Critical Inventory Planning and Control KPIs

by | Feb 13, 2020 | Planning, Power BI, Sales & Operations, Supply Chain

Inventory Planning and Control KPIs

Every process needs controls and key performance indicators to track the progress and identify areas of improvement. Similarly, there are various indicators in the Inventory Planning domain which helps us to keep a check on the right flow of stocks and also govern the overall process.

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Having said this, let us take a look at some of the most important and successful Inventory Planning and Control KPIs.

1) Inventory Turn-Over Ratio

This measure shows how effectively have we managed the inventory flow in a given period of consumption. The effectiveness of this KPI is observed by comparing the cost of goods sold with average inventory for the given period.

2) Inventory Carrying Cost

It means the cost of holding inventory which includes storage rent, utilities, salaries, insurance & shrinkage loss. Other financial expenditures that occurred during the course of handling the stocks are also included while computing the overall carrying cost of Inventory.

3) Days or Weeks On-Hand Inventory

This measure helps to understand the average amount of time in Days or Weeks it takes to sell the inventory we hold.

Most of the entities use the concept of ‘Days to Sell’.

4) Average Inventory

This KPI depicts the amount of stock on-hand during a specific period of time. While a few entities would consider inventory in ‘volume’, however, most of the organizations follow the concept of average Inventory at ‘value’.

5) Shrinkage

This term is used to define a KPI when our Stocks on record show a higher count of inventory but in reality, we have lesser inventory. A perfect example of inventory mismatch which could arise due to various reasons such as miscounting, theft, damage, etc.

These are just a few out of many KPIs which could be used for better governance and controls on our Inventory Management process. The organization expects that its Operation or Planning teams should analyze all of these KPIs together. However, it leads to increasing complexities especially when we deal with many products and variants. 

With ValQ, Modern Visual Planning for Microsoft Power BI, we can create a model that can exactly replicate our Inventory Planning & Control process. Moreover, with the help of a quick ‘What-If analysis’, Planners can identify the best-fit Inventory Plan which also helps in timely retrospection of past events and take necessary steps to improve stock-flow efficiency.  

In our next blog, we shall discuss how ValQ can bring all of these KPIs on a single canvas for better Inventory Planning. Stay tuned to know more about ValQ for Inventory Management. Register today and participate in our next Webinar on Inventory Planning & Control using Microsoft Power BI.

Webinar dated 26th Feb-2020 (Asia Pacific). Click here to register.

Webinar dated 27th Feb-2020 (US and Other Regions). Click here to register.

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