Inventory Velocity
Inventory Velocity is the speed at which inventory moves through a defined cycle (i.e., from receiving to shipping). A company’s Inventory Velocity provides insight into how efficient its operations are and how well it is able to meet customer demand.
- A high Inventory Velocity indicates that a company is effectively managing its inventory and is able to turn over its stock rapidly.
- A low Inventory Velocity may indicate that a company is carrying too much inventory or that its operations are not efficient.
Inventory Velocity can be measured in several ways, but the most common method is to divide the number of days in a period by the number of times inventory turns over during that period. For example, if a company has an Inventory Velocity of 10, this means that, on average, inventory is moving through the defined cycle 10 times per day.
Inventory Velocity is an important metric for logistics and supply chain managers to track as it can provide early warning signs of potential issues that could impact a company’s ability to meet customer demand. High Inventory Velocities can also help logistics and supply chain managers to identify opportunities to improve operations and reduce costs.
Related Links
inventory velocity – Demand Solutions
Four Supply Chain Metrics that Drive Inventory Velocity – Ultriva
Inventory Velocity: All the Right Moves – Inbound Logistics
Taming and Managing Inventory Velocity in a Fast-Paced Consumer World
Understanding Inventory Velocity
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