Supply chain management metrics are designed to give your company the analytical tools to assess the performance of each piece of the supply chain. The matrices should be straightforward to use, but aligned to specific business requirements. Three important matrices critical to effective supply chain management and bottom lines are: carrying cost of inventory, inventory to sales ratio, and inventory turnover.
Carrying Cost of Inventory
The carrying cost of inventory is one of the supply chain management metrics that measures the costs of keeping inventory, whether over the short- or long-term. Carrying cost of inventory can help you to determine expected profits on current inventory, and if more product, or less, is required to ensure income levels or to cover expenses. It can also impact more strategic decision-making like sourcing. Continue reading