An inventory KPI is only useful if it changes a decision. This topic covers the metrics that do, how each is calculated, what a healthy range looks like, and the common ways they mislead when read in isolation.
The point of an inventory KPI is to turn a pile of stock and transactions into a decision: order more, hold less, recount, or leave it alone. A number that does not change one of those is decoration.
This topic defines each core metric, shows the formula, and, more importantly, shows how the metrics interact, because the failure mode is reading one in isolation and optimising it at the expense of the others.
The metrics most operations watch are inventory turnover, days of inventory on hand, stock accuracy, service level, fill rate, and carrying cost as a percent of inventory value. The right set depends on whether your risk is tied-up cash or lost sales.
Service level is the probability of not stocking out during a replenishment cycle. Fill rate is the fraction of demand actually satisfied from stock. They are different numbers, and a high service level can coexist with a disappointing fill rate when the stockouts that do happen are large.
Best-in-class operations run inventory record accuracy above 99% at the SKU-location level, sustained through cycle counting. Below about 95%, planning and promising stock against the book becomes unreliable.
AvanSaber's inventory practice operates across the topics covered on this pillar: case-by-case implementation projects, operational audits, and ongoing advisory for mid-market and enterprise inventory teams. The practitioners who write here are the practitioners who deliver the engagements.