This plan focuses on maintaining the best metrics for an updated inventory of spare parts, which is crucial for operational efficiency and customer satisfaction. Key metrics such as inventory accuracy rate and stock turnover rate are pivotal for optimized stock management. For example, by implementing regular cycle counts and using barcode systems, inventory accuracy can be improved, directly reducing errors in order fulfillment.
Stock turnover rate is another critical metric; by adjusting reorder levels and monitoring sales trends, businesses can ensure a faster turnover, reducing excess stock. Likewise, maintaining a low backorder rate is essential for fulfilling customer demands promptly. Metrics like days of inventory on hand (DOH) help in managing storage and reducing holding costs.
Overall, these metrics guide businesses in maintaining a balanced inventory, ultimately leading to cost savings and improved service levels.
Top 5 metrics for Updated Inventory of Spare Parts
1. Inventory Accuracy Rate
The percentage of inventory records that are accurate when compared to physical counts
What good looks like for this metric: 95% or higher
How to improve this metric:- Implement regular cycle counts
- Utilise barcode/RFID systems
- Conduct thorough training for staff
- Review and update inventory records regularly
- Analyse discrepancies and correct processes
2. Stock Turnover Rate
The number of times inventory is sold or used in a time period compared to the average inventory
What good looks like for this metric: 4 to 6 times per year
How to improve this metric:- Adjust reorder levels and frequency
- Monitor sales and usage trends
- Identify slow-moving items and clear them
- Negotiate with suppliers for optimal order quantities
- Integrate demand forecasting tools
3. Backorder Rate
The percentage of customer orders that cannot be filled at the scheduled time due to lack of inventory
What good looks like for this metric: Less than 10%
How to improve this metric:- Improve demand forecasting accuracy
- Increase safety stock for critical items
- Collaborate with suppliers on lead times
- Enhance order fulfilment processes
- Utilise data analytics for better insights
4. Days of Inventory on Hand (DOH)
The average number of days that inventory is held before it is sold or used
What good looks like for this metric: 45 to 60 days
How to improve this metric:- Optimise inventory mix based on demand
- Implement just-in-time ordering
- Improve marketing strategies to boost sales
- Utilise warehouse space efficiently
- Develop partnerships with reliable suppliers
5. Carrying Cost of Inventory
The total cost of holding onto inventory, typically a percentage of total inventory costs
What good looks like for this metric: 20% to 30% of inventory value
How to improve this metric:- Reduce excess inventory levels
- Improve inventory turnover
- Negotiate better terms with suppliers
- Utilise technology to monitor costs closely
- Enhance inventory flow and minimise holding time
How to track Updated Inventory of Spare Parts 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.