Weeks of Stock Explained
Improve your customer satisfaction by understanding weeks of stock.This article is all about understanding how much stock is needed to meet your customer demand by looking at the Weeks of Stock. (Weeks of Stock is sometimes referred to as Weeks of Cover.)
Weeks of Stock, also known as Weeks of Cover, is a key metric used in inventory management, supply chain planning, and retail analysis. It measures the expected duration of time that existing inventory will last, given current demand levels and sales rates.
Weeks of Stock is a valuable metric for managing inventory, optimizing supply chain processes, and improving customer satisfaction by ensuring the right amount of stock is available. By monitoring this metric, you can make more informed decisions about inventory levels, reduce costs, and enhance overall efficiency.
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How is Weeks of Stock calculated
In Weeks of Stock in standard reporting is calculated by dividing the total inventory on hand by the average weekly demand or sales.
The formula is typically:
In this formula:
- Total Inventory is the current amount of stock you have on hand.
- Average Weekly Demand is the average amount of product sold per week, which is usually derived from historical sales data.
What does Weeks of Stock Represent?
The Weeks of Stock value represents the number of weeks that your current inventory will cover based on current sales rates.
A higher value indicates a more extensive stock level relative to demand, which can suggest overstocking or slow sales. A lower value might suggest understocking, increased risk of stockouts, or high demand.
Where is it used?
The metric can be used across a lot of different areas of your business, here are some examples:
Inventory management
For Inventory Management purposes, you can use this metric to gauge if they have too much or too little inventory. It helps in deciding when to reorder stock or when to run down inventory.
Demand & Supply planning
Weeks of Stock assists in assessing whether your supply chain has the right balance of inventory, considering lead times, demand variability, and safety stock.
Merchandising
You can also use this metric to evaluate inventory levels across different product categories over time. It will inform you to make better decisions on what products you should promote, which products to mark down, or which products to reorder.
Financial planning & analyses
For financial planning and analyses you can use Weeks of Stock as an indicator of inventory turnover and cash flow tied up in stock.
What are the implications?
Weeks of Stock is a valuable metric to optimise your inventory and improving your customer satisfaction.
By understanding and monitoring this metric, companies can make informed decisions about inventory levels, reduce costs, and enhance overall efficiency.
High Weeks of Stock
A high Weeks of Stock indicates that your inventory turnover is slow. This could suggest overstocking, tying up capital, or excess inventory costs. It might lead to product obsolescence, spoilage (waste), or markdowns.
High Weeks of Stock
A low value suggests rapid inventory turnover, indicating potential stock-outs, missed sales opportunities, or customer dissatisfaction due to unavailability.
How can Shelf Planner help?
An automated inventory management tool like Shelf Planner helps businesses keep track of stock levels automatically with minimal human intervention.
It’s a proactive tool that helps you avoid:
- Stock Outs
- Excess inventory
- Lost Sales
- Disappointed customers
This is done by using inventory management tools that track stock levels in real time across all your sales channels. That way, you always have an accurate picture of your stock levels and you can make informed decisions about restocking.
Automated inventory management with Shelf Planner
Shelf Planner’s AI-based inventory management platform supports you with all the tools you need to optimise your business.
