![]() Similarly, businesses must know when, what, and how many items to order. Understanding the rate of product sales and customer demands is essential to ensure timely purchases of items and improved decision-making. Inventory management is one of the key aspects that reveal how any business will perform in the coming years. Apart from ensuring profitability and providing better insights into customer demands, inventory turnover also helps reduce holding, shelf space and clearance sales costs. It’s no secret that adopting a customer-centric approach accounts for success, which is one of the aspects enabled by a good inventory turnover. When a business has a high inventory turnover ratio, they become agile and respond effectively to constantly changing customer needs. Inventory turnover is the definitive key performance indicator (KPI) for the retail sector as it helps businesses plan ahead in order to increase profitability. Achieving growth in the retail industry requires a decent number of sales and profitability. Make your business more profitableĪ well-designed inventory management system enables companies to grow in the right direction by optimizing stock orders, warehousing, and distribution. That being said, technological advancements have contributed to the development of omnichannel solutions that provide retailers with the ability to get inventory forecasts while eliminating the risks of human error. ![]() Manual methods of inventory turnover management take up a lot of time and expertise, which is simply not feasible for today’s modern business environment. Businesses that do not have effective inventory management systems tend to experience stockouts and delays in order deliveries. Keeping track of inventory is important to ensure timely order fulfillment, which in turn leads to higher customer satisfaction. ![]() Inventory Turnover from a Business Perspective ![]() For instance, keeping an eye on inventory helps get a hold of the next pricing strategy, purchasing, manufacturing, and marketing. However, taking into account the areas affected by a weak inventory management system, it is important for companies to assess where they stand. On the surface, it seems that inventory management is just one of the aspects a business has to consider. Knowing how often they need to re-stock, or which items sell faster, allows them to take better decisions for the future. Modern businesses realize the importance of supply chain visibility and developing an efficient inventory turnover strategy. It enables them to efficiently manage assets, as well as help, decide when and how to invest in new items. For omnichannel retailers, inventory turnover is a benchmark that measures how quickly a company sells its products. The financial unit known as the inventory turnover ratio depicts how many times a company sells its entire inventory in a given period. What is Inventory Turnover? Inventory turnover is defined as the amount of time a particular item spends in a company’s inventory, from its purchase till when it is sold.
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