What Is Inventory Turnover? Formula and Best Practices
Inventory turnover measures how many times you sell and replace your inventory during a period—a key indicator of how efficiently your inventory investment generates sales.
Planster Team
Insights on demand forecasting, inventory planning, and growing your e-commerce brand.
Inventory turnover measures how many times you sell and replace your inventory during a period—a key indicator of how efficiently your inventory investment generates sales.
Planster Team
A purchase order (PO) is a formal document from buyer to supplier that specifies products, quantities, prices, and delivery terms—your official request to buy goods.
Planster Team
Fill rate is the percentage of customer demand that you fulfill from stock on hand—a direct measure of how often you have what customers want when they want it.
Planster Team
Sales and Operations Planning (S&OP) is a business process that aligns sales forecasts with supply capabilities and financial goals into a single, agreed-upon plan.
Planster Team
Lead time is the total duration between placing an order and having that inventory available to sell—not just shipping time, but every step from order to shelf.
Planster Team
Demand forecasting is the process of predicting future customer demand for your products using historical sales data, market trends, and other factors.
Planster Team
A reorder point (ROP) is the inventory level at which you need to place a new order with your supplier—the trigger that tells you it's time to reorder.
Planster Team
Safety stock is the extra inventory you keep on hand to protect against uncertainty—your buffer between what you expect to happen and what actually happens.
Planster Team
Sales thinks demand will be 20% higher. Operations thinks last year's numbers are right. Finance split the difference. Sound familiar? Consensus forecasting solves this.
Planster Team
Static forecasts go stale. Rolling forecasts evolve with your business. Here's how to build a forecasting process that stays current and actually drives decisions.
Planster Team
You don't need a PhD to use statistical forecasting. Here's a practical overview of the methods that work for CPG brands—and when to use each one.
Planster Team
Forecasting looks forward using historical patterns. Sensing looks at now using real-time signals. Understanding the difference—and when each matters—improves your demand planning.
Planster Team
New products have no sales history—but you still need to decide how much inventory to buy. Here's how to build a reasonable forecast when you're starting from zero.
Planster Team
Every forecast error has a cost—whether it's lost sales from stockouts or cash trapped in excess inventory. Here's how to quantify what inaccurate forecasting is actually costing your business.
Planster Team
Some businesses need weekly forecasts to stay responsive. Others do fine with monthly. Here's how to decide which cadence fits your operations—and when to change it.
Planster Team
Promotions spike demand—but how much? And what happens after? Here's how to adjust your forecasts for promotional events without getting whipsawed by the volatility.
Planster Team
Holiday rush, summer slump, back-to-school surge—seasonal patterns drive significant demand swings. Here's how to see them coming and plan accordingly.
Planster Team
Perfect forecasts don't exist. But how accurate is accurate enough? Here's what good looks like for CPG brands—and why chasing the last few percentage points often isn't worth it.
Planster Team
Each sales channel has its own demand patterns, lead times, and service requirements. Here's how to plan across all of them without losing your mind—or your inventory.
Planster Team
You don't need a team of data scientists to build reliable demand forecasts. Here's how operations teams at growing brands can create actionable forecasts with the data they already have.
Planster Team
Service level and fill rate sound similar but measure different things. Here's how to understand and use both metrics to measure your inventory performance correctly.
Planster Team
Overall inventory turnover hides important patterns. Here's how to analyze turns at the product level to find your winners, losers, and opportunities for improvement.
Planster Team
Not all SKUs deserve equal attention. ABC analysis helps you classify inventory by importance so you can focus planning efforts where they matter most.
Planster Team
Managing inventory across multiple locations multiplies complexity but also opportunity. Here's how to allocate, balance, and optimize inventory across your distribution network.
Planster Team
Days on hand tells you how long your inventory will last at current sales rates. Here's how to calculate it, what it reveals, and how to use it for better inventory decisions.
Planster Team
Dead stock ties up cash and warehouse space, but aggressive clearance can hurt your core business. Here's how to reduce excess inventory strategically while protecting fill rates.
Planster Team
Not all safety stock formulas are created equal. Here's a practical comparison of five approaches, from dead simple to statistically rigorous, so you can pick the right one for your situation.
Planster Team
Target inventory and safety stock sound similar but serve different purposes. Here's how to understand and set both for better inventory control.
Planster Team
A stockout isn't just a missed sale—it's lost customers, damaged search rankings, and operational chaos. Here's how to calculate what stockouts really cost your business.
Planster Team
Safety stock doesn't have to be complicated. Here's how to calculate the right buffer inventory for your business using straightforward formulas that actually work.
Planster Team
A practical guide to min/max inventory systems—when they work, how to set the levels, and how to avoid common pitfalls.
Planster Team
How to create a vendor scorecard that measures what matters—and use it to improve supplier relationships and performance.
Planster Team
Understanding place-by dates—the often-overlooked planning concept that keeps your inventory arriving on time.
Planster Team
A complete guide to managing purchase orders effectively—from knowing when to order through tracking delivery and resolving discrepancies.
Planster Team
A practical guide to the EOQ formula—how to calculate it, when to use it, and when to throw it out the window.
Planster Team
Build a supplier delay response plan that minimizes disruption when things go wrong—because they will go wrong.
Planster Team
Practical strategies for reducing supplier lead times and improving inventory flow without massive capital investments or premium shipping costs.
Planster Team
Learn the reorder point formula and practical strategies for setting ROP levels that keep inventory flowing without tying up excess capital.
Planster Team
Retail chargebacks can eat 5-15% of your invoice value if you're not careful. Here's how to build compliance into your operations and protect your margins.
Planster Team
Growing your retail distribution is exciting—but it wreaks havoc on your demand forecast if you're not prepared. Here's how to plan inventory for retail expansion.
Planster Team
Retail velocity is the metric that determines whether you're winning or losing on the shelf. Here's how to calculate, interpret, and improve your units per store per week.
Planster Team
Landing a new retail partner is exciting—until you realize the inventory planning complexity that comes with it. Here's your complete checklist for getting it right from day one.
Planster Team
EDI sounds intimidating, but it's simply the standard way retailers and suppliers exchange business documents. Here's what you actually need to know.
Planster Team
Selling through both retail and DTC channels sounds simple until you realize they operate on completely different rhythms. Here's how to manage inventory across both.
Planster Team
Bundled products and gift sets create inventory complexity. Here's how to plan for kitted products without over-buying components or running out of your best-sellers.
Planster Team
Seasonal peaks can make or break your year. Here's how to plan production capacity and inventory to capture peak demand without drowning in excess stock afterward.
Planster Team
When your products are made at a co-packer's facility, inventory visibility becomes challenging. Here's how to maintain control without micromanaging.
Planster Team
Your sales forecast tells you how many finished products you'll sell. Here's how to convert that into raw material purchase orders that arrive on time.
Planster Team
A bill of materials is the foundation of production planning. Here's how to create and use BOMs to plan inventory for food products and CPG manufacturing.
Planster Team
Reactive ops teams fight fires. Proactive ops teams prevent them. Here's how to shift your culture from constant crisis mode to calm, controlled execution.
Planster Team
The best inventory planning happens when nothing's on fire. Here's how to build a weekly routine that catches problems before they become emergencies.
Planster Team
The awkward middle: too big for spreadsheets, too small for enterprise software. Here's how mid-market CPG brands tackle the inventory challenges that come with growth.
Planster Team
That $50,000/year planning system actually costs $200,000 when you add implementation, customization, and the team to run it. Here's what the sales rep won't tell you.
Planster Team
Enterprise software promises results in 6 months. Here's how modern planning tools deliver value in the first 30 days—and what to expect each week.
Planster Team
Every CPG brand starts with spreadsheets. Here's how to know when your growth has outpaced Excel—and what switching to planning software actually looks like.
Planster Team
See how Planster can help you forecast demand and prevent stockouts.