How can the inventory turnover rate be increased?
The inventory turnover rate is a key figure that can be used to measure the movement of goods. It indicates for a predefined period (for example, a year or month) how often the total stock or the stock of an item has turned over.
The lower the inventory turnover rate of a stock, the more capital is tied up because goods are only stored for longer periods. Therefore, it is important for companies to maintain or increase inventory turns as much as possible. This is where it can help:
- The reduction of the safety stock
- Shorter times for procurement
- Make the range more attractive to customers so that demand increases
- Implementation of just-in-time deliveries
What are the benefits of increasing inventory turns?
If goods are handled more frequently, the storage costs and the capital tied up for them are reduced. This brings financial advantages for companies, also in that the product range can be turned into cash again more quickly by selling it.