Inventory Metrics Review

It is important to note that the data considered begins with the date on the heading panel of the dashboard, under Earliest Analysis Date.  This means that your metrics and filtered data will start with the inventory data on this date.

You will see a link to this document in the top of the dashboard, under the heading Dashboard Help.

Date Picker

To the right of the dashboard header you will see a date picker - select both a the From and To date in full months that you wish to analyze and hit the Update Dashboard button. Remember that the inventory values are as of the first day of each month.

On Hand Values by Location

The first section will show you at a high level the monthly volumes of your inventory units and cost. These values will adjust according to filters that you apply to the dashboard. If your operation includes warehouse locations, you will see that data represented here.

Inventory Levels

In this section you will see your average on hand units and costs. Looking at this graphic at the same time as the Sales, Cost & Profit graphic can offer insights into the levels you carried against how they sold. Remember that you can click on the legends to toggle on & off the metrics & bring specific ones into focus.

If your volumes of inventory are steady across all months in your date range, you'll see that quickly in the graphic. Maybe you have seasonal flows, however, that dictate higher levels at certain times of the year. Or maybe your buyers negotiated better cost pricing by making larger orders at less frequent intervals. In these cases, you will want to understand the associated costs of holding that inventory and monitor the rates at which it sells (again, looking at this graphic and the prior one at the same time). The cost pricing might be a better deal up front, the storage costs of holding it could offset some of that deal, though.

These metrics as well as those in the prior section feed the metrics in the next section - be sure to understand them as you move through this dashboard.

Sell Through, GMROI & Inventory Turns

This section will show you the amount of inventory that moves through your system (sell through), the dollar amount you earn on each dollar invested in inventory (gross margin return on investment or GMROI), the speed at which inventory moves through your system (inventory turnover) and the number of days to sell through inventory (inventory turnover period).

Your sell through is a metric to consider on a short term basis, say monthly. The average monthly rate is reflected in the KPI and you can see the monthly rate on the graphic. This will tell you the percentage of inventory sold from what you held at the beginning of the month. The balance of holding enough to satisfy what your customers want vs. storing what is not sold is important. There are costs associated with storing product. Look at the ebbs & flows of the sell through rate - your customers might tell you that they want more of certain products at specific times of the year, and less at other times. What are the factors in your operation that influence this? Is it natural seasonality, higher levels of available product, maybe a price change? Have you reset the store floors or shelf space to highlight a particular product?

Your GMROI is a metric to consider on a longer term basis; for that reason it is annualized here. By dividing your gross margin by your average inventory cost, you can see how much of a return you get (in dollars) for each dollar that you invest in inventory. If your GMROI for a specific category, for example, is $1.50, then you are getting $1.50 back for every dollar that you invested in the inventory. So keep in mind that sales and margin performance are very important - they do not, however, tell the whole story. Say for example that Department A has the highest sales $, Department B has the highest gross margin %, and Department C has the highest GMROI - which is the best performing department? The correct answer is that all three of these metrics should be considered, along with volumes of sales before making a judgement. If a GMROI is low, question things like whether you devote too much inventory to that product or manufacturer - or how you might improve the GMROI, such as holding less inventory throughout the year - maybe buying in lower quantities more frequently.

Inventory turnover is the ratio of your COGS over the average inventory cost; it is an annualized metric on this dashboard. This tells you how fast your inventory moves through the system. Your purchasing and sales departments will need to work together to have a solid turnover rate. Purchasing inventory is of course critical to having what your customers want to purchase. Balancing the costs of storage and other operational expenses is just as critical. You will want to watch this rate to be sure that you are not carrying product that your customers are not keen to purchase. You also do not want to tie up cash in product that is not turning over at a reasonable rate. Be sure to consider exceptionally high turnover rates - this might be simply a result of excellent sales, it could also indicate that inventory is too low & result in lower sales when product is not available.

Inventory turnover time period is a product of your inventory turn; it is an annualized metric on this dashboard. It is simply a different way to show how quickly the inventory is moving. In essence, it is the number of days it takes to sell through your inventory. You will want to look at this metric for categories, manufacturers and even individual items. Remember that product can move faster or slower in different geographical locations or with different store selling practices, be sure to use the filters to dig into what is affecting this performance metric.

Notice that below the monthly trend graphics there are a bar charts that show how the products perform by a variety of dimensions. You can right click on the bar graphics to switch dimensions and look at your data in different ways. Maybe you want to see how your stores perform against each other - are there geographical reasons that certain products perform better than others? Maybe you have store staff in certain locations that engage their customers better than other locations. If you have offered a special promotion, you can measure the results here - did a new placement of product result in a higher sell through, better inventory turn? Maybe you want to see performance by manufacturer, right click and switch to that dimension. This is a powerful way to see your data and make adjustments to your operation that will improve your metrics.

Monthly Metrics Data

The pivot table at the bottom of the dashboard allows you to see at a glance the factors and resulting metrics for this dashboard. You are able to interact with the pivot table by adding, or removing fields that will help your analysis. By right clicking on a header or row, you will see a list of fields that can be added to the pivot table. Simply click on them to add or remove. Be sure to leave the Month field on the piovot table to achieve accurate results.

Any of the data tables can be exported to work with the data outside the dashboard. Do this by clicking on the 3 dots at the top right corner of the widget, choose Download and export an image or file.  The recommended file type for a spreadsheet is CSV.