Measuring Success
How we track improvement
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It is important for us that how we measure success is quantitative and clear for each client. We have a well-defined set of metrics that we utilize for each client so that both the initial opportunity and the actual performance improvement is clearly visible and tracked in the client’s dashboard.
Inventory Reduction
The actual reduction in average inventory value by inventory category and location ($)
Safety Stock – Buffer inventory kept to reduce the risk of stockouts
Cycle Stock – The amount of inventory produced or purchased to meet expected demand over a set period of time
Excess –Inventory that far exceeds a company’s expected demand typically caused by over ordering, a significant reduction in demand, or a combination of the two
Obsolete – Inventory that has no foreseeable demand or usage
Inventory Avoidance
The actual inventory avoided due to actions such as:
PO Cancellation / Deferment – Cancelling or pushing out PO’s for materials that exceed optimal replenishment plans
Inventory Expiration Mitigation – Identification and use of lots of inventory that are at risk of expiring
Inventory Turns Improvement
The actual improvement in inventory turns and days of forward coverage.
Inventory Turns - The amount of times inventory is sold or used in a given time period such as a year. Inventory turns is a backward looking metric
Days on Hand (DOH) –The days of inventory on hand based on expected future sales. DOH is a forward looking metric
Service Level Improvement
The actual improvement in the availability of items for sale or usage (%)
Order Line Fill Rate – The percentage of sales order lines fulfilled by the committed date within a given time period.
Stock Outs – The percentage of stocked raw materials or components used in production that have no on hand inventory within a given time period
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