on-shelf availability

Why Is Monitoring the Stock Turnover Indicator Important?

Ensuring accurate, instant visibility into inventory status is vital for maintaining efficient operations. Lean concepts, especially when applied at the retail level, focus on eliminating waste associated with both time and assets. Since a large portion of company capital is represented by inventory, stock monitoring is an actionable piece of information that cannot be ignored. Effective inventory management within the supply chain is essential for maintaining a high level of service at the lowest possible cost.

Rigorous observation of the stock turnover indictor helps retailers gain both a comprehensive look at performance combined with a granular view of each product or stock keeping unit (SKU). Since businesses must be able to have full visibility into inventory data in order to effectively control replenishment and buying strategies, monitoring stock accurately demands an updated software solution that is able to provide that visibility.

Effective stock monitoring is the key to reducing inventory costs through targeted results.

· Superior FIFO Performance: Shelf life is an important element in inventory control. Products past their expiration date represent high levels of waste, and those that become obsolete face the same fate. The stock turnover indicator delivers alerts on products that are nearing their shelf life so that retailers can move those items before a loss occurs.

· Eliminate Stock-Outs: The stock turnover indicator also tracks movement from the point of sale (POS), which allows administrators to immediately instigate replacements or arrange for automated PO replenishment using intelligent stock monitoring information.

· Improve Customer Service: Out-of-stock situations frustrate buyers who subsequently take their business elsewhere. Over time, that sort of behavior reduces sales and negatively impacts company reputation. Accurate stock monitoring eliminates outages.

· Inventory Amount Reduction: One of the key elements of lean concepts is the ability to maintain optimum inventory. A reduction in stored inventory through proper monitoring, reduces warehousing expenses and eliminates a large portion of quarterly shrinkage costs. Because inventory is directly related to weeks of supply (WOS) planning, this type of immediate connection helps maximize replenishment value.

· Decrease Discount Occurrences: With controlled stock levels and improved FIFO, retailers are able to reduce the amount of sale promotions that abolish profit margins.

Stock monitoring with the turnover indicator creates an environment of efficiency within the retail supply chain, reducing waste through intelligent planning and replenishment practices.

Download our retail supply chain collaboration white paper to learn the seven most important criteria in selecting a new supply chain platform. 

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NeoGrid is a global software company providing a cloud-based suite of supply chain synchronization solutions that enable our clients to simultaneously reduce out-of-stocks (OOS) and inventory levels.

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