Whether it is stocked items or goods in transit, it is possible to measure the corresponding stock turnover at the SKU level or globally. This KPI can be tracked at each step of the chain: from the raw material to the factory, the warehouse, the transportation network, and the distribution network. So, to lower your stocks and improve your cash flow, you need good inventory management. For example, You have more money to invest in new products, better marketing processes… If the investments are a success, you will have more sales and more profits: more free cash flow. Less inventory means more cash available (free cash flow) for investments. Here, we focus on the bottom right of the pyramid: The on-hand inventory is directly related to the amount of cash available.Īs stated by Warren Buffet, “Cash is King”: improving your inventory management strategy is critical for the profitability of your company. Profitability is achieved if we keep a high level of Service, while minimizing Costs and Inventory. If you want to have a profitable Supply Chain, you need to track 3 main pillars: Service, Costs, and Inventory. Why is the Inventory Turn KPI so important? How to optimize my Inventory? – Go further Use your forecasts instead of sales (Inventory Coverage) I don’t have any Inventory data history – what should I do? Inventory Turnover: 5 Questions and common mistakes.Inventory Turnover ratio (cycle): Excel calculation.Inventory Turnover in days: Excel calculation.Inventory Turnover calculation in Excel.Inventory Turnover meaning and formulas. Why is the Inventory Turn KPI so important?.
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