Inventory velocity
Inventory velocity refers to the speed at which inventory moves through a supply chain. It is a key metric used to measure how efficiently a company manages its inventory. A high inventory velocity indicates that inventory is being sold quickly, which can help reduce carrying costs and improve cash flow.
For example, a company that sells perishable goods, such as fresh produce, would want to have a high inventory velocity to prevent spoilage and ensure that products are sold before they go bad. On the other hand, a company that sells luxury items may have a lower inventory velocity, as their products are in less demand and may take longer to sell.
By tracking inventory velocity, companies can optimize their inventory levels and make more informed decisions about pricing, promotions, and production schedules. This can lead to increased profitability and customer satisfaction.
Overall, inventory velocity plays a crucial role in supply chain management and can have a significant impact on a company’s bottom line.
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