selling current stock. Metrics such as Inventory Turnover Ratio and Sell-Through Rate help businesses understand the speed and effectiveness with which they move products. For example, a higher Inventory Turnover Ratio indicates that products are being sold and replaced quickly, optimizing the supply chain and reducing holding costs.
Metrics like Gross Margin Return on Investment (GMROI) and Days Sales of Inventory (DSI) help businesses gauge profitability and operational efficiency. GMROI measures the profit relative to inventory investment, guiding pricing and product decisions. Meanwhile, DSI aids in understanding how quickly inventory can be turned into sales, offering insights into demand forecasting and supply chain management.
Focusing on Customer Feedback and Satisfaction Score ensures that the quality of products meets customer expectations, improving loyalty and repeat purchases. By implementing strategies to enhance these metrics, businesses can achieve sustainable growth and maintain competitive advantages.
Top 5 metrics for Sales Of Existing Inventory
1. Inventory Turnover Ratio
Measures how often inventory is sold and replaced over a period. Calculated by dividing cost of goods sold by average inventory
What good looks like for this metric: 2 to 4 times per year
How to improve this metric:- Analyse inventory levels regularly
- Offer discounts on slow-moving products
- Optimize supply chain processes
- Increase product visibility through promotions
- Bundle products to increase sales
2. Sell-Through Rate
The percentage of inventory sold compared to the amount of inventory received. Calculated by dividing units sold by the initial inventory received
What good looks like for this metric: 80% or higher
How to improve this metric:- Enhance marketing efforts
- Rotate inventory displays regularly
- Improve sales staff training
- Utilize customer feedback for improvements
- Focus promotions on best-selling products
3. Gross Margin Return On Investment (GMROI)
Measures the profit a company makes on its inventory investment. Calculated by dividing gross margin by average inventory cost
What good looks like for this metric: $2 or higher
How to improve this metric:- Negotiate better terms with suppliers
- Improve pricing strategies
- Reduce inventory holding costs
- Focus on high-margin products
- Limit discounting on high-margin products
4. Days Sales Of Inventory (DSI)
Indicates the average time in days that a company takes to turn its inventory into sales. Lower values are better
What good looks like for this metric: 30 to 60 days
How to improve this metric:- Improve demand forecasting
- Implement automated inventory management systems
- Enhance supplier relationships
- Streamline supply chain processes
- Conduct regular inventory audits
5. Customer Feedback And Satisfaction Score
Measure of customer satisfaction with the existing product line, usually through surveys or reviews
What good looks like for this metric: 4 out of 5 or higher
How to improve this metric:- Actively solicit customer feedback
- Enhance product quality based on feedback
- Implement a customer loyalty program
- Improve customer service experiences
- Address any negative feedback promptly
How to track Sales Of Existing Inventory metrics
It's one thing to have a plan, it's another to stick to it. We hope that the examples above will help you get started with your own strategy, but we also know that it's easy to get lost in the day-to-day effort.
That's why we built Tability: to help you track your progress, keep your team aligned, and make sure you're always moving in the right direction.
Give it a try and see how it can help you bring accountability to your metrics.
