Inventory Turnover

Benchmarking Report

Inventory Turnover

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 Inventory Turnover. 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 Inventory Turnover?

The number of times a company's inventory is sold and replaced over a set period of time. Can be calculated by dividing the cost of goods sold (COGS) by the average dollar value of inventory on hand during a defined selling period (monthly, quarterly, annually).

Why should Inventory Turnover be measured?

Inventory Turnover is a vital KPI in Supply Chain Management that measures the rate at which a company's inventory is sold and replaced (i.e., "turned") over a given period of time. A relatively high value for this KPI indicates that the company's inventory is turned several times throughout the measurement period, 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 low value may indicate that 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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