How to improve Inventory Turnover?

How to improve the Inventory turnover of your business?

  Touseef Riaz

Posted on: 17 Dec 2021

improve inventory turnover


Inventory is an essential part of any business, it is no secret and no argument can be done over this thought for sure. Inventory management plays a vital role in the success of any business if done correctly. You should always be sure about the fact that all the operations relevant to the inventory of your business are running efficiently so that there is no need for revision later in the future. The main goal of every business as we all know is to make as many sales as it can in a very limited or short period of time. Similarly, you much be aware of techniques that could help you to improve the inventory turnover of your business.

Today the world is entirely dependent upon technology and modern grounds of doing business. Therefore, it would be wise if you would automize your work by using inventory management software like Inventooly. It will help to a great extent to maintain the stock levels of your business and also make you sure about the fact that when the orders are being received and when they are dispatched correctly towards the customers. Inventory management software like Inventooly also has another benefit that you can check and monitor the inventory of your business 24/7 with your mobile phone without going all the way down to the storage houses of your business where the items are kept. 


Inventory Turnover:

Inventory as being discussed as the most important and prioritized thing in any business should also focus on what you can do to sell it and make a profit. Because at the end of the day, the main goal and purpose of every businessman are to make as much as profit by selling his stocks and providing services to the customers on a good platform. Similarly, inventory turnover is considered as the phenomenon of calculating that how much sales your business has earned in a specified time period. 

If we take an example of some namely platforms, Amazon would be the first one to pop up in our minds as of the most widely used E-commerce platform worldwide. But what people don’t get is that this platform is also named for some reason, they provide excellent customer support services and make sure that your product reaches you at the correct time. Therefore, the inventory turnover ratio of Amazon is much higher than any other if we make comparisons. 

The Inventory turnover rate of any business is the base of:

  • Customer confidence in your business.
  • Good reputation in the marketplace.
  • Making huge profits and earning a good amount of sales.
  • Satisfaction of the employees as their wages are also time paid and incremented.
  • Your brand is exposed worldwide and a large audience can be targeted.


How to improve the Inventory turnover of your business?

When the matter of your business’s inventory is being undertaken, it can not be discussed without the fact about what you should do and change in order to attract more sales. At the end of the day, a good and effective inventory management system results in an increase in inventory turnover. Which is the basic key for making your business flourish in the market and stand among the competitors.  

  • Introduce Automation:

It would be wise enough if you would automate the inventory system of your business. It means that introducing the latest methods of production, manufacturing, storing, registering your products, and also shipping to the desired customers. As we are aware that human work can cause mistakes, nobody has control over this issue. Whether it is the record-keeping or the matters relevant to the supply chain of your business, everything if handled manually will definitely result worse for the inventory turnover of your business.

Therefore, in order to eradicate this problem and improve the inventory turnover ratio of your company, you will surely need to get help from the automated inventory systems and latest technology being involved in your business.

  • Accurate Forecasting is needed:

It is no doubt that when there are no expert officials who will carry an accurate forecast about the inventory or sales of your business, the inventory turnover will surely be affected. Therefore you must keep a check on employing such software or hiring an extremely professional employee in order to accurately forecast the inventory, sales, and revenue of your business.

Nowadays there is much new software being developed which will provide a quicker and accurate solution to your forecasting problem. You just have to research thoroughly and select appropriate software in order to conduct accurate forecasting which will result in an increase as well as improve the inventory turnover of your business.  

  • Advertise your products efficiently:

Improving the inventory turnover of your business can be done only when you have the proper means to create awareness regarding your products and services. When people will see new and unique products they will surely be attracted to them. Therefore, advertising and marketing of your product play an important role in the contribution to increasing the sales of your business.

If we talk about the current era, you will see every next person is involved with at least one social media platform. That is why using these in order to market your newly produced products would be helpful in terms of gathering people’s attention and improving the inventory turnover of your business.

  • Remarket the old inventory:

Another helpful technique that will improve the inventory turnover of your business is remarketing the old products laying in the storage houses of your business. It can be observed through various experiences of different businesses that they have managed to gain a bunch of sales by simply remarketing their old inventory in front of the people.

Furthermore, you have to understand the fact that people are fond of things that tend to surprise them and make them know more about those things. So, by simply obtaining modern methods and remarketing your old inventory, you will see a major improvement in the inventory turnover rate of your business.

  • Set smart prices:

The most important thing that a customer focuses on is the price of your product. It is simply the main factor that will either drive away your customer or gain you numerous ones at the same time. Therefore, you need to be careful when setting the prices of your products while displaying them in front of the public. It is a very noticeable thing when it comes to improving the inventory turnover ratio of your business.

Setting a good and smart price should be your first priority. Because if your prices are too low, it will simply represent your business’s products as cheap ones and not quality-oriented. Whereas high prices could prevent you from gaining the attention of the most numbered class (middle-class) people which will also cause you loss. Whereas smart and wise prices or even occasionally displayed discounts could help you to increase the inventory turnover of your business to a great extent.

  • Provide customer support:

Being there for your customer is the only thing that can itself earn you a bunch of sales in return. Because it is a natural fact that when you help and support something, it will surely pay you back even if you are not expecting it. Likewise, in business also your customer is the one who can make your sales fly high, so you have to make sure that he is completely satisfied and supported in every regard.

Giving 24/7 support and answering the queries of your customers could make them realize the fact that they are your utmost priority and you will be there for them whenever they need it. This sense of relationship with your customer will not only improve the inventory turnover ratio of your business but also earn you more customers through recommendations.

  • Fasten your shipping process:

It is a matter of fact that life is busy these days and people are seriously impatient! In such an environment when you are not dealing with your customers timely, they tend to become furious at you which ultimately results in the loss of clients. Therefore, you must employ such methods that will ensure that your customers will not have to wait much when their orders are being shipped and delivered to them.

Furthermore, fast and timely delivery of goods and services will surely have a positive impact on your business’s reputation which will, in turn, improve the inventory turnover of your business. However, automizing your shipment methods by employing software like Inventooly could be of great help as it assures you to manage your inventory in such a way that all your orders are dispatched at the right time. In the end, it is the main goal, right? Customers are satisfied, sales are conducted, and profit is earned!


Inventory Turnover Ratio:

The inventory turnover ratio plays a vital role in calculating the actual sales of your business in a given time period. It is basically an accounting formula that helps you to calculate that how much cost is spent on the inventory and how much sales are earned. As a result which gives you the actual picture of the profit or loss that your company has made in a specific time period. 


The formula by which you can calculate the inventory turnover ratio of your business is stated below; 


Inventory Turnover ratio = Cost of goods sold / Average Inventory


How to improve Inventory Turnover Ratio:

In accounting terms, it has been concluded that a good inventory turnover ratio of your business can lie between 4 to 8. It basically shows that you have a balanced amount of inventory stocked in your business with that of the goods sold to the public. However, even if the inventory turnover ratio of your business is higher, it indicates that you are able to sell more and earn a good revenue than expected.

On the other hand, the opposite results in a low inventory turnover rate. Which will indicate that you have got much more inventory stocked in your business which you are not able to sell efficiently.

Moreover, the inventory turnover ratio of your business can be improved and increased simultaneously if you focus on some important measures like;

  • Hiring expedient officials to manage your inventory.
  • Digitalizing your important activities.
  • Conduct surveys to know the actual demands of the people.
  • Improving the production methods.
  • Increasing speed of the delivery process.
  • Offering support services to the public.



Inventory turnover plays an important role in the smooth running of your business. You must not take this thing lightly because earning sales is the main target of every business at the start. Then you would be able to see what you are doing wrong and which things need improvements. If you have come here you would have got all the relevant information which will surely guide you to improve the inventory turnover of your business successfully.