From the course: Supply Chain and Operations Management Tips

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Track your inventory turns

Track your inventory turns

From the course: Supply Chain and Operations Management Tips

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Track your inventory turns

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- Inventory is an investment. It helps us make money because it allows us to meet our customers' needs quickly. But it also consumes capital, so you want to make sure that your inventory is turning over on a regular basis. Let's walk through an example that shows how to calculate your inventory turns so that you have a simple metric that can help you manage the efficiency of your supply chain. In order to calculate the inventory turns, the first thing we need to do is choose a time period. You can calculate turns weekly, monthly, or annually. For this example, I'll calculate our monthly turns. Next, we need to choose how to measure our inventory. Do we want to measure the cost of the goods, the revenue, or the quantity of items? I'm going with quantity this time because that data is often the easiest to get. Now we need three numbers. How many units did we sell during the month? How many units did we have at the beginning of the month? And how many units did we have at the end of the…

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