In our most recent LinkedIn poll, we asked supply chain professionals to identify their most important inventory KPI. Decision-makers use KPIs to measure the level of success across supply chain processes. Significantly, supply chain KPIs, including inventory KPIs, refer to the main variables that have a fundamental impact on the overall health or problems of the supply chain.
We asked our LinkedIn audience to choose which inventory KPI was most important to them or their organisation. They could choose from: days sales of inventory (DSI), inventory to sales ratio (ISR), inventory days of supply (IDS), or other. Read below to discover what we found.
Inventory KPIs: what we found
- The joint most popular option, with 45% of votes, was days sales of inventory (DSI). DSI is the average number of days taken to sell inventory. Analysts use DSI to calculate efficiency. High DSI indicates that a firm is not effectively managing inventory or that inventory is difficult to sell.
- 45% of respondents also told us that Inventory to Sales Ratio (ISR) was the most important inventory KPI. ISR measures the amount of inventory in stores compared to the number of sales fulfilled. This inventory KPI is a broad assessment of a company store’s inventory management and helps businesses configure their stock to keep high margins.
- Of the remaining respondents, 9% of voters said that an inventory KPI other than the three options that we listed was most important to their organisation.
- Finally, receiving 0% of responses, was Inventory days of supply (IDS). IDS is the measurement that projects the amount of stock expressed in days of sales. We calculate this figure as the average value of inventory at standard cost, divided by annual cost of goods sold (COGS), then divided by 365.
B2BE’s experience in the supply chain industry allows our clients to develop, expand and modernise successfully, enabling greater effectiveness and profitability. To engage with B2BE and to offer us feedback on what matters most to you and your business, make sure to follow us on LinkedIn and across social media. You can also vote on our latest LinkedIn poll. If you’d like to discuss your supply chain strategy, including how to use inventory KPIs to measure success, get in touch with us.