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What is Inventory Velocity?
This metric measures the speed at which inventory moves through a warehouse, from receipt to dispatch.
How to calculate Inventory Velocity?
Inventory Velocity = Cost of Goods Sold / Average Inventory
What is the business impact of Inventory Velocity?
High inventory velocity indicates efficient warehouse operations and strong demand for the products.
Industry benchmark for Inventory Velocity
Higher inventory velocity is generally desirable as it means inventory is being sold more quickly.
How to improve Inventory Velocity?
- Ensure products are readily available and easy to access. Simplify the movement of goods to, within, and from the warehouse.
- Use a Warehouse Management System (WMS) with advanced pick and pack features to speed up order processing.
- Implement a wave picking strategy to optimize picking routes and reduce order cycle time.
