10 Inventory Management KPIs That Actually Matter

You can’t fix what you don’t measure. And when it comes to inventory, the right KPIs (key performance indicators) help you spot issues before they become expensive problems.

But not every metric deserves your time. Below are 10 inventory management KPIs that give you the clearest insight into what’s working, and what’s not.

1. Inventory Accuracy
Are your system numbers correct?
If what’s in your database doesn’t match what’s on the shelf, you’ve got a visibility problem. This is the foundation for reliable operations and confident decision-making.

2. Inventory Turnover
How fast are you moving product?
A healthy turnover rate tells you your stock is flowing and not sitting idle. It’s one of the clearest signs of efficiency.

3. Order Accuracy Rate
Are customers getting exactly what they ordered?
This metric tracks the percentage of error-free shipments. High accuracy keeps customers happy and returns low.

4. Shrinkage
What inventory is disappearing? And why?
Shrinkage covers theft, damage, miscounts, and anything else that makes your stock vanish. If it’s creeping up, you’ve got a process issue.

5. Receiving Accuracy
Is what you ordered what actually arrived?
This tracks how often inbound shipments match your POs. Mistakes here ripple through the rest of your system.

6. Backorder Rate
How often are you out of stock when it counts?
A high backorder rate signals missed demand and poor replenishment planning. It also hurts customer trust.

7. Days on Hand
How long does your inventory sit before it moves?
Too many days ties up cash. Too few means you’re at risk of stockouts. This KPI helps you strike the right balance.

8. Pick and Pack Cycle Time
How quickly can you fulfill an order?
Tracking the time from picking to shipment helps you tighten warehouse efficiency and spot bottlenecks.

9. Return Rate
How much is coming back? For what reason?
Returns aren’t just a customer service issue. They’re a data point that can expose product, packaging, or fulfillment problems.

10. Fill Rate
Are you meeting customer demand in real time?
Fill rate measures how much of an order you can fulfill immediately from available stock. It’s a direct reflection of your service level.

Additional KPIs to Consider

If you’ve already mastered the basics, these additional KPIs can help you fine-tune operations and uncover hidden inefficiencies.

Receiving Cycle Time
Tracks how long it takes to process incoming shipments, from dock to shelf. A useful metric for optimizing warehouse throughput.

Cost of Receiving per Line
Measures labor and processing cost per line item received. Helpful when looking to control operating expenses.

Picking Accuracy
Focuses on how often the correct item is picked on the first try. Especially important in high-volume environments.

Pick and Pack Cost
Calculates the total labor cost for picking and packing per order. Useful for understanding fulfillment efficiency.

Putaway Accuracy
How often inventory is stored in the correct location. Impacts retrieval speed and stock visibility.

Putaway Cycle Time
Measures how quickly items are moved from receiving to storage. Delays here can slow down the rest of your operation.

Return Processing Time
How long it takes to process and restock returned items. Shorter processing means better inventory availability.

Final Thought
You don’t need to track everything. But if you’re not tracking these 10 KPIs, you’re running blind.

Use them to set baselines, catch inefficiencies, and guide smarter decisions, before small problems become costly ones.