The Importance of Inventory KPIs

Tanja Folnovic

In third blog post in KPI series we are bringing you inventory KPIs in agriculture and what can you measure with them. We will focus on 5 inventory KPIs:

  • Average sales period
  • Waste ratio and value
  • Average usage period
  • Monthly stock usage
  • Low inventory items.

 Average sales period is the time needed for selling complete stock of specific culture that you are producing. It is measured in days and counting starts from harvesting. This KPI gives you clear insight on how long you are keeping specific culture on inventory, you can calculate storage costs based on it and you can identify the risk of generating waste, if the produced fruit and vegetables stand too long on stock. Imagine that you can keep some culture 60 days on storage and your sales period for it is 51 days - this means you are 9 days close to risk of generating waste.

Waste ratio KPI shows the percentage of produced yield that finished as waste and the value of it. This value is a direct loss to a producer and must be minimized. It is important to identify the factors that lead to waste and make needed actions that prevent the waste.

Average usage period represents the average number of days that fuel, fertilizers, pesticides are standing on your inventory. This can help you to reduce your inventory and improve the purchase process. Although having optimal inventory is very important, this must be balanced with savings through discount on buying larger quantities.

Monthly stock usage represents the monthly used quantity of specific stock item. The quantity of a stock item shouldn't be lower than monthly stock usage, because that can lead to insufficient quantity when you need to use it.  This KPI is closely related to average usage period and two of them together allow you to achieve optimal inventory and  just-in-time (JIT) purchase.

Low inventory items  KPI is the number of items that are under the minimum required level - usually under monthly stock usage. As higher this KPI is, the risk of delaying the activities because of insufficient inputs is higher. This KPI should also display exact items, so that producer can react quickly and purchase that items. Agrivi lets you take complete control over your production and gives you clear insight into your inventory. Don't let your production manage you, manage it instead.