How to Improve Inventory Velocity: Practical Steps for Distributors and Manufacturers
Inventory ties up cash and creates service risk. Improving inventory velocity (how quickly stock moves through your business) frees cash, improves delivery performance and makes forecasting easier. The steps below are practical, simple to follow, and can be started this quarter using your ERP.
Measure a few useful KPIs
Start with a small set of reliable numbers you can review weekly:
- Inventory turns = cost of goods sold / average inventory.
- Days Inventory Outstanding (DIO) = 365 / turns.
- Fill rate (percent of orders shipped on time and in full).
- Supplier on‑time delivery rate and lead‑time variability. Pull these figures from your ERP so everyone uses the same data.
Fix the data that trips you up
Small data problems cause big operational mistakes. Tidy these first:
- Standardise SKUs, pack sizes and units of measure.
- Update supplier lead times and transit times from recent history.
- Remove duplicate or obsolete product records. Quick win: pick the top 20% of SKUs by value or volume and run a short weekly validation check to correct errors.
Segment stock by how it behaves
Not every product needs the same rules. Combine value (ABC) with demand type:
- A‑steady (high value, steady demand) – Keep predictable safety stock.
- A‑variable (high value, erratic demand) – Consider vendor collaboration, consignment or tighter review.
- B (mid value) – min/max or regular review.
- C (low value/lumpy) – move to make‑to‑order or strict re‑order thresholds. In Jiwa ERP, apply different reorder rules and safety stock methods to each group.
Reduce and stabilise lead times
Unpredictable lead times force extra stock. Use purchase history to measure suppliers:
- Track actual verses promised lead time and delivery variance.
- Create an alert for suppliers with high variance and queue those POs for buyer review. Practical actions: consolidate orders with reliable carriers, negotiate partial deliveries for critical items, and hold critical spares locally where supplier risk is high.
Make replenishment rules smarter
Replace one‑size‑fits‑all reorder points with rules that respond to variability:
- Set safety stock based on lead‑time variability and demand volatility.
- Use rolling forecast windows (30/60/90 days) to adjust order quantities.
- Use Kanban or min/max cards for fast movers and batch rules for slow movers. Policy example: recalculate safety stock weekly for A‑items, monthly for B‑items, quarterly for C‑items.
Run quick pilots before widescale change
Test changes on a small scale so you can measure impact:
- Kanban pilot: pick 8–12 fast movers, set card levels, run 6 weeks, track stockouts and ordering frequency.
- Dynamic safety stock pilot: apply volatility‑based safety stock to 20 A‑items for 8 weeks, measure DIO and fill rate. Compare pilot SKUs to similar control SKUs in your ERP dashboards. Scale what improves turns and service.
Keep teams aligned with a short sales and operations planning rhythm
Make coordination simple and regular:
- Weekly 15–30 minute operational huddle with three items: top stock risks, 5‑day demand changes, and supplier issues.
- Use our powerful ERP dashboard showing exceptions, supply risk and cash impact. Role checklist: Sales flags demand shifts; Purchasing owns supplier fixes; Operations executes warehouse changes.
Use returns data to improve decisions
Returns and scrap highlight product and process problems:
- Track reasons for returns and scrap by SKU and feed that back into demand forecasts.
- Rule: if returns exceed a threshold for two months, quarantine the SKU for review and adjust future orders.
Fast actions that free cash now
Simple, focused moves can release trapped cash quickly:
- Identify SKUs with no movement for 12+ months and pick a disposal route: reprice & bundle, return to supplier, or scrap/donate.
- Run short, targeted promotions for slow movers with a controlled margin floor.
- Negotiate short‑term supplier terms or consignment for categories that free significant cash.
How Jiwa helps you do this
Jiwa gives you the single source of truth to run these steps:
- Pull consistent KPIs and supplier performance reports from one place.
- Automate different reorder rules by SKU segment and set exception alerts.
- Build simple dashboards for your weekly huddle and export supplier scorecards for negotiation.
90 day plan you can start this week
- Weeks 1–2: Baseline KPIs and clean top 20% SKUs.
- Weeks 3–4: Run supplier scorecards and set high‑variance alerts.
- Weeks 5–8: Pilot Kanban for fast movers and dynamic safety stock for A‑items.
- Weeks 9–12: Review pilots, scale what works, run inventory disposal for >12‑month stock.
Get Jiwa now to get started
Ready to start a 90‑day inventory velocity project? Book a Jiwa demo to see the dashboards and workflows in action.
We can build you a free custom demo to suit your unique requirements to show you exactly how much Jiwa can simplify for you. Either request a demo direct through our website or speak to our team.
In Summary
Improving inventory velocity is practical and measurable. With small data fixes, targeted pilots and the right ERP workflows, distributors and manufacturers can reduce DIO, free cash and improve customer service within a single quarter.