{"id":28057,"date":"2025-07-16T10:05:26","date_gmt":"2025-07-16T10:05:26","guid":{"rendered":"https:\/\/www.hashmicro.com\/ph\/blog\/?p=28057"},"modified":"2025-11-26T04:26:30","modified_gmt":"2025-11-26T04:26:30","slug":"inventory-management-kpi","status":"publish","type":"post","link":"https:\/\/www.hashmicro.com\/ph\/blog\/inventory-management-kpi\/","title":{"rendered":"Top Inventory Management KPIs Every Business Should Track"},"content":{"rendered":"<p>If you&#8217;re not tracking your inventory KPIs, you&#8217;re running your business with a blindfold on. It\u2019s not just about counting what\u2019s in stock. Rather, it\u2019s about understanding the numbers that quietly make or break your margins. Inventory management KPIs help you adjust to demand shifts and stay in control of every unit moving in or out.<\/p>\n<p>Most businesses don\u2019t realize they\u2019re losing money on inventory until it\u2019s too late. Expired items, missed sales, or overstocked shelves that collect dust. The right KPIs show where the gaps are and what actions to take, from sales trends to supplier performance.<\/p>\n<p>Tracking these metrics becomes much easier with a system built to do it for you. This article will walk you through essential inventory KPIs, how to measure them, and how the right tools can help you track them effortlessly.<\/p>\n<table style=\"border-collapse: collapse;background-color: #fffacd;border-radius: 25px 25px 25px 25px\" width=\"100%\">\n<tbody>\n<tr>\n<td style=\"padding: 15px;border: none\">\n<h3 style=\"margin-bottom: 10px\"><span style=\"background-color: #990000;color: #ffffff;padding: 5px\"><b>Key Takeaways<\/b><\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400\">Inventory KPIs reveal critical insights like sales trends, stock accuracy, and operational efficiency that directly impact profitability.<\/li>\n<li style=\"font-weight: 400\">Key metrics span across sales, receiving, operations, and employee performance, helping businesses identify gaps and streamline processes.<\/li>\n<li style=\"font-weight: 400\">Choosing and tracking the right KPIs requires alignment with business goals, clear implementation, and the right tools to measure progress.<\/li>\n<li style=\"font-weight: 400\"><a href=\"https:\/\/www.hashmicro.com\/ph\/inventory-management-system\">HashMicro simplifies KPI tracking<\/a> with smart automation, real-time dashboards, and AI-powered insights for better inventory decisions.<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span data-sheets-root=\"1\"><a href=\"https:\/\/www.hashmicro.com\/ph\/free-product-tour\/?medium=free-product-tour\" target=\"_blank\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2024\/10\/bir-demo-gratis.webp\" data-desktop-src=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2024\/10\/bir-demo-gratis.webp\" data-mobile-src=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2024\/10\/mobile-bir-demo-gratis.webp\" alt=\"FreeDemo\" class=\"responsive-image-banner\" width=\"620\" height=\"255\"><\/a>\r\n\r\n<script>\r\n    \/\/ check which image to use based on screensize\r\n    document.addEventListener(\"DOMContentLoaded\", function() {\r\n        function updateImageSource() {\r\n            var images = document.querySelectorAll('.responsive-image-banner');\r\n            var screenWidth = window.innerWidth;\r\n\r\n            images.forEach(function(img) {\r\n                var mobileSrc = img.getAttribute('data-mobile-src');\r\n                var desktopSrc = img.getAttribute('data-desktop-src');\r\n\r\n                if (screenWidth < 576 && mobileSrc) {\r\n                    img.setAttribute('src', mobileSrc);\r\n                } else {\r\n                    img.setAttribute('src', desktopSrc);\r\n                }\r\n            });\r\n        }\r\n\r\n        \/\/ Initial check\r\n        updateImageSource();\r\n\r\n        \/\/ Update on resize\r\n        window.addEventListener('resize', updateImageSource);\r\n    });\r\n<\/script><div id=\"toc_group_article\" style=''>\r\n\t<p style='font-size:25px;font-weight:bold; margin-bottom:0px'>\r\n\t\tTable of Contents\r\n\t<\/p>\r\n\t<ul id=\"list_toc\" class='list_toc'><\/ul>\r\n<\/div>\r\n\r\n<div id=\"placeholder-toc\"><\/div>\r\n<div id=\"toc\">\r\n    <div class=\"header\">\r\n\t<span class=\"toc-title\" id=\"toc-title\">Content Lists<\/span>\t\r\n\t <i class=\"toc-icon\">\r\n        <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"30\" height=\"30\" viewBox=\"0 0 24 24\" fill=\"none\" stroke=\"#000\" stroke-width=\"2\" stroke-linecap=\"round\" stroke-linejoin=\"round\" class=\"header-icon\">\r\n          <path d=\"m6 9 6 6 6-6\" \/>\r\n        <\/svg>\r\n      <\/i>\r\n\t<\/div>\r\n    <div class=\"list\">\r\n      <ul id=\"toc-list\"><\/ul>\r\n    <\/div>\r\n <\/div>\r\n\r\n<style>\r\n\/* Simple styling for the TOC *\/\r\n\t\r\n\t#toc ul li:last-child {\r\n    padding-bottom: 16px; \/* Adjust the value as needed *\/\r\n}\r\n\r\n.td-fix-index {\r\n\t transform: unset !important;\r\n     -webkit-transform: unset !important; \r\n}\r\n.footer-contact .td-fix-index {\r\n\t transform: translateZ(0) !important;\r\n     -webkit-transform: translateZ(0) !important; 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\/\/ Set height to 0 for full collapse\r\n\t\t\t  icon.style.transform = \"rotate(180deg)\";\r\n\t\t\t\tif(window.innerWidth > 768){\r\n\t\t\t\t\tif(!toc.classList.contains('sticky')){\r\n\t\t\t\t\t\ttoc.style.width = \"unset\";\r\n\t\t\t\t\t}\r\n\t\t\t\t\tif (toc.classList.contains('sticky')){\r\n\t\t\t\t\t\ttoc.style.width = '${tocParent.offsetWidth}px';\r\n\t\t\t\t\t\ttoc.setAttribute('style', 'width: ' + tocParent.offsetWidth + 'px !important;');\r\n\t\t\t\t\t}\r\n\t\t\t\t}\r\n\t\t\t\tif(window.innerWidth < 767){\r\n\t\t\t\t\ttoc.style.width = \"unset\"; \/\/ Reset width\r\n\t\t\t\t}\r\n\t\t\t\ttoc.style.backgroundColor = \"#FFF1F1\";\r\n\t\t\t} else {\r\n\t\t\t  panel.style.height = panel.scrollHeight + \"px\";\r\n\t\t\t  icon.style.transform = \"rotate(0deg)\";\r\n\t\t\t  toc.style.backgroundColor = \"#FFF\";\r\n\t\t\t  tocTitle.textContent = 'Table of Contents'; \/\/ Reset title\r\n\t\t\t\ttoc.style.paddingBottom = '24px';\r\n\t\t\t \tif(window.innerWidth < 767){\r\n\t\t\t\t\ttoc.style.width = `${tocParent.offsetWidth}px`; \/\/ Set width to match the parent element\r\n\t\t\t\t\ttoc.setAttribute('style', 'width: ' + tocParent.offsetWidth + 'px !important;');\r\n\t\t\t\t}\r\n\t\t\t}\r\n\t\t  });\r\n\r\n\t\t  \/\/ Close TOC when a link inside it is clicked\r\n\t\t  var tocLinks = document.querySelectorAll(\"#toc .list a\");\r\n\t\t  tocLinks.forEach(function(link) {\r\n\t\t\tlink.addEventListener(\"click\", function() {\r\n\t\t\t  var panel = document.querySelector(\"#toc .list\");\r\n\t\t\t  panel.style.height = '0px'; \/\/ Set height to 0 for full collapse\r\n\t\t\t  icon.style.transform = \"rotate(180deg)\";\r\n\t\t\t  toc.style.backgroundColor = \"#FFF\";\r\n\t\t\t});\r\n\t\t  });\r\n\t\t});\r\n\t\r\n\/\/ \tmake the heading at the center of the viewport\r\n\/\/ \tdocument.addEventListener('DOMContentLoaded', function() {\r\n\/\/     \/\/ Add click event listener to all links in the TOC list\r\n\/\/     document.querySelectorAll('#toc-list a').forEach(anchor => {\r\n\/\/         anchor.addEventListener('click', function (e) {\r\n\/\/             e.preventDefault(); \/\/ Prevent the default behavior of jumping to the anchor\r\n\/\/             const targetId = this.getAttribute('href').substring(1); \/\/ Get the ID of the target element\r\n\/\/             const targetElement = document.getElementById(targetId); \/\/ Get the target element\r\n\r\n\/\/             if (targetElement) {\r\n\/\/                 const headerHeight = document.querySelector('#toc .header').offsetHeight; \/\/ Get the height of the fixed header\r\n\/\/                 const windowHeight = window.innerHeight; \/\/ Get the height of the viewport\r\n\/\/                 const targetOffset = targetElement.offsetTop; \/\/ Get the top offset of the target element\r\n\/\/                 const scrollTo = targetOffset + (windowHeight \/ 2) + (headerHeight); \/\/ Calculate the scroll position to center the target element\r\n\r\n\/\/                 \/\/ Scroll to the calculated position smoothly\r\n\/\/                 window.scrollTo({\r\n\/\/                     top: scrollTo,\r\n\/\/                     behavior: 'smooth'\r\n\/\/                 });\r\n\/\/             }\r\n\/\/         });\r\n\/\/     });\r\n\/\/ });\r\n<\/script>\r\n\r\n<script>\r\n    \/\/ Scrollspy function to highlight the active TOC item based on the scroll position\r\n  function scrollSpy(tocClass) {\r\n    const scrollPosition = window.scrollY;\r\n\r\n    \/\/ Find the active h2 and h3 headings based on their position in the corresponding TOC\r\n    let activeH2 = null;\r\n    let activeH3 = null;\r\n\r\n    const tocItems = document.querySelectorAll(`.${tocClass} li`);\r\n    tocItems.forEach(item => {\r\n      const a = item.querySelector('a');\r\n      if (!a) return;\r\n      const href = a.getAttribute('href');\r\n      const targetId = href.substring(1); \/\/ Remove the '#' from the href to get the target ID\r\n      const targetElement = document.getElementById(targetId);\r\n      if (!targetElement) return;\r\n\r\n      const targetTop = targetElement.getBoundingClientRect().top + scrollPosition;\r\n      const nextItem = item.nextElementSibling;\r\n      const nextTop = nextItem ? nextItem.getBoundingClientRect().top + scrollPosition : Infinity;\r\n\r\n      if (targetTop <= scrollPosition + 150) {\r\n        if (a.parentElement.parentElement === tocItems) {\r\n          \/\/ The h2 heading is at the root level of the TOC\r\n          activeH2 = { id: targetId, level: 'h2' };\r\n        } else {\r\n          \/\/ The h3 heading is nested under an h2 heading\r\n          const parentH2 = a.parentElement.parentElement.previousElementSibling;\r\n          if (parentH2) {\r\n            const h2Link = parentH2.querySelector('a');\r\n            if (h2Link) {\r\n              const h2Href = h2Link.getAttribute('href');\r\n              const h2Id = h2Href.substring(1);\r\n              activeH2 = { id: h2Id, level: 'h2' };\r\n            }\r\n          }\r\n          activeH3 = { id: targetId, level: 'h3' };\r\n        }\r\n      }\r\n\r\n      if (targetTop > scrollPosition + 150 && nextTop > scrollPosition + 150 && !activeH3) {\r\n        \/\/ Reset the activeH2 when there are no more active h3 headings\r\n        activeH2 = null;\r\n      }\r\n    });\r\n\r\n    \/\/ Update the active state for the TOC items\r\n    tocItems.forEach(item => {\r\n      item.classList.remove('active');\r\n      const a = item.querySelector('a');\r\n      if (a) {\r\n        const href = a.getAttribute('href');\r\n        const targetId = href.substring(1);\r\n        if ((activeH2 && activeH2.id === targetId) || (activeH3 && activeH3.id === targetId)) {\r\n          item.classList.add('active');\r\n        }\r\n      }\r\n    });\r\n  }\r\n\r\n  \/\/ Call scrollSpy for each TOC on window scroll\r\n  const tocClasses = ['list_toc', 'list_toc_float']; \/\/ Add other TOC class names here if you have more than two instances\r\n  tocClasses.forEach(tocClass => {\r\n    window.addEventListener('scroll', () => scrollSpy(tocClass));\r\n  });\r\n<\/script>\r\n\t\r\n\r\n<!-- ToC List for desktop side bar, diganti jadi inject by php, di code snippet \"Sidebar Accordion\" -->\r\n<!-- <script>\r\n\tdocument.addEventListener('DOMContentLoaded', function() {\r\n        let headerCounter = 0; \/\/ Counter to generate unique IDs\r\n\r\n\t\t\/\/ Function to generate ID in header0, header1, etc. format\r\n\t\tfunction formatId() {\r\n\t\t\treturn `header-${headerCounter++}`; \/\/ ID format: header0, header1, etc.\r\n\t\t}\r\n\r\n\/\/ \t\tfunction formatId(text) {\r\n\/\/             return text.trim().replace(\/[^\\w\\d]+\/g, '_');\r\n\/\/         }\r\n\t\r\n        \/\/ Function to create nested list\r\n        function createNestedList(parentNode, children) {\r\n            if (children.length === 0) return;\r\n\r\n            const nestedUl = document.createElement('ul');\r\n            children.forEach(child => {\r\n                const nestedLi = document.createElement('li');\r\n                const nestedA = document.createElement('a');\r\n                nestedA.textContent = child.title;\r\n                nestedA.href = `#${child.id}`;\r\n                nestedLi.appendChild(nestedA);\r\n                nestedUl.appendChild(nestedLi);\r\n\r\n                if (child.children.length > 0) {\r\n                    createNestedList(nestedLi, child.children);\r\n                }\r\n            });\r\n\r\n            parentNode.appendChild(nestedUl);\r\n        }\r\n\r\n        \/\/ Object to store list of h2 and h3 with their titles\r\n        const headings = [];\r\n\r\n           \/\/ Get all h2 and h3 elements\r\n        \/\/ Get all h2 and h3 elements\r\n\t\tconst elements = document.querySelectorAll('.td-post-content h2');\r\n\r\n\t\telements.forEach(element => {\r\n\t\t\tif (element.tagName === 'H2') {\r\n\t\t\t\tconst id = formatId(); \/\/ Generate new ID\r\n\t\t\t\telement.id = id; \/\/ Set ID to h2 element\r\n\t\t\t\tif (element.textContent.toLowerCase() === \"key takeaways\") {return;} \/\/ Hide Key Takeaways di ToC\r\n\t\t\t\theadings.push({ level: 'h2', id: id, title: element.textContent, children: [] });\r\n\t\t\t} else if (element.tagName === 'H3') {\r\n\t\t\t\tconst id = formatId(); \/\/ Generate new ID\r\n\t\t\t\telement.id = id; \/\/ Set ID to h3 element\r\n\t\t\t\tif (headings.length > 0) {\r\n\t\t\t\t\theadings[headings.length - 1].children.push({ level: 'h3', id: id, title: element.textContent, children: [] });\r\n\t\t\t\t}\r\n\t\t\t}\r\n\t\t});\r\n       \/\/ Create HTML list from headings object\r\n\t\tconst ul = document.getElementById('list_toc');\r\n\t\tlet currentUl = ul;\r\n\t\theadings.forEach(heading => {\r\n\t\t\tconst li = document.createElement('li');\r\n\t\t\tconst a = document.createElement('a');\r\n\t\t\ta.textContent = heading.title;\r\n\t\t\ta.href = `#${heading.id}`; \/\/ Use the newly generated ID\r\n\t\t\tli.appendChild(a);\r\n\r\n\t\t\tif (heading.level === 'h2') {\r\n\t\t\t\tcurrentUl = li;\r\n\t\t\t\tul.appendChild(li);\r\n\t\t\t} else if (heading.level === 'h3') {\r\n\t\t\t\tif (!currentUl.lastElementChild || currentUl.lastElementChild.tagName !== 'UL') {\r\n\t\t\t\t\tconst nestedUl = document.createElement('ul');\r\n\t\t\t\t\tcurrentUl.appendChild(nestedUl);\r\n\t\t\t\t\tcurrentUl = nestedUl;\r\n\t\t\t\t}\r\n\t\t\t\tcurrentUl.appendChild(li);\r\n\t\t\t}\r\n\r\n\t\t\tcreateNestedList(li, heading.children);\r\n\t\t});\r\n\t\t\/\/ Get ul element with id 'list_toc'\r\n\t\tconst ulFloat = document.getElementById('list_toc');\r\n\r\n\t\t\/\/ Get content (child elements) from ul with id 'list_toc'\r\n\t\tconst clonedChildren = ulFloat.cloneNode(true).children;\r\n\r\n\t\t\/\/ Get ul element with id 'list_toc_float'\r\n\t\tconst ulToc = document.getElementById('list_toc_float');\r\n\r\n\t\t\/\/ Add content obtained from 'list_toc' to ul with id 'list_toc_float'\r\n\t\tulToc.append(...clonedChildren);\r\n\r\n\r\n        \/\/ Function to get navbar height\r\n\t\tfunction getNavbarHeight() {\r\n\t\t\tconst navbar = document.getElementById('tdi_34');\r\n\t\t\treturn navbar ? navbar.offsetHeight : 0;\r\n\t\t}\r\n\r\n\t\t\/\/ Function to add scroll position offset\r\n\t\tfunction scrollToElementWithOffset(elementId) {\r\n\t\t\tconst element = document.getElementById(elementId);\r\n\t\t\tif (element) {\r\n\t\t\t\tconst offset = getNavbarHeight();\r\n\t\t\t\tconst elementPosition = element.getBoundingClientRect().top;\r\n\t\t\t\tconst offsetPosition = elementPosition - offset - 40;\r\n\r\n\t\t\t\twindow.scrollBy({\r\n\t\t\t\t\ttop: offsetPosition,\r\n\t\t\t\t\tbehavior: 'smooth'\r\n\t\t\t\t});\r\n\t\t\t}\r\n\t\t}\r\n\r\n\t\t\/\/ Function to handle title link click\r\n\t\tfunction handleTitleClick(event) {\r\n\t\t\tevent.preventDefault();\r\n\t\t\tconst href = event.target.getAttribute('href').substr(1);\r\n\t\t\tscrollToElementWithOffset(href);\r\n\t\t}\r\n\r\n\t\t\/\/ Add event listener for all title links\r\n\t\tconst titleLinks = document.querySelectorAll('a[href^=\"#\"]');\r\n\t\ttitleLinks.forEach(link => {\r\n\t\t\tlink.addEventListener('click', handleTitleClick);\r\n\t\t});\r\n\t});\r\n    <\/script> -->\r\n<\/span><\/p>\n<h2><b>What is Inventory Management KPI?<\/b><\/h2>\n<p>Key performance indicators (KPIs) in inventory management are essential metrics used to monitor stock levels and guide decision-making. They provide insights into turnover rates, sales performance, demand trends, cost efficiency, operational effectiveness, and supplier relationships.<\/p>\n<p>However, there are numerous KPIs that a company must track. In order to make it a job well done, <a href=\"https:\/\/www.hashmicro.com\/ph\/blog\/best-inventory-management-software\/\">inventory management software<\/a> makes it simple to track these KPIs. They help identify progress, highlight successful areas, and pinpoint processes that need improvement.<\/p>\n<h2><b>Inventory Metrics: Sales KPIs<\/b><\/h2>\n<p>Sales metrics can give your team a competitive edge and support collaboration and deal-closing efforts.<\/p>\n<h3><b>1. Inventory Turnover Rate<\/b><\/h3>\n<p>Also called inventory turn or turnover ratio, this metric shows how often a business sells and replenishes its stock within a set timeframe, typically one year. It helps assess whether inventory levels are aligned with actual sales activity. The formula is:<\/p>\n<p><b>Inventory turnover rate = Cost of Goods Sold \u00f7 Average Inventory<\/b><\/p>\n<h3><b>2. Days on Hand (DOH)<\/b><\/h3>\n<p>Also known as Days Sales of Inventory (DSI) or the average age of inventory, this metric measures how long inventory remains unsold, expressed in days. It\u2019s commonly used to analyze short-term performance. Use this formula:<\/p>\n<p><b>Days on Hand = (Average Inventory \u00f7 Cost of Sales) \u00d7 365<\/b><\/p>\n<h3><b>3. Weeks on Hand<\/b><\/h3>\n<p>This metric reflects how many weeks it takes, on average, to sell through inventory. A higher number indicates slower movement, while a lower number shows faster turnover. Formula:<\/p>\n<p><b>Weeks on Hand = (Average Inventory \u00f7 Cost of Sales) \u00d7 52<\/b><\/p>\n<h3><b>4. Stock-to-Sales Ratio<\/b><\/h3>\n<p>This shows how much inventory is held in relation to sales volume. It\u2019s useful for evaluating whether you\u2019re carrying excess stock that might reduce profitability. Here\u2019s the formula:<\/p>\n<p><b>Stock-to-Sales Ratio = Inventory Value \u00f7 Sales Value<\/b><\/p>\n<h3><b>5. Sell-Through Rate<\/b><\/h3>\n<p>This compares the number of items sold to the number received from suppliers or manufacturers, helping to evaluate how well inventory moves through the supply chain. Calculate it with:<\/p>\n<p><b>Sell-Through Rate = (Units Sold \u00f7 Units Received) \u00d7 100<\/b><\/p>\n<h3><b>6. Backorder Rate<\/b><\/h3>\n<p>This metric tracks the percentage of customer orders that couldn&#8217;t be fulfilled due to items being out of stock. It reflects how well a business keeps up with demand for its products. To calculate backorder rate:<\/p>\n<p><b>Backorder Rate = (Delayed Orders Due to Backorders \u00f7 Total Orders Placed) \u00d7 100<\/b><\/p>\n<h3><b>7. Forecast Accuracy<\/b><\/h3>\n<p>Also known as demand forecast accuracy, this measures how closely actual inventory levels matched the forecasted amounts. It evaluates how precise your predictions were based on past sales and ordering. Formula:<\/p>\n<p><b>Forecast Accuracy = [(Actual \u2013 Forecast) \u00f7 Actual] \u00d7 100<\/b><\/p>\n<h3><b>8. Rate of Return (RoR)<\/b><\/h3>\n<p>Often called return on investment (ROI), this percentage shows the gain or loss on an investment relative to its original cost. It\u2019s usually measured annually. Here\u2019s the formula:<\/p>\n<p><b>Rate of Return = [(Final Value \u2013 Initial Value) \u00f7 Initial Value] \u00d7 100<\/b><\/p>\n<h3><b>9. Product Sales<\/b><\/h3>\n<p>Also referred to as sales revenue, this metric represents total income from sold products, after subtracting returns, discounts, and allowances. Use this formula:<\/p>\n<p><b>Product Sales = Gross Sales Revenue \u2013 Sales Returns \u2013 Discounts \u2013 Allowances<\/b><\/p>\n<h3><b>10. Revenue per Unit<\/b><\/h3>\n<p>This metric shows how much income is earned from each unit sold. It&#8217;s especially useful for subscription-based or volume-driven businesses. Calculate it with:<\/p>\n<p><b>Revenue per Unit = Total Revenue for the Period \u00f7 Average Units Sold in the Period<\/b><\/p>\n<h3><b>11. Cost per Unit<\/b><\/h3>\n<p>Cost per unit represents how much it costs to produce or acquire one unit of a product. This is ideal for businesses with high production volume. Formula:<\/p>\n<p><b>Cost per Unit = (Fixed Costs + Variable Costs) \u00f7 Number of Units Produced<\/b><\/p>\n<h3><b>12. Gross Margin by Product<\/b><\/h3>\n<p>Gross margin tells you how much profit is made per sale after deducting the cost of goods sold. It reflects how efficiently a product generates income. Use this formula:<\/p>\n<p><b>Gross Margin = [(Net Sales \u2013 Cost of Goods Sold) \u00f7 Net Sales] \u00d7 100<\/b><\/p>\n<h3><b>13. Gross Margin Return on Investment (GMROI)<\/b><\/h3>\n<p>GMROI shows the return earned on inventory investments. It helps assess whether your inventory spending leads to strong profit returns. Calculate it with:<\/p>\n<p><b>GMROI = Gross Margin \u00f7 Average Inventory Cost<\/b><\/p>\n<p><b>Read more: <\/b><a href=\"https:\/\/www.hashmicro.com\/ph\/blog\/pharmacy-inventory-management-system\/\"><b>Pharmacy Inventory Management System<\/b><\/a><\/p>\n<h2><b>Inventory Metrics: Receiving KPIs<\/b><\/h2>\n<p><a href=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Key-inventory-indicators.webp\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-28059\" src=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Key-inventory-indicators.webp\" alt=\"Key inventory indicators\" width=\"1200\" height=\"675\" srcset=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Key-inventory-indicators.webp 1200w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Key-inventory-indicators-300x169.webp 300w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Key-inventory-indicators-1024x576.webp 1024w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Key-inventory-indicators-768x432.webp 768w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Key-inventory-indicators-747x420.webp 747w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Key-inventory-indicators-150x84.webp 150w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Key-inventory-indicators-696x392.webp 696w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Key-inventory-indicators-1068x601.webp 1068w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/a>Receiving KPIs, often grouped under warehouse metrics, focus specifically on the efficiency and accuracy of handling incoming stock. While they may overlap with general operational KPIs, these indicators zero in on the receiving phase of inventory management.<\/p>\n<h3><b>1. Time to Receive<\/b><\/h3>\n<p>This metric tracks how long it takes staff to process incoming inventory\u2014from the moment stock arrives to when it\u2019s ready for storage or sale. It helps evaluate the speed and efficiency of your receiving operations. Formula:<\/p>\n<p><b>Time to Receive = Time for Stock Validation + Time to Record Inventory + Time to Prepare for Storage<\/b><\/p>\n<h3><b>2. Put Away Time<\/b><\/h3>\n<p>Put away time measures how quickly received goods are stored in their proper locations. It begins after stock has been validated and recorded. Improving this KPI helps reduce lead time and streamline warehouse flow. Formula:<\/p>\n<p><b>Put Away Time = Total Time to Store Received Inventory<\/b><\/p>\n<h3><b>3. Supplier Quality Index (SQI)<\/b><\/h3>\n<p>SQI evaluates vendor performance across several critical areas, including product quality, responsiveness, and delivery reliability. It combines weighted scores to provide a comprehensive rating of each supplier. Typically tracked monthly and averaged annually. Example formula:<\/p>\n<p><b>Supplier Quality Index = (Material Quality \u00d7 45%) + (Corrective Action \u00d7 10%) + (Prompt Reply \u00d7 10%) + (Delivery Quality \u00d7 20%) + (Quality Systems \u00d7 5%) + (Commercial Posture \u00d7 10%)<\/b><\/p>\n<h2><b>Inventory Metrics: Operational KPIs<\/b><\/h2>\n<p>Operational KPIs help measure how smoothly your business runs on a day-to-day basis. Strong internal performance in these areas often translates to better customer satisfaction and overall efficiency.<\/p>\n<h3><b>1. Lost Sales Ratio<\/b><\/h3>\n<p>This KPI tracks the percentage of the year a product is out of stock compared to its expected sales activity. A high ratio may indicate that inventory levels are too low, leading to missed sales opportunities. Formula:<\/p>\n<p><b>Lost Sales Ratio = (Days Out of Stock \u00f7 365) \u00d7 100<\/b><\/p>\n<h3><b>2. Perfect Order Rate<\/b><\/h3>\n<p>This measures how many orders are shipped without errors\u2014on time, complete, damage-free, and with correct documentation. A high perfect order rate indicates strong operational accuracy and customer satisfaction. Use this formula:<\/p>\n<p><b>Perfect Order Rate = [(On-Time Deliveries \u00f7 Total Orders) \u00d7 (Complete Orders \u00f7 Total Orders) \u00d7 (Damage-Free Orders \u00f7 Total Orders) \u00d7 (Accurate Documentation \u00f7 Total Orders)] \u00d7 100<\/b><\/p>\n<h3><b>3. Inventory Shrinkage<\/b><\/h3>\n<p>This metric reflects the gap between recorded inventory and what\u2019s physically in stock. Shrinkage is often due to theft, damage, or errors, and it can impact profitability. Formula:<\/p>\n<p><b>Inventory Shrinkage = Ending Inventory Value \u2013 Physically Counted Inventory Value<\/b><\/p>\n<h3><b>4. Average Inventory<\/b><\/h3>\n<p>Average inventory calculates the typical amount of stock a business holds over a given period. Maintaining a consistent level helps with planning and avoids overstocking or shortages. Use this formula:<\/p>\n<p><b>Average Inventory = (Beginning Inventory + Ending Inventory) \u00f7 2<\/b><\/p>\n<h3><b>5. Inventory Carrying Cost<\/b><\/h3>\n<p>Also known as holding cost, this metric shows the percentage of inventory value spent on storing products. It includes expenses like warehousing, insurance, labor, and losses from unsellable stock. The total cost varies depending on product type, number of SKUs, storage setup, and turnover rate. Formula:<\/p>\n<p><b>Inventory Carrying Cost = [(Service Costs + Risk Costs + Capital Cost + Storage Cost) \u00f7 Total Inventory Value] \u00d7 100<\/b><\/p>\n<h3><b>6. Customer Satisfaction Score (CSAT)<\/b><\/h3>\n<p>CSAT measures how satisfied customers are with your product or service, usually gathered through short post-purchase surveys. A higher score reflects better customer experience. Formula:<\/p>\n<p><b>Customer Satisfaction Score = (Positive Responses \u00f7 Total Responses) \u00d7 100<\/b><\/p>\n<h3><b>7. Fill Rate<\/b><\/h3>\n<p>Also called line fill rate, this KPI tracks the percentage of customer orders that are fully fulfilled. It\u2019s used to evaluate performance across the entire supply chain. Formula:<\/p>\n<p><b>Fill Rate = [(Total Items \u2013 Unshipped Items) \u00f7 Total Items] \u00d7 100<\/b><\/p>\n<h3><b>8. Gross Margin Percent<\/b><\/h3>\n<p>This shows how much profit remains after subtracting the cost of goods sold from revenue. It\u2019s a key indicator of pricing strategy and cost efficiency. Formula:<\/p>\n<p><b>Gross Margin Percent = [(Total Revenue \u2013 Cost of Goods Sold) \u00f7 Total Revenue] \u00d7 100<\/b><\/p>\n<h3><b>9. Order Cycle Time<\/b><\/h3>\n<p>Also called order timeliness, this measures how long it takes to complete a customer order from placement to delivery. Shorter cycles typically indicate higher operational efficiency. Formula:<\/p>\n<p><b>Order Cycle Time = (Time Order Was Received \u2013 Time Order Was Placed) \u00f7 Total Shipped Orders<\/b><\/p>\n<h3><b>10. Stock-Outs<\/b><\/h3>\n<p>This KPI reflects how often items are unavailable when customers try to order them. Frequent stock-outs can lead to lost sales and reduced customer trust. Use this formula:<\/p>\n<p><b>Stock-Outs = (Items Out of Stock \u00f7 Items Shipped) \u00d7 100<\/b><\/p>\n<h3><b>11. Lead Time<\/b><\/h3>\n<p>Lead time tracks how long it takes from the moment a customer places an order until they receive the product. It reflects the overall responsiveness of your supply chain. To calculate:<\/p>\n<p><b>Lead Time = Order Processing Time + Production Time + Delivery Time<\/b><\/p>\n<h3><b>12. Dead Stock \/ Spoilage<\/b><\/h3>\n<p>Dead stock refers to unsold items that can no longer be sold, often due to low demand or being outdated. Spoilage is similar but applies to perishable goods like food. High percentages of dead or spoiled stock can signal serious inventory issues.<\/p>\n<p>Set clear criteria for what qualifies as \u201cunsellable\u201d (e.g., after a season ends). Use this formula:<\/p>\n<p><b>Dead\/Spoiled Stock = (Unsellable Stock During Period \u00f7 Total Available Stock During Period) \u00d7 100<\/b><\/p>\n<h2><b>Inventory Metrics: Employee KPIs<\/b><\/h2>\n<p>Employee KPIs, or labor KPIs, measure how effectively your workforce contributes to business output. They reveal whether your team is working efficiently, contributing to production goals, and generating value for the company.<\/p>\n<h3><b>1. Labor Cost per Item<\/b><\/h3>\n<p>Also called unit labor cost, this KPI shows how much labor expense goes into producing a single unit. It includes wages and any labor-related costs tied to moving the product through production to sale. Formula:<\/p>\n<p><b>Labor Cost per Item = Total Labor Expense \u00f7 Total Units Produced<\/b><\/p>\n<h3><b>2. Labor Cost per Hour<\/b><\/h3>\n<p>This measures how much each working hour costs the company per employee. It\u2019s useful for evaluating the cost-effectiveness of meetings, tasks, or time allocation. Formula:<\/p>\n<p><b>Labor Cost per Hour = (Annual Gross Salary \u00f7 Weeks Worked per Year) \u00f7 Hours Worked per Week<\/b><\/p>\n<h2><b>How to Measure KPI in Inventory Management<\/b><\/h2>\n<p>Every business has different goals, so it&#8217;s important to choose KPIs that align with your needs. Here are some tips to help you select the right ones:<\/p>\n<ul>\n<li><b>Focus on KPIs<\/b> <b>that give useful insights <\/b>and help improve how you manage your inventory.<\/li>\n<li><b>Align your KPIs with your strategic business goals.<\/b> For example, if you&#8217;re running a sari-sari store or a retail chain in Metro Manila and want to improve cash flow or profitability, you might track stock turnover or fast-moving items. Think about the kind of data you&#8217;re missing and the questions your business partners or investors might ask.<\/li>\n<li><b>Don\u2019t just look inward, consider your customers.<\/b> Are they finding the items they need in stock? Tracking customer satisfaction or fulfillment rates can help ensure they come back.<\/li>\n<li>Lastly, check whether <b>your current inventory system can track these KPIs.<\/b> If not, you may need to upgrade or invest in a more capable software that fits your business size and industry.<\/li>\n<\/ul>\n<p>If you think your existing inventory system isn\u2019t capable of tracking the metrics in the first place, you might want to consider changing your inventory system for future time and budget-saving. Click the banner below to find out about the pricing:<\/p>\n<a href=\"https:\/\/www.hashmicro.com\/ph\/offer\/download-erp-pricing-list?medium=banner-article\" target=\"_blank\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2024\/10\/bir-skema-harga.webp\" data-desktop-src=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2024\/10\/bir-skema-harga.webp\" data-mobile-src=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2024\/10\/mobile-bir-skema-harga.webp\" alt=\"SkemaHarga\" class=\"responsive-image-banner\" width=\"620\" height=\"255\"><\/a>\r\n\r\n<script>\r\n    \/\/ check which image to use based on screensize\r\n    document.addEventListener(\"DOMContentLoaded\", function() {\r\n        function updateImageSource() {\r\n            var images = document.querySelectorAll('.responsive-image-banner');\r\n            var screenWidth = window.innerWidth;\r\n\r\n            images.forEach(function(img) {\r\n                var mobileSrc = img.getAttribute('data-mobile-src');\r\n                var desktopSrc = img.getAttribute('data-desktop-src');\r\n\r\n                if (screenWidth < 576 && mobileSrc) {\r\n                    img.setAttribute('src', mobileSrc);\r\n                } else {\r\n                    img.setAttribute('src', desktopSrc);\r\n                }\r\n            });\r\n        }\r\n\r\n        \/\/ Initial check\r\n        updateImageSource();\r\n\r\n        \/\/ Update on resize\r\n        window.addEventListener('resize', updateImageSource);\r\n    });\r\n<\/script>\n<h2><b>How to Set Inventory Management KPIs<\/b><\/h2>\n<p>When setting KPIs, it\u2019s important to tailor them specifically to each business unit. Introducing too many new metrics at once can overwhelm your team, so it\u2019s best to start with just a few key indicators per department. Collaborate with department heads to consider:<\/p>\n<ul>\n<li>How daily tasks may shift as a result of the KPI.<\/li>\n<li>Whether the metric drives true improvement, not just faster output.<\/li>\n<li>How staff can use the data to take meaningful action.<\/li>\n<li>If the KPI encourages healthy collaboration or creates unnecessary competition.<\/li>\n<li>Whether it supports the company\u2019s broader mission and goals.<\/li>\n<li>If the metric truly captures the insight you&#8217;re aiming for.<\/li>\n<li>Whether the KPI addresses areas that need real progress.<\/li>\n<li>If the metric can evolve over time. KPIs should be adaptable and refined regularly.<\/li>\n<\/ul>\n<h2><b>Best Practices to Implement Inventory Management KPIs<\/b><\/h2>\n<p>Effective inventory metrics begin with tracking the right factors. Set realistic targets for each metric and avoid overly ambitious or vague goals. KPIs should be practical, and each department should focus on no more than 5 to 7 key indicators.<\/p>\n<p>Once KPIs are defined, support your team to achieve them. Clearly communicate the goals, the desired outcomes, and provide the necessary tools to succeed. Avoid setting goals that are unrealistic or lack a clear action plan. Before introducing new KPIs to your teams, be sure to:<\/p>\n<ul>\n<li>Clearly define and document each metric.<\/li>\n<li>Involve employees in the process so they understand how they\u2019re measured and what\u2019s expected.<\/li>\n<li>Train the relevant teams to use and interpret the metrics.<\/li>\n<li>Align internal processes with the selected KPIs.<\/li>\n<li>Set benchmarks, review them regularly, and adjust when needed.<\/li>\n<li>Use a dashboard to track and visualize progress over time.<\/li>\n<\/ul>\n<p>Nowadays, many companies, including logistic managers and business owners, also use <a href=\"https:\/\/www.hashmicro.com\/ph\/blog\/ai-inventory-management\/\">AI inventory management<\/a> to assist with their daily tasks. The emergence of new AI tools promises a more effective, streamlined workflow for all parties involved.<\/p>\n<h2><b>How HashMicro Empowers KPI-Driven Inventory Management<\/b><\/h2>\n<p><a href=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Inventory-ph-2.webp\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-28060\" src=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Inventory-ph-2.webp\" alt=\"Inventory ph\" width=\"1775\" height=\"1200\" srcset=\"https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Inventory-ph-2.webp 1775w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Inventory-ph-2-300x203.webp 300w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Inventory-ph-2-1024x692.webp 1024w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Inventory-ph-2-768x519.webp 768w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Inventory-ph-2-1536x1038.webp 1536w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Inventory-ph-2-621x420.webp 621w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Inventory-ph-2-150x101.webp 150w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Inventory-ph-2-696x471.webp 696w, https:\/\/www.hashmicro.com\/ph\/blog\/wp-content\/uploads\/2025\/07\/Inventory-ph-2-1068x722.webp 1068w\" sizes=\"(max-width: 1775px) 100vw, 1775px\" \/><\/a>Tracking inventory KPIs is key to maintaining healthy business operations, and it\u2019s far more effective with the right system in place. With <a href=\"https:\/\/www.hashmicro.com\/ph\/inventory-management-system\">HashMicro\u2019s Inventory Management Software<\/a>, you get a smart, real-time dashboard that gives you visibility into stock performance, costs, and operational bottlenecks.<\/p>\n<p>From calculating critical metrics like revenue per unit, gross margin by product, and labor cost per item, to monitoring stock availability, delivery timelines, and stock turnover, HashMicro helps businesses take action with data.<\/p>\n<p>And with Hashy AI, the built-in intelligent virtual assistant, you can access insights, generate reports, or get KPI explanations instantly, just by asking.<\/p>\n<p>Whether you&#8217;re managing thousands of SKUs or just a few key items, HashMicro turns inventory insights into decisions that drive profitability.<\/p>\n<p>Equipped with many features, HashMicro can aid in tracking your KPIs by doing these:<\/p>\n<ul>\n<li><b>Automate stock forecasting and reordering<\/b> based on real-time run rates to maintain optimal inventory levels.<\/li>\n<li><b>Track product warranty and expiry dates<\/b> with automated reminders and reporting to ensure timely handling of sensitive goods.<\/li>\n<li><b>Capture varying product costs per warehouse<\/b> to maintain accurate cost records across multiple locations.<\/li>\n<li><b>Scan barcodes, QR codes, and RFID tags<\/b> to streamline receiving, transfers, and delivery processes.<\/li>\n<li><b>Recommend stock transfers across branches<\/b> based on system-suggested movements that balance inventory levels.<\/li>\n<li><b>Access detailed inventory reports<\/b> such as aging, fast vs slow movers, turnover, reservations, and current stock levels.<\/li>\n<\/ul>\n<h2><b>Conclusion<\/b><\/h2>\n<p>Inventory management KPIs help businesses track stock performance, reduce waste, and make data-driven operational decisions. By focusing on the right metrics, companies can improve inventory control and increase long-term profitability.<\/p>\n<p>If you&#8217;re serious about mastering your inventory, <a href=\"https:\/\/www.hashmicro.com\/ph\/inventory-management-system\">HashMicro Inventory Software<\/a> makes tracking KPIs simpler, faster, and far more accurate. From forecasting to fulfillment, it\u2019s packed with smart tools that work seamlessly for any business size.<\/p>\n<p>Don\u2019t settle for spreadsheets or outdated systems; switch to a powerful solution trusted by top businesses across Asia. With HashMicro, you\u2019ll gain better visibility, save time, and make smarter decisions every day.<\/p>\n<p>If you\u2019re interested, schedule the <a href=\"https:\/\/www.hashmicro.com\/ph\/free-product-tour\">free demo<\/a> now by clicking the link or the banner below!<\/p>\n<p><span data-sheets-root=\"1\"><a href=\"https:\/\/www.hashmicro.com\/ph\/inventory-management-system?medium=moneysite-banner\" target=\"_blank\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/www.hashmicro.com\/blog\/wp-content\/uploads\/2023\/03\/CTA-Inventory.png\" data-desktop-src=\"https:\/\/www.hashmicro.com\/blog\/wp-content\/uploads\/2023\/03\/CTA-Inventory.png\" data-mobile-src=\"\" alt=\"InventoryManagement\" class=\"responsive-image-banner\" width=\"620\" height=\"255\"><\/a>\r\n\r\n<script>\r\n    \/\/ check which image to use based on screensize\r\n    document.addEventListener(\"DOMContentLoaded\", function() {\r\n        function updateImageSource() {\r\n            var images = document.querySelectorAll('.responsive-image-banner');\r\n            var screenWidth = window.innerWidth;\r\n\r\n            images.forEach(function(img) {\r\n                var mobileSrc = img.getAttribute('data-mobile-src');\r\n                var desktopSrc = img.getAttribute('data-desktop-src');\r\n\r\n                if (screenWidth < 576 && mobileSrc) {\r\n                    img.setAttribute('src', mobileSrc);\r\n                } else {\r\n                    img.setAttribute('src', desktopSrc);\r\n                }\r\n            });\r\n        }\r\n\r\n        \/\/ Initial check\r\n        updateImageSource();\r\n\r\n        \/\/ Update on resize\r\n        window.addEventListener('resize', updateImageSource);\r\n    });\r\n<\/script><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you&#8217;re not tracking your inventory KPIs, you&#8217;re running your business with a blindfold on. It\u2019s not just about counting what\u2019s in stock. Rather, it\u2019s about understanding the numbers that quietly make or break your margins. Inventory management KPIs help you adjust to demand shifts and stay in control of every unit moving in or [&hellip;]<\/p>\n","protected":false},"author":14,"featured_media":28058,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[20],"tags":[],"class_list":{"0":"post-28057","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-inventory"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Top Inventory Management KPIs Every Business Should Track<\/title>\n<meta name=\"description\" content=\"Inventory management KPIs are measurable metrics used to monitor stock performance, optimize operations and decision-making.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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