What is inventory turnover in SAP LO-LIS - Logistics Information System (LIS)?

SAP Term: inventory turnover

• Component: LO-LIS

• Component Name: Logistics Information System (LIS)

• Description: The rate or number of times that stock is turned round in a given period. Inventory turnover is calculated by dividing total consumption by mean stock and is one of the key figures in the Inventory Controlling information system. The higher the rate is the better. A high inventory turnover means that materials are not in storage a long time and storage costs are low.

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• Key Concepts: 
  Inventory turnover is a measure of how quickly a company is selling and replacing its inventory. It is calculated by dividing the cost of goods sold (COGS) by the average inventory for a given period. In the SAP Logistics Information System (LIS), inventory turnover is used to measure the efficiency of a company's inventory management. 
  
  How to use it: 
  In SAP LIS, inventory turnover can be calculated by using the Inventory Turnover Report. This report provides information on the average inventory, cost of goods sold, and inventory turnover for a given period. The report can be used to identify areas where inventory management can be improved and to track changes in inventory turnover over time. 
  
  Tips & Tricks: 
  When using the Inventory Turnover Report in SAP LIS, it is important to ensure that the data is accurate and up-to-date. This can be done by regularly updating the data in the system and ensuring that all transactions are accurately recorded. Additionally, it is important to compare the results of the report with other metrics such as sales and profits to get a better understanding of how efficient a company's inventory management is. 
  
  Related Information: 
  Inventory turnover is just one metric that can be used to measure the efficiency of a company's inventory management. Other metrics include stock turns, days of supply, and stock-to-sales ratio. Additionally, there are various techniques that can be used to improve inventory management such as just-in-time (JIT) inventory management and vendor managed inventory (VMI).