Master Inventory Management and Boost Your KPI Poor Inventory Management Can Drain Your Wallet
inventory is the same as death by a thousand cuts! Tiny mistakes and over-ordering different products can make your KPI far lower than it should be. As a result, your inventory can create a black hole that’s stealing all your cash. Let’s break it down step-by-step. To calculate your inventory turns, you must divide your annual cost of goods sold (COGS) by your current inventory value. If you don’t have your annual COGS number, you can instead take a recent month’s number and multiply it by 12 to get a reasonable approximation. Your equation should look like this:
We all want an inventory stocked up with every possible item on the market, but that’s impossible, especially if your cash flow is already lacking. If your wallet only has dust bunnies inside, an over-stocked inventory may be to blame. Fixing your inventory turns KPI requires the most heavy lifting out of our three critical KPIs, but it can make a world of difference. It’s no wonder that our inventory course is our most in-depth one!
Annualized Cost of Goods Sold (or last month’s COGS x 12) ÷ Current Inventory Value = Inventory Turns
Properly managing your inventory isn’t hard, but there are numerous elements you need to consider. A poorly managed
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