SAP inventory turnover Algorithm

Traditional inventory refers to items stored in warehouses. From the logistics point of view
There is an inevitable time difference between the status of transition, in this time difference, in idle materials is inventory. In a broader sense, all idle resources for future use are inventories.
I. quantitative indicators of inventory Performance Evaluation
A clear and consistent performance evaluation of inventory is a key part of the inventory management process.
The price must reflect both the service level and the inventory level. If they are only concentrated on the inventory level, planners tend to have the lowest inventory level, which may have a negative impact on the service level. In contrast, if the performance evaluation is concentrated on the service level, it will lead the planners to ignore the inventory level. Therefore, the performance evaluation should clearly reflect the expectations and actual needs of the enterprise.
(1) Utilization of warehouse Resources
1. Real estate utilization rate = (warehouse construction area/real estate area) × 100%

2. warehouse area utilization rate = (available warehouse area/warehouse building area) x 100%

3. Warehouse utilization rate = (actual quantity or volume of inventory goods/storage volume or volume) × 100%

4. Effective range = (inventory/average daily demand) × 100%

5. Cost-based investment = (investment cost/(unit inventory/unit time) × 100%

6. Device integrity rate = (number of devices in good condition during the period/total number of devices in the same period) × 100%

7. device utilization rate = actual working hours of all devices/total working capacity (hours) of all devices × 100%
(2) Service level
1. missing goods rate = (number of out-of-stock items/number of customer orders) × 100%

2. Customer satisfaction = (number of satisfied customer requirements/number of customers required) x 100%

3. Punctual delivery rate = (number of on-time deliveries/total number of deliveries) × 100%

4. Goods loss and delivery compensation rate = (total goods loss and delivery compensation fee/total business income during the same period) × 100%

(3) storage capability and quality
1. Inventory throughput capacity implementation rate = (actual throughput during the period/warehouse Design Throughput) × 100%

2. Import and delivery accuracy = (throughput during the period. Total errors/throughput during the period) x 100%

3. commodity defect rate = (number of commodity defects in the period/total number of commodities in the period) × 100%

Ii. Evaluation of inventory turnover rate

Inventory turnover is of great significance for enterprise inventory management. For example, a manufacturer's interests are derived from the cyclical activities of funds → raw materials → products → sales → funds. If such a cycle is fast, that is, when the turnover is fast, the interest rate under the same fund is also high. Therefore, the turnover rate represents the measured value of the enterprise's interests, known as "inventory turnover rate ".
There is no absolute evaluation standard for inventory turnover rate, usually compared with the same industry, or compared with other internal periods of the enterprise. Inventory Performance Evaluation and Analysis, inventory turnover rate is the content of the evaluation.
(1) Basic Formula for Calculating inventory turnover
The formula for calculating inventory turnover can be calculated using the following formula in actual evaluation:
Inventory turnover = (quantity used/quantity in stock) × 100%
The quantity used is not equal to the number of warehouse picking because the warehouse picking quantity includes part of the backup quantity. In addition
Also, the inventory turnover rate is calculated based on the amount. Similarly, the amount used is not equal to the outbound amount.
Inventory turnover = (usage amount/inventory amount) × 100%
When the amount is used or the stock amount is used, the following formula is required to study the amount within a certain period:
Inventory turnover = (total warehouse picking amount during the period/average inventory amount during the period) x 100%
= (Total warehouse picking amount during this period × 2/initial inventory amount + end inventory amount) × 100%

The formula for calculating the inventory turnover is (taking the average monthly inventory turnover as an example ):

1. Raw material inventory turnover rate = total raw material inventory/average raw material inventory

2. Inventory-based turnover rate = Cost of finished products/average in-stock

3. Finished product inventory turnover rate = monthly material cost/Average finished product inventory in the database

For example:
Inventory turnover
= Cost of goods sold/average aggregate inventory value
=160/$35
= 4.57
Inventory turnover rate = Cost of sold goods/average total inventory value = 160/35 = 4.57
Since the company is used to an inventory turnover of 10, a drop to 4.57 means
That the inventory is not turning over as quickly as it had in the past.
Knowing the industry average of turns for this company it is not possible
Comment on how they are competitively doing in the industry.
Since the company's inventory turnover rate was 10 in previous years, this year's reduction to 4.57 means
Its inventory turnover is not as fast as before. If you do not know
On average turnover, it is impossible to comment on how competitive it is in the industry.

The report on inventory turnover in SAP is mcba and MC. B and so on. I tested it and calculated it according to this formula. However, it should be noted that decommission and database migration cannot be counted as the denominator of this formula!