Inventory Turn
Inventory turn, or inventory turnover, is the number of times inventory is sold, used, and replaced over a period, typically a year. It is calculated as cost of goods sold divided by average inventory, usually beginning plus ending inventory divided by two. In industrial settings, it measures how efficiently materials move through a facility and working capital is converted into output.
On the shop floor, inventory turn is used to monitor how quickly raw material, work in progress, and finished goods move through receiving, storage, production, and shipping. A high turn often signals that material is consumed and replenished quickly, lowering carrying costs, reducing floor congestion, and limiting obsolescence risk. Procurement and supply planning teams use the ratio to set reorder points, highlight slow-moving SKUs, and align purchase quantities with actual consumption rather than forecasted excess. In the warehouse, turn is a core KPI for whether storage slots hold fast movers or are tied up by dormant stock that should be relocated, reduced, or liquidated. Inventory turn can be measured separately for commodities, subassemblies, and finished goods to expose where flow slows; high component turns paired with low finished-goods turns usually points to a downstream bottleneck, not a purchasing problem.
Is inventory turn the same as inventory days?
No. Inventory turn counts how many times inventory is replaced in a period, while inventory days converts that rate into time using 365 divided by inventory turn for annual reporting.
Should I use COGS or sales revenue in the numerator?
The most common and operationally preferred method uses cost of goods sold divided by average inventory at cost, not sales revenue.
Can inventory turn be measured by SKU or material family?
Yes. Many manufacturing and warehouse teams calculate turns at the SKU, line, plant, category, or value-stream level to isolate slow movers and localized flow problems.