Warehouse & Wholesale Inventory Turnover Data

Benchmarking & Monitoring

For most wholesalers and distributors, inventory and the space to store it is the largest single cost of doing business. From purely a cost viewpoint, less inventory means less cost. At the same time, insufficient inventory can lead to stockouts, lost sales and unhappy customers. Balancing these two factors is critical to profitability and growth but achieving that balance is not obvious or easy.

One metric for evaluating the amount of your inventory is Inventory Turnover. Turnover measures the efficiency of inventory usage and compensates for differences in sales volume. This metric is simple, intuitive and easy to calculate. Both sales and inventory value are measured in terms of Cost of Goods:

Turnover can monitor trends or changes from previous periods. It is also useful for benchmarking against similar firms. When benchmarking with industry averages there are several cautionary notes:

1) There are wide variations in turnover even within an industry or industry sub-group. The best firms may have turnovers that are 200%-400% of the industry average. Targeting the industry average turnover is setting up mediocrity as a goal.

2) There MAY be special circumstances that dictate an average or below average turnover. However, such circumstances can often be overcome. When low turnover occurs, it is important to find and rectify the source of high inventory.

Summary data for wholesale industry turnover averages are shown at right. We offer a much more detailed spreadsheet with over 260 categories and sub-categories for only $6.00. Click Here to purchase.