4 Inventory Metrics Wholesale Brands Should Focus On

If you’re a brand that wants to level up its wholesale operations, there are four inventory metrics you need to make sure you’re focusing on. 

Of course, there’s more to a successful wholesale brand than effectively managing inventory and production, but making sure this part of the business is squared away will go a long way. 

Closely monitor these metrics and you’ll be rewarded with streamlined operations, improved customer satisfaction and even better profits.  

Let’s take a look at them. 

1. Inventory Turnover Ratio

Inventory turnover ratio measures how often your inventory is sold and replaced over a specific period. 

It's a vital indicator of sales efficiency and inventory management. A higher turnover rate implies strong sales and effective inventory control, while a lower rate may indicate overstocking or weak sales.

Why It's Important:

• Optimizes Inventory Levels: Helps in maintaining the right amount of stock, which reduces your holding costs.  
• Improves Cash Flow: Faster turnover means quicker cash recovery from inventory investments.
• Enhances Responsiveness: It lets you adapt quickly to market trends and consumer demands.

Tips to Improve Inventory Turnover:

• Analyze Sales Data: Regularly review which products are selling and adjust stock levels accordingly.
• Implement Just-In-Time Inventory: Reduce excess stock by ordering inventory as needed.
• Strengthen Supplier Relationships: Reliable suppliers can provide quick restocks, minimizing stockouts.

2. Stockout Rate

Your stockout rate represents the frequency at which products are unavailable when customers want to purchase them. High stockout rates can lead to lost sales, diminished customer loyalty, and a negative brand reputation.

Why It's Important:

• Maintains Customer Satisfaction: You want to make sure your customers can purchase the products they want, when they want them. 
• Prevents Lost Sales: Minimizes the risk of customers turning to competitors.
• Informs Reordering Decisions: Helps in forecasting demand and adjusting order quantities.

How to Manage Stockout Rate:

• Monitor Inventory Levels: Use inventory management software to track stock in real-time. (Our software integrates with your ERP so you and your buyers have live inventory status)
• Forecast Demand Accurately: Use historical sales data and market trends to predict future demand.
• Set Reorder Points: Establish minimum stock levels that trigger automatic reordering.

3. Time to Market

Time to market refers to the time it takes for a product to move from the warehouse to retail shelves. Speeding up this process can give you a competitive advantage, especially with seasonal or trending products.

Why It's Important:

• Captures Market Opportunities: Quickly meeting consumer demand can increase sales.
• Reduces Holding Costs: Shorter times reduce the costs associated with storing inventory.
• Improves Competitive Edge: Being first to market can establish brand leadership in new trends.

Strategies to Reduce Time to Market:

• Streamline Warehouse Operations: Optimize picking, packing, and shipping processes.
• Enhance Logistics Coordination: Work closely with logistics partners for efficient transportation.
• Automate Processes: Implement automation technologies for faster processing.

4. Lead Time

Lead time is the period between placing an order with a supplier and receiving the goods. Understanding and managing lead times is essential to ensure timely product availability without overstocking.

Why It's Important:

• Ensures Timely Deliveries: Aligns product availability with customer demand and promotional activities.
• Optimizes Warehouse Space: Prevents premature stock arrivals that occupy valuable space.
• Reduces Rush Costs: Avoids expedited shipping fees due to last-minute orders.

How to Effectively Manage Lead Time:

• Plan Ahead: Schedule orders based on accurate lead time calculations and sales forecasts.
• Communicate with Suppliers: Maintain open lines of communication to stay informed about potential delays.
• Diversify Suppliers: Having multiple suppliers can mitigate risks associated with lead time variability.

Investing time and resources into understanding and improving these areas will not only streamline your supply chain but also give you a significant advantage in a competitive marketplace. 

Start implementing these strategies today and you’ll see your brand start to level up. 

And, if you need some help on how to start, reach out to our team and we’ll be happy to help.