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Inventory Productivity Levels Optimize your inventory one step at a time Mango's Inventory Productivity Levels will help tune your store's inventory engine by showing where to divest in unwanted inventory and where to invest in the good-selling stuff. A step-by-step approach keeps your store focused on achieving only one level at a time. First up is to reduce Unproductive inventory (stuff your customers don't want to buy and items you have too much of) to a reasonable level using Closeout Management, this frees up shelf space and cash. Next is to simply deepen inventory where customers are repeatedly buying you out (this is called In Stock), and finally, you can work on increasing your assortment breadth by bringing in new items that sell well in nearby stores. Highly actionable SKU-level lists for each level are provided in the Retail Analytics Dashboard (Acenet) so that hitting your target is easily within reach. What about the traditional inventory performance metrics like Turns and Inventory per Square Foot? Traditional inventory performance metrics such as Turns, GMROI, Inventory per sq. ft., Sales to Inventory Ratio, etc., are good at a high level, but they're hardly actionable at the SKU level. Take Turns for example, how do we make Turns better, and exactly what is better? None of the traditional ratios explicitly tell us if we have too much inventory or not enough (perhaps we have too much of the bad stuff and not nearly enough of the good stuff), we only know a ratio. However, if we look to the root components of inventory productivity then we can take SKU-level action by divesting in unproductive inventory and invest in more productive items. When we do this, Turns, Inventory per Square Foot, etc. are optimized along with your store's inventory investment! Level 0: Unproductive - Target 7% or less This highly actionable level shows the dollar value (quantity on hand multiplied by average cost) of inventory that has not sold in over two years and with over two years of supply, divided by total inventory value. SKU-level detail can be found in your MEGA Report (Obsolete and Overstock) tabs. Stores managing their unproductive inventory will see values 7% and below. Stores with lower sales volume than the typical store will have their two-year sales threshold adjusted back (up to a year based upon sales volume). New stores will show 0% for two years. Level 1: In Stock - Target 1% or less In Stock Opportunity measures annual sales increase potential if your store never ran out of what it sells (Ace SKUs only). For example, if your metric is 1.1% then your store would see an increase of 1.1% in annual sales if it never sold out of inventory. This metric is highly actionable through the Retail Analytics Dashboard as it lists the SKU-level detail that makes up this metric. Increasing inventory levels for these items will likely increase sales with very little inventory investment. SKU lists (and metric) excludes outs caused by RSC (retail support center), special orders, in/out promotional items and other kinds of noise. This is an easy level to achieve, but it takes some time for your In Stock percentage to move: persistence and patience are the key to this level. Level 2: Assortment - Target 3% or less Assortment Opportunity measures your store's incremental annual sales opportunity if it carried everything (Ace SKUs only) that sold well in other peer stores, but are not carried in your store. SKU-level detail is found in a shopping cart on Acenet. This metric does not take similar SKUs into account (we're working on that) so it is unlikely your store would experience a full projected sales increase, however, this metric is consistently measured across all stores so it is a great at gauging how much additional sales opportunity your store has compared to targets and peers. We are constantly working on the quality of this metric by reducing similar SKUs and tuning the assortment to your market (Urban, Suburban, Rural, Lumber, etc.). Level 3: Certified You've made it, congratulations! Your store's inventory is running at peak productivity. At this point, you've worked rigorously through all the levels and now you can shift into maintenance mode (using your PDF Exception Reports and Assortment Reports). Articles in this section Level 0 - UnproductiveLevel 1 - In StockLevel 2 - Assortment
Inventory Productivity Levels Optimize your inventory one step at a time