![]() However, you will need a more powerful logistics system to manage the volume of sales, which may involve higher costs. Therefore, if you have a high index, it indicates that the products are popular and are in the warehouse for a short time, so we will avoid undesirable costs such as, any costs generated by expired products or by the deterioration of old products. Always, there are pros and cons to any concept to do with business and we need to explore both. However, because you see a higher inventory turnover rate, it does not always mean that your storage costs are lower. If your ratio is high, that means that the flow of goods is constant, sales are constant and therefore, you’re most likely seeing higher profits as a business. This now sets us up to explain what the stock turnover rate (also known as, IR) is, it’s the specific ratio that measures the times in which an inventory needs to be replenished. In simpler terms, it’s the times when you have to feed the warehouse with products, to keep it working correctly. What is inventory turnover? The immediate definition is that this a concept that indicates the times when the stock of a warehouse needs to be replenished in its entirety. So what exactly is stock rotation and how is it calculated?īefore understanding the rate, let’s strip it down and start with the basics. So, if you are already doing this on a daily basis, then let’s explore how to do it in the most efficient way. It’s known that this is a huge task that takes up a lot of your time, but its needs must. It’s absolutely vital that you understand inventory turnover because it’s something your business will have to continuously monitor, just as much as you monitor your stock day-to-day. Does your business have to deal with stock rotation? Do you know how to calculate it properly? All will be explained in this upcoming article, ensuring you can have a handle on your inventory for good.
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