Supply Chain Metrics

Backorder rate is the percentage of customer orders that cannot be fulfilled immediately because the requested item is out of stock but expected to be available. It measures how well inventory keeps pace with demand and signals gaps in forecasting, replenishment, or supplier reliability.

The Cash Conversion Cycle, also knows as Cash-to-Cash Cycle Time, is the time between when a business pays its suppliers and when the business receives payment from its customers, usually expressed in days. Keeping active tabs on your Cash Conversion Cycle will aid you in monitoring your finances as cash flows in and out of your business.

Days Sales of Inventory (DSI) is the average number of days a company takes to convert its inventory into sales. It measures how long stock sits before it sells, making it a key indicator of operational efficiency, liquidity, and working capital management.

Fill rate is the percentage of customer orders fulfilled immediately from available stock, without backorders or lost sales. It measures inventory efficiency, demand forecasting accuracy, and supply chain reliability, and is a key indicator of customer satisfaction and operational performance.

GMROI is a retail and supply chain metric that measures how much gross profit a business earns for every dollar invested in inventory. It combines profit margin and inventory turnover into a single number, helping retailers identify which products and categories generate the strongest return on their inventory investment.

Inventory Accuracy is the percentage of stock records in your management system that match the actual physical inventory in your warehouse or store. It is a critical supply chain KPI that supports smooth fulfilment, reliable financial reporting, and effective demand forecasting. Discrepancies between system records and physical stock lead to stockouts, overstocking, and financial inaccuracies.

Inventory carrying cost is the total expense a business incurs to store and maintain unsold inventory over a given period, expressed as a percentage of inventory value. It includes capital costs, storage, insurance, taxes, and inventory risk such as spoilage or obsolescence. Most businesses see carrying costs between 15% and 30% of total inventory value. Tracking this metric helps optimize reorder quantities, reduce overstocking, and protect profit margins.

Inventory lead time is the total elapsed time from when a replenishment order is placed with a supplier until the goods are received and available for use or sale. It spans order processing, supplier production or sourcing, transit, customs clearance, and warehouse receiving.

Inventory Quantity is the currently available stock for each product variant a retail location or e-commerce store has available. Keeping track of inventory quantity is important to ensure that there are enough goods in stock to meet customer demand. Businesses should identify the optimal stock level for each product variant and adjust accordingly. If inventory levels are too low, customers may not be able to purchase a desired item or find an alternative solution elsewhere. On the other hand, if levels are too high, it can lead to an overstocking of products and wasted resources.

Inventory Turnover measures how often a business sells through its entire inventory within a given period. It is a key efficiency metric used to evaluate pricing strategy, product demand, and purchasing decisions, and is especially critical for businesses handling perishable goods.

Manufacturing Cycle Time is the total time it takes to turn a released production order into finished goods. It covers active work and the waiting around it, which makes it a clear measure of how smoothly production flows. A long cycle ties up materials and cash, delays deliveries, and hides bottlenecks. Managers use it to decide where to add capacity, how to schedule work, and which delays to remove first.

On-time delivery measures the percentage of orders delivered to customers on or before the promised delivery date. It helps evaluate the efficiency of the supply chain in meeting customer expectations. On-time delivery is crucial for maintaining high customer satisfaction levels. Timely delivery is often seen as a reflection of a company's reliability, and consistent punctuality can lead to increased customer trust and loyalty. Moreover, on-time delivery helps to avoid unnecessary costs related to late delivery compensation or loss of business, directly impacting the company's bottom line.