The definitive guide to retail supply chain metrics

Inventory turnover measures the number of times a company sells and replaces its inventory over a given period. This metric reflects inventory management efficiency and helps organizations understand how quickly inventory is converted to sales.

• Share sell-through data with suppliers to enable demand-driven replenishment and collaborative forecast planning and to negotiate better shipping terms.
• Work with suppliers to help support slower-moving items through collaborative markdown strategies to minimize overstocks.
• Use turnover data to refine your product mix with suppliers by category.

Sales: Optimizing inventory turnover ensures relevant product availability and reduces likelihood of overstock or stockouts.
Operating expense: High turnover with reliable procurement strategies and shipment visibility can decrease inventory carrying costs.
Margin: Efficient inventory movement minimizes markdowns, obsolescence and waste.

Inventory turnover benchmarks vary significantly by category. Fast-moving consumer goods and grocery products typically have higher turnover rates than durable goods. Seasonal businesses may also show different patterns throughout the year.

Order cycle time benchmarks vary significantly by product type, supplier location and complexity. Standard products from domestic suppliers typically have shorter cycles than custom or imported goods.

Order cycle time measures the total time from order placement until the order is completely fulfilled and delivered to the distribution center or store.

Sales: Shorter cycle times get product to the end customer faster, increasing customer satisfaction under the sales label
Operating expense: Efficient order cycles reduce administrative costs
Margin: Faster fulfillment decreases safety stock requirements and inventory carrying costs

• Articulate clear expectations and track supplier performance against targets
• Use order cycle reporting insights to find gaps in internal processes
• Partner with suppliers to optimize their fulfillment processes

DIOH measures the average number of days a company takes to sell its entire inventory, based on current inventory cost of goods sold and value. This metric helps optimize inventory levels by showing how efficiently stock converts to sales.

DIOH benchmarks vary significantly by retail category and business model. Grocery and fast-moving consumer goods typically have lower DIOH than durable goods like furniture or electronics. Seasonal businesses may show different patterns throughout the year.

• Implement supplier scorecards to track and measure delivery reliability to provide insights into lead time consistency that enable teams to develop more accurate inventory strategies
• Share sell-through data with suppliers to enable collaborative demand planning and optimize inventory
• Use sales velocity data to collaborate with suppliers on markdowns, returns and SKU rationalization
• Optimize procurement strategies to adjust order frequency or collaborate with suppliers to negotiate better shipping terms

Sales: Optimal DIOH levels maintain product availability while enabling faster response to demand changes
Operating expense: Lower DIOH can indicate lower carrying costs, but procurement strategies and shipment visibility should be managed closely to avoid stockouts
Margin: Efficient inventory management minimizes markdowns, obsolescence and write-offs

Lead time represents the total time between starting a process (such as placing a purchase order) and its completion (receipt of goods or services). This metric impacts supply chain efficiency, customer satisfaction and operational performance.

Customer lead time: The time from when a customer places an order to when they receive the final product.

Supplier lead time: The time it takes for a supplier to deliver goods or materials after receiving a purchase order.

Production lead time: The time required to purchase raw materials and transform them into a finished product.

Material lead time: The time spent creating a product after gathering all necessary materials.

Lead time expectations differ by industry, product and geography. Global sourcing usually means longer lead times, while local suppliers typically offer shorter cycles.

Sales: Shorter lead times reduce stockouts and lost sales opportunities, and enable faster response to demand changes
Operating expense: Reduced lead times minimize safety stock needs and expedited shipping costs
Margin: Shorter lead times reduce emergency reorders, pricing premiums and shipping surcharges

OTIF measures the percentage of customer orders delivered both on time (within the promised delivery window) and in full (with all ordered items included). This metric reflects how well your suppliers perform against timing and quantity expectations.

• Establish delivery windows and order fulfillment requirements with all suppliers
• Automate order and shipping data to track OTIF performance without manual processes
• Use supplier scorecards to identify patterns and collaborate with suppliers on solutions

Sales: Higher OTIF performance reduces stockouts and captures more sales opportunities
Operating expense: Consistent OTIF performance reduces the need for manual tracking, customer service and administrative costs
Margin: Strong OTIF execution minimizes expedited shipping costs, returns processing and emergency procurement at premium prices

Baseline: 70-80% (needs attention)
Good: 85-90% (industry standard)
Excellent: 95%+ (best-in-class)

Fill rate measures how successfully a company fulfills orders.

Order fill rate measures the percentage of orders fulfilled completely with all items shipped and no backorders.

Volume fill rate measures the percentage of individual line items (SKUs) that are fulfilled completely within an order.

Line item fill rate measures the percentage of total units ordered that are fulfilled, regardless of whether the full order or line item is completed.

Typical: 85-95% (standard industry benchmark range per Institute for Supply Management)
High-performing: 95%+ (top-tier companies)
Note: While high fill rates are desirable, rates of more than 100% may indicate excess inventory investment and impact working capital.

• Define fulfillment requirements in a vendor guide and add fill rate expectations in supplier agreements
• Automate item, order and sales data sharing to gain data visibility and enhance forecasting and order accuracy
• Analyze fill rate trends to optimize supplier performance and inventory planning

Sales: Higher supplier fill rates ensure product availability and reduce stockouts
Operating expense: Complete supplier shipments reduce expediting costs and administrative overhead
Margin: Full shipments from suppliers minimize emergency orders and excess safety stock costs

Supplier onboarding and adoption KPIs measure both the speed of initial supplier onboarding and ongoing compliance with your operational standards. These become useful when you’re actively implementing automated supply chain processes with your supplier community.

Key metrics include:
Supplier onboarding rate: Percentage of suppliers enabled to adopt your specifications and expectations
Order acknowledgment rate: Percentage of purchase orders acknowledged by suppliers, providing visibility for proactive order management
Ship notice compliance rate: Percentage of suppliers submitting advance ship notices to improve coordination and planning
Invoice compliance rate: Percentage of electronic invoices that adhere to your requirements and standards
Supplier adoption rate: Percentage of automated transactions versus total transactions between you and suppliers.

These benchmarks vary significantly based on automation maturity and industry. Companies in early stages may see 60-80% adoption rates, while best-in-class programs target 100% adoption. Achieving high adoption rates requires clear and consistent communication with suppliers stating the business value, enhanced collaboration strategies and clear expectations.

As you increase the percentage of suppliers doing business in the way you expect, you can optimize business processes to improve sales and margin while reducing operating expense.

Sales: Enhanced supply chain visibility enables faster response to demand changes and reduces stockouts, resulting in 2-5% potential sales lift
Operating expense: Automated trading partner data exchange eliminates manual processing and administrative overhead, delivering up to 5-10% reduction in operating expenses
Margin: Improved supplier performance management minimizes errors, disputes and processing delays, creating up to 1-3% margin improvement

• Establish clear expectations across data, processes and performance as part of supplier onboarding
• Provide hands-on support to guide suppliers through setup and remove adoption barriers
• Monitor adoption progress to identify gaps, drive accountability and improve supplier readiness