They are data that if consistently measured and properly monitored, will have the biggest impact on where you are and where you want to go. Sales calls per week, number of new customers, and sales and gross profit volume per customer represent a sample of key performance indicators for sales. For inventory, the primary indicators deal with inventory turnover and customer service levels. Maintaining the best possible customer service while maintaining the optimum levels of inventory should be the goal of any inventory system. A delicate balance between the two must be maintained to achieve maximum profitability.
Inventory turnover is a measurement of inventory use.
It expresses how many times per year the stock inventory is used. For businesses that have direct shipments to customers, only the stock inventory should be used. Otherwise, the turnover results will be overstated. Inventory turnover rates should be measured, ideally, at least on a monthly basis. Some businesses may choose to use the end of month inventory as the denominator, and that is acceptable.