A search for inventory KPIs returns lists of thirty. Most of them were written for a retailer with a thousand stores, and most of them measure things a business with one or two warehouses cannot change or does not need to know.
Eight figures are enough. Each one answers a question an owner actually asks, each can be calculated from records you already keep, and together they cover money, movement, accuracy and supply.
Money
1. Stock value and its trend. What the stock is worth today, at cost, and the value at each of the last twelve month ends. The question it answers: is the money tied up in stock growing faster than the business. Look monthly. A value that climbs while sales are flat is the first sign of over-ordering, months before the ageing report shows it.
2. Inventory turnover and days of inventory. Cost of goods sold over the year divided by average stock value, and 365 divided by that. See the full explanation. The question: how long does the money stay on the shelf. Look quarterly for the business, monthly for the top products.
3. Aged stock share. The value of stock older than 180 days as a share of total stock value. The question: how much of the stock is quietly becoming dead stock. Look monthly, and set a threshold that triggers a clearance decision, for instance 10%.
Movement
4. Stock-outs. How many products ran out this month, and for how many days. The question: how often are we failing to have what is needed. Count them, with the product and the cause, because the fix depends on whether it was a late supplier, a wrong reorder point or an unexpected job. Look weekly.
5. Run-out forecast. The products expected to run out in the next 30 days at the current rate of use, with the days left. It is the forward-looking version of the stock-out count, and the only KPI on this list that prevents a problem rather than reporting one. Look weekly, or daily if your lead times are short.
Accuracy
6. Count accuracy. The share of counted products where the record matched the shelf, from your cycle counts or the annual stocktake. See inventory accuracy and shrinkage. The question: can we trust the other seven figures. Below 95% the reorder points, the valuation and the turnover are all built on sand. Look after every count.
Supply
7. Supplier lead time, average and worst. Days from order to delivery, per supplier, from your own purchase orders. See measuring lead time. The question: how early do we have to order, and how much buffer do we need. Look twice a year, and after any supplier change.
8. Committed cash to suppliers. What is due to suppliers in each of the next three months from approved orders, firm invoiced amounts apart from estimates. The question: what does the stock we have already bought cost us next month. Look monthly, with the cash forecast.
The ones you can leave out
Fill rate and backorder rate matter when you sell to order and ship from stock; if you supply your own production or a shop, stock-outs already cover it. Gross margin return on inventory needs reliable sales data by product and is worth it only once the eight above are routine. Carrying cost as a percentage is worth calculating once to set order quantities, not tracking monthly.
Putting them on one page
| KPI | Formula or source | How often |
|---|---|---|
| Stock value and trend | Valuation at cost, month ends | Monthly |
| Turnover, days of inventory | COGS ÷ average stock; 365 ÷ turnover | Quarterly |
| Aged stock share | Value over 180 days ÷ total value | Monthly |
| Stock-outs | Count of products at zero, with cause | Weekly |
| Run-out forecast | Products running out within 30 days | Weekly |
| Count accuracy | Correct counts ÷ counts | After each count |
| Supplier lead time | Delivery date − order date, average and worst | Twice a year |
| Committed cash | Payments due from approved orders, by month | Monthly |
One page, eight numbers, each with last month’s figure beside it. If a number has not changed what you did in three months, drop it.
Where each figure comes from in StockBold
The inventory valuation report gives the stock value on any date, at purchase price plus landed costs under your method, and the inventory value history report charts the last twelve month ends. The product turnover report gives each product’s turnover and days of inventory, and the cost of goods sold report the value side. The inventory ageing report splits stock into fixed bands up to over 180 days, with the value in each.
Products with automatic reorder calculation show up in the 30-day run-out forecast, by urgency, with the days left, and in the daily low-stock email for the people who follow them. Each stock count shows its variances and net variance as you go. Every purchase order carries its order and delivery dates, and the payment forecast shows what falls due with each supplier month by month, firm amounts apart from estimates and approved orders apart from drafts.
Read more about stock valuation and reports, or the help guide on the inventory value history report.