![]() It’s a delicate dance of forecasting, supply chain collaboration, and staying ahead of market demands. From Days in Inventory to Inventory Period, this metric is key to optimizing your operations and boosting your bottom line.īut here’s the kicker: inventory management isn’t just about crunching numbers and calculating averages. Welcome to the world of Inventory Days of Supply, a powerful metric that reveals the efficiency of your inventory turnover. Understanding this metric can unlock a world of possibilities for your inventory management strategy. Release Updates Outlined feature updates from our last releasesĭo you know how long it takes for your business to sell its entire inventory? Imagine having the insight to gauge the average time your products take to fly off the shelves.Help Center Endless support in case you are stuck.OKR Canvas Kick start your OKR implementation right away.Answers (FAQs) Get instant solutions to your queries.OKR Webinars Discover current trends and expert insights.OKR Examples Collection of OKR examples for your business.KPI Library Find the Most Effective KPIs for your business.eBooks Books sharing our OKR expertise, ideas and insights.OKR University OKR resources for beginners and experts.OKR Certification Iterate Faster with OKRs Coaching & Certification Programs. ![]() Why ? Know what customers like you think about us.Case Study Know why 1000s of brands trust.Integrations Integrate easily with all your favorite apps.Employee Engagement Engage, align and inspire your team.Task Management Increase day-to-day productivity.Performance Management Build a high performance team.OKR Management Strategy-execution made easy.Product Overview Know more about our products.The difference between 3.5 turns compared to 4 turns doesn’t seem significant, but by turning those into days, it is the difference between 104 days and 91 days of inventory on-hand. The reason we like parts managers to measure their inventory in terms of days instead of turns is that it gives them a more accurate picture of what is really going on. For example, if your “true” turn were 4.5, you would have enough inventory on-hand to cover your needs for 81 days. Once you have figured out your “true” turn number, we encourage dealers to determine their “Inventory Days On-Hand.” To calculate Inventory Days, divide your inventory turns into 365 days. Our goal for dealers is 4-5 turns per year. For example, if your cost of parts is $300,000, your special orders and emergency orders are $30,000, and your parts inventory is $60,000, your formula would be as follows: $300,000-$30,000=$270,000/$60,000=4.5 turns per year. To calculate your “true” inventory turns, you must take the annualized cost of your parts, subtract any special or emergency orders, and divide by your parts inventory. You can get a more accurate picture of how your parts sales are moving through your on-hand inventory by looking at your “true” inventory turns. With a turn of less than four, you may be carrying too much inventory, and with more than six you are probably ordering too often and missing volume purchase discounts. Your goal is to have a “gross” turn 4-6 times per year. To determine “gross” turns, you need to take the annualized cost of your parts sales and divide that number by your total dollars of parts inventory. Most parts managers understand the importance of measuring their parts inventory turns which, theoretically, helps them determine if they are doing a good or bad job controlling their department, but they also need to understand the difference between “gross” inventory turns, and “true” inventory turns. While you can’t do that with every part, it is still easy to reduce your item count on each part, and still meet the daily demands placed upon your parts department. You can easily meet that demand today by keeping only four in stock. Twenty years ago, you may have had to carry eight different carburetors in order to meet the needs of your customers and service department. Think how that changes your approach to deciding on the number of any particular part item you should keep on hand. Twenty years ago, it took almost 30 days to get a part, and now you can get a part delivered to you in one to four days. Today, it makes no sense for a dealership to maintain a large parts inventory, or stock ten of the same item, because manufacturers have greatly improved their ability to get you the parts you need when you need them.
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