Days Inventory Outstanding
This PDF report includes benchmarking data (in a visual, chart-based format), an comprehensive KPI definition, characteristics of high performers and technical details on measuring Days Inventory Outstanding. Purchase and download this easy-to-understand, presentation-ready report immediately to compare performance levels, set attainable performance targets, and push towards best-in-class performance for this KPI.
What is Days Inventory Outstanding?
The total dollar value of the inventory-on-hand divided by the average cost of goods sold (COGS) per day.
Why should Days Inventory Outstanding be measured?
Days Inventory Outstanding is a vital KPI in Supply Chain Management that measures the amount of inventory supply (in days) that a company has on hand. A relatively low value for this KPI indicates that the company keeps a low supply of inventory on hand, which may indicate high inventory turnover, but may also be a leading indicator of potential for backorders and/or a lack of cost avoidance within the procurement function (i.e., purchasing in bulk to replenish inventory, when possible, to reduce procurement costs). On the other hand, a relatively high value may indicate that the company's inventory is overstocked, and the organization's purchasing/procurement, sales and related forecasting functions are not working in concert to determine the appropriate inventory levels based on forecasted demand.
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