For example, according to the Inventory Carrying Cost Calculator by The Balance, the average inventory carrying cost for the retail industry is 25%. To compare your inventory carrying cost with industry standards, you can use online calculators or tools that provide average costs for different industries and products. For example, if your total inventory carrying cost is $50,000 and your average inventory value is $100,000, your inventory carrying cost is 50%. To calculate your inventory carrying cost, you need to add up all the costs associated with holding your inventory and divide it by your average inventory value. A low inventory carrying cost means that you have a lean inventory that optimizes your cash flow and profitability. In 2024, manufacturers are expected to face economic uncertainty, the ongoing shortage. The manufacturing industry continues to face headwinds, however. A high inventory carrying cost means that you have a large amount of inventory that consumes your resources and capital. As of July 2023, annual construction spending in manufacturing stands at US201 billion, representing a 70 year-over-year increase and setting the stage for further industry growth in 2024. This cost represents the total expense of holding and storing your inventory, including warehousing, handling, insurance, taxes, depreciation, and obsolescence. For example, according to the 2020 Warehouse and Distribution Center Benchmark Report by WERC, the median inventory accuracy rate for all industries was 98%.Ī third metric to evaluate inventory performance is the inventory carrying cost. To compare your inventory accuracy rate with industry standards, you can use online surveys or benchmarks that provide average rates for different industries and segments. For example, if you count 100 items and 95 of them match your records, your inventory accuracy rate is 95%. To calculate your inventory accuracy rate, you need to divide the number of correct inventory counts by the total number of inventory counts. A low inventory accuracy rate means that you have a poor and inaccurate inventory data that leads to errors and inefficiencies. A high inventory accuracy rate means that you have a reliable and consistent inventory data that supports your planning and decision making. This rate shows how closely your physical inventory matches your records in your inventory management system. Additionally, you can sign up for our Daily or Weekly newsletters to receive these top-ranked articles right in your inbox, or you can sign up to be notified when new resources like webinars or ebooks are available.Another important metric to measure inventory performance is the inventory accuracy rate. We use reader data to auto-curate the articles, meaning that the most valuable resources move to the top. Supply Chain Brief is a collection of the leading industry thought leadership in the form of blogs, webinars, and downloadable resources, on one convenient website.
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