Supply Chain Metric .com
Inventory Turns (Inventory Turnover): The number of times that your inventory cycles or turns over per year. It is one of the most commonly used Supply Chain Metrics.
Calculation: A frequently used method is to divide the Annual Cost of Sales by the
Average Inventory Level.
Projected Inventory Turns: Divide the "Total Cost of 12 Month Sales Plan" by
the "Total Cost of Goal Inventory"
Turns can be viewed using Cost Value, Retail Value, or even in Units. Just make sure that you're using the same Unit of Measure in both the Numerator and the Denominator.
Although results vary by industry, typical manufacturing companies may have 6-8 inventory turns per year. High volume/low margin companies (like grocery stores) may have 12 or more inventory turns per year or more. It is common for a company to target slowly increasing it's turns year after year.
Consult a qualified benchmarking company to help you set your target for your inventory turns.
Please see the category links on the left side to view various Supply Chain definitions.
Our goal is to guide companies that are looking to
optimize their Supply Chain. Originally, we intended on answering questions about Inventory
Control, Sourcing, Manufacturing, Distribution and Supply Chain Metrics. However, we currently do not have the resources to answer individual questions.
For information on Inventory
Turns, Fill Rate Measurement, Backorder Reporting or any other Supply Chain
Metric, click on the links to the left. The text that appears on this
website is the opinion of the webmaster. Metrics may or may not be uniform
across all industries. All data listed here may be used as a general guide, but
it's accuracy is not guaranteed. Please consult a qualified Supply Chain
professional for more details on Supply Chain Measurements.
Other Supply Chain Websites
VendorManagedInventory.com - information on
Vendor Managed Inventory