inventory managementProducts come in and out, but you should be in control of that cycle at all times. And if you run a small business or fulfillment company, you have to; your success depends on it.

If you’ve never given much thought to inventory metrics, here are five factors to take note of:

1. Gross Margin Size

A lot of business owners don’t like to talk about the math that goes into their organization, but they know they still have to know the numbers in order to understand profits, taxes, and the like. But the good news is you don’t have to know a lot of specific calculations, except for one—the gross margin, which is the total revenue minus the cost of your goods, divided by your total sales revenue, expressed as a percentage. This number helps to determine your efficiency level while lowering your costs.

2. Inventory Levels and Accuracy

Do you know how much of your product you have in stock right now? If you don’t, that’s a problem; there’s few things worse than not having a product on hand when someone orders it or having ordered too much of an old product that’s not selling. Keeping tabs on your stock levels and making sure they are all stored well, haven’t expired, and are ready to be sent out are paramount concerns.

3. Item Fill Rate

Another mathematical aspect of a small business’ inventory metrics is the item fill rate, a percentage of items a customer ordered that your business was able to ship. To put it another way, you need to think about which orders are shipped and filled properly versus which had items missing. If your fill rate is low, then there’s something wrong; it means you’re not filling your items correctly and need to fix the issue immediately.

4. Inventory Turnover

Since “turnover” is a frequently thrown around term, it’s beneficial to know exactly what inventory turnover means. Mathematically, it’s the cost of your products sold divided by the average inventory; practically, it’s about how quickly you replace your inventory as it’s sold. You ideally want a high rate of inventory turnover so that you keep old products moving out and revenue coming in.

5. Cycle Time

As the title suggests, product cycle time deals with making deadlines; it’s the time taken from when an order is placed to its delivery. This metric is dependent on what goods you’re dealing in, but should obviously be as short as possible to ensure people get their orders quickly and efficiently.

To deal with all of these metrics, your best bet is to invest in quality inventory metrics software to make sure that you can keep tabs on your numbers and make the necessary improvements to them based on the results.

Need solutions to your product fulfillment problems? APS Fulfillment, Inc. has the knowledge and services to make your direct mail and product fulfillment ventures more successful. Contact APS Fulfillment, Inc. by e-mail at, visit their web site at, or phone toll-free at (954) 582-7450.