Inventory glossary

What is Inventory KPI?

Inventory KPI is a measurable number used to track how well a store manages stock, such as turnover, stockout rate, or days of supply.

A small store cannot manage what it does not measure. Inventory KPIs turn gut feeling into numbers you can check weekly, so you know if too much cash is tied up in stock or if you are running out of bestsellers too often.

Pick a small set of KPIs that match your real problems. If stockouts hurt you most, track stockout rate and days of supply. If cash is tight, track inventory turnover and carrying cost. Check the same KPIs on a regular schedule so you can spot trends, not just single bad weeks.

Example

A candle store tracks two KPIs each month: inventory turnover and stockout rate. In March, cost of goods sold was 4,000 dollars and average inventory value was 2,000 dollars, giving a turnover of 4,000 / 2,000 = 2 for the month. Out of 50 SKUs, 3 were out of stock at some point, giving a stockout rate of 3 / 50 = 6 percent.

Common mistakes

  • Tracking too many KPIs and never acting on any of them.
  • Comparing KPIs across very different product types, like apparel and perishables, as if they mean the same thing.
  • Measuring KPIs once and never again, so trends are missed.

Inventory KPI and SteadyShelf

SteadyShelf's forecasts and order-by dates give you the underlying data, like days of supply and incoming stock, that feed directly into inventory KPIs.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

Inventory turnover · Days of supply · Stockout · Sell-through rate · Carrying cost

Full inventory glossary

FAQ

How many inventory KPIs should a small store track?

Three to five is usually enough. More than that becomes hard to review regularly and act on.

What is the most useful inventory KPI to start with?

Stockout rate is a good starting point for small stores because it directly shows lost sales from running out of stock.

Let SteadyShelf do this math for every SKU

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