What are Stock Turnover metrics? Crafting the perfect Stock Turnover metrics can feel overwhelming, particularly when you're juggling daily responsibilities. That's why we've put together a collection of examples to spark your inspiration.
Copy these examples into your preferred app, or you can also use Tability to keep yourself accountable.
Find Stock Turnover metrics with AI While we have some examples available, it's likely that you'll have specific scenarios that aren't covered here. You can use our free AI metrics generator below to generate your own strategies.
Examples of Stock Turnover metrics and KPIs 1. Stock Turnover Ratio The number of times inventory is sold and replaced over a period, calculated as Cost of Goods Sold divided by Average Inventory
What good looks like for this metric: 5 to 10 times annually
Ideas to improve this metric Improve inventory management practices Reduce lead time for supply orders Increase sales through promotions Implement Just-In-Time inventory system Analyse and remove slow-moving products 2. Days Sales of Inventory (DSI) The average number of days it takes to sell inventory, calculated as 365 divided by Stock Turnover Ratio
What good looks like for this metric: 30 to 50 days
Ideas to improve this metric Conduct periodic inventory reviews Enhance demand forecasting accuracy Optimise pricing strategies Streamline supply chain processes Implement vendor-managed inventory 3. Gross Margin Return on Inventory Investment (GMROII) A measure of inventory profitability, calculated as Gross Margin divided by Average Inventory Cost
What good looks like for this metric: Above 2.0
Ideas to improve this metric Negotiate better terms with suppliers Identify and promote high-margin products Reduce inventory carrying costs Sell off obsolete inventory Utilise sales data for inventory optimization 4. Inventory to Sales Ratio The ratio of inventory held against sales made, reflecting inventory management efficiency
What good looks like for this metric: 0.12 to 0.20
Ideas to improve this metric Push sales for slow-moving items Improve demand planning Regularly adjust stock levels to sales patterns Implement an advanced inventory tracking system Diversify the product line to match consumer demand 5. Backorder Rate The percentage of orders that cannot be filled at the time of purchase, indicating potential stock deficiencies
What good looks like for this metric: 2% to 4%
Ideas to improve this metric Enhance communication with suppliers Better demand forecasting and planning Increase safety stock levels for high-demand products Monitor and adjust reorder points Invest in an integrated supply chain management system
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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
Ideas 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
Ideas 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%
Ideas 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
Ideas 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
Ideas 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
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Tracking your Stock Turnover metrics Having a plan is one thing, sticking to it is another.
Don't fall into the set-and-forget trap. It is important to adopt a weekly check-in process to keep your strategy agile – otherwise this is nothing more than a reporting exercise.
A tool like Tability can also help you by combining AI and goal-setting to keep you on track.
More metrics recently published We have more examples to help you below.
Planning resources OKRs are a great way to translate strategies into measurable goals. Here are a list of resources to help you adopt the OKR framework:
Tability's check-ins will save you hours and increase transparency
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