There are many non-financial Key Performance Indicators (KPIs) that may be relevant to your business, below we have included some of the KPIs that are commonly used to track and monitor and control Stock / Inventory.
As with all KPIs and goals in general, ‘less is more’, so ideally you will select the handful of KPIs that are of greatest importance to the business to track and report on at top level management. The further down the organisation you go, some of the more granular KPIs are likely to be ideally for middle or junior level management and of course for staff on the ‘shop floor’.
The list below is not intended to be comprehensive; this is provided purely to help with the process of selecting those KPIs that are most relevant to your unique circumstances.
Definition: The number of times inventory is sold and replaced over a specific period.
Importance: High turnover rates indicate efficient inventory management and reduced holding costs.
Definition: The percentage of times an item is out of stock when demanded.
Importance: Lower stockout rates reflect better inventory planning and customer satisfaction.
Definition: The accuracy of inventory records compared to actual stock levels.
Importance: High accuracy ensures reliable inventory data, reducing discrepancies and operational issues.
Definition: The time taken to process and deliver an order from the moment it is received.
Importance: Shorter cycle times enhance customer satisfaction and operational efficiency.
Definition: The total cost associated with holding inventory, including storage, insurance, and obsolescence.
Importance: Lower carrying costs indicate efficient inventory management and cost control.
Definition: The percentage of products returned by customers.
Importance: A low rate of return suggests effective inventory quality control and customer satisfaction.
Definition: The consistency of the time taken to replenish inventory.
Importance: Lower variability ensures smoother inventory replenishment and reduces the risk of stockouts or excess stock.
Definition: Inventory that has not been sold or used within a certain period.
Importance: Reducing dead stock minimizes waste and frees up capital for other uses.
Definition: The percentage of orders that cannot be fulfilled at the time of order due to insufficient inventory.
Importance: A lower backorder rate reflects better inventory planning and customer service.
Definition: The time taken for suppliers to deliver inventory from the point of order.
Importance: Shorter and more consistent supplier lead times improve inventory planning and reduce holding costs.