Critical Inventory Metrics Every Retail Owner Should Know

Managing an inventory of a busy store never gets easy even if you have years of experience. Every owner dreams of having an inventory that is free from all the mishaps of running out of stock, having stock more than required limit or even worse nightmare is facing stock-outs. You can read a thousand of books to get the key of managing inventory effectively but in the end all of those books material trickles down to a few basic points.

Here are the crucial inventory metrics you should keep an eye on to have your inventory managed all the time!

• Gross Margin Return on Investment:- In business it is mandatory to keep track of every dollar you spend and every dollar you receive after that. This not only helps you to track your profit ratio but also plays a role in inventory management as well. GMROI makes you answer the question “How many dollars have I earned after putting x dollars in my business?” It enlightens you about the success of your business.
• Depreciation of Products:- Has it ever happened that your stock on paper showed more products than in real? This refers to shrinkage or depreciation of products that occurs due to employee theft, shoplifting, errors by administration or supplier scam. It makes you aware of the products that are missing from you inventory. Though this seems to be normal in businesses but knowing it would help you to know where you stand with other businesses.
• Stock Turnover:- This term refers to the times your shop has sold out all the products from the shelves and got them filled again. If you monitor this closely it tells you about how well your business is performing without collecting much of stock in store. The higher the rate the more joy of brisk sales you get. If your stock is not going out much then with observance you can pinpoint the main cause.
• Sell-Through Rate:- It takes care of the scenario where you have a number of items you have sold versus number of items your store actually had. If your sell through rate is very low you can consider returning the merchandise to the supplier or maybe can put a discount tag on those items.

Now your wish to have the key to a perfect inventory is finally granted. Make sure you follow these metrics closely and we hope you have an efficiently managed inventory.

If you feel it’s time for you to progress up to a software that could do your inventory management, feel free to join RepairDesk and become a part of the successful world of small and medium sized businesses.