Inventory KPI (Key Performance Indicator) in Inventory management are metrics that help to monitor, improve and make decisions about your stock, turnover, sales, demand, costs, process and relationship.

With the set of metrics as Inventory KPI, Stores, warehouse and procurement department can evaluate and track the efficiency of process, identify bottleneck, improve productivity and streamline the process.

Dhyey Consulting designed a set of KPIs to help supply chain department and management.

1) INVENTORY TURNOVER (ITR) AND DAYS SALES OF INVENTORY (DSI)

Inventory Turnover is a financial ratio showing how many times a company turned over its inventory relative to its cost of goods sold (COGS) in a given period. It determines how soon a company sells its goods / products and replaces its inventories in a set duration.

Formula is COGS / Average Inventory amount in a certain period.

It is also referred to as Inventory Turn Cycle, Stock Turn (Cycle), Inventory Turnover Ratio/Rate.

Days Sales of Inventory (DSI) This ratio measures the average number of days a company holds inventory before selling it or how much time it will take to sell all the inventory currently on hand.

Formula is (Average Inventory amount / COGS) * 365 days in a certain period.

It is also referred to as Days Inventory Outstanding Ratio, Stock Turn (Days), Days in Inventory.

2) INVENTORY TO SALES RATIO / STOCK TO SALES RATIO

The inventory to sales ratio compares the average inventory value to the net sales value and is one measure of a company’s inventory level health.

Formula is Average Inventory amount / Net sales amount in a certain period.

It is also referred to as Stock to Sales/Revenue Ratio.

3) RAW MATERIAL COST REPORT.

Report shows detail of landed cost breakup and analysis of purchased items.

4) INVENTORY CYCLE TIME AND AGE

Inventory cycle time is the amount of time it takes between receipt of procured item / production output and deliver an order, usually measured in days. The average time a company keeps its inventory before it is sold/consumed.

5) STOCK OUT ITEM

Stockouts means company run out of inventory of a particular item. An out of stock can happen anywhere in supply chain.
Stockouts can be defined as the unavailability of specific items or products at the point of purchase when the customer is ready to buy. Four types of Stock related reports are available for analysis.

1- Stock out Item as on Date, 2- Stock Item as on Date, 3- Probable stock out within Period and 4- Excess Stock after Period.

6) INVENTORY STOCK OUT RATE

KPI is the % inventory stock out rate or percentage of items not available when needed for sale/consumption. It is derived by dividing the no. of items not in stock by then total no. of items are available in inventory.

7) NON-MOVING ITEMS

Non-moving items or dead stock items means items are not utilized at all over a specific timeframe. These are goods that ended up idle in storage location for extended period time.

8) INVENTORY REORDER

Reorder point is a stock quantity that sets the inventory below the level that you must replenish the item.

9) UNRECONCILED INVENTORY

Report shows items which are not compared physical inventory counts with system inventory count within next counting end date/period specified on item card. Report shows all uncounted items with delayed days. SKU-wise details option is available.

10) STOCK COVERAGE

Stock coverage allows you to estimate the period during which your business will be able to fulfil orders without having to purchase a new product. Formula is dividing the available stock by the average product demand / consumption over a specific period of time.

Supported Editions

This app supports the Essential and Premium edition of Microsoft Dynamics 365 Business Central.

Supported Countries

Canada, India, United Kingdom, and United States. Supported Languages English only.

Inventory KPI

by Dhyey Consulting Services Pvt. Ltd.