Key inventory metrics for accounting

By Annapoorna


Updated on: Apr 5th, 2022


3 min read

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In inventory management, key performance indicators (KPIs) are measures that assist you in monitoring and making choices regarding your stock. KPIs are important in inventory management because they provide data on turnover, sales, demand, expenses, process success, relationships, and more.

What is a KPI in inventory management?

Key inventory metrics are indications that let you monitor, evaluate, and assess your performance and provide you with some keys to help you optimise and enhance your operations. They concentrate on a certain area and objectives to understand trends and vulnerabilities.

Key inventory metrics drastically reduce estimation by offering you defined targets to accomplish every week, month, quarter, or year. They provide you with the information you need to make smart and well-informed decisions that will benefit your company. They assist you in implementing the most productive habits, tactics, and decisions. Key inventory metrics help enhance on-time delivery, lower operational expenses, increase customer happiness, optimise transportation, etc.

What to consider when selecting inventory management metrics?

Here are some pointers to consider while selecting the most accurate and efficient key inventory management metrics:

1.      Unnecessary metrics

Unnecessary metrics that make a department’s process appear functional but don’t provide insight into improving inventory management performance should be avoided.

2.      Focus on business objectives

The key to selecting the appropriate indicators is to keep your business’s strategic objectives in mind and pick them accordingly.

3.      Customer satisfaction metrics

Your consumers are the ones who will get your inventory. Suppose they receive the wrong item, arrive late, or are out of stock for an extended period. In that case, the inventory will appear to be mismanaged entirely, leaving them disappointed and less likely to return.

4.      Monitor performance

Comparing data to previous performance or creating a KPI scorecard template for your inventory measures and metrics that you can transfer to numerous business situations can help you detect patterns or inefficiencies in your operations. If your out-of-stock rate has been problematic in recent weeks or months, you can investigate more to see why. This will assist you in taking the appropriate action at the right moment.

Benefits of Inventory KPI and Metrics

Key inventory metrics and KPIs are useful because they establish a system for measuring and achieving development in a business. Appropriate KPIs for your business will guide behaviour, productivity, and decision-making. Inventory measurements and KPIs also have the following advantages:

1.      Increase your revenue and sales.

2.      Make the company financially viable.

3.      Improve customer satisfaction and relations.

4.      Improve the company’s public image.

5.      Boost employee and operational productivity.

6.      Lower your operational costs.

7.      Eliminate problems with the supply chain.

8.      Link inventory management to the company’s overall strategy and objectives.

9.      Ensure that your marketing and merchandising efforts are successful. If you implement more effective warehouse and inventory management methods, you’ll start to discover trends that will help you improve your inventory management operations. Using key inventory metrics that suit your business needs and tracking them over time will help you effectively optimise your operations.

About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more


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