Inventory Planner offers a wealth of metrics to help you make replenishment decisions to optimize your profit, not just stock levels.

You can improve your cash flow by prioritizing high-revenue items for replenishment instead of locking cash up with low-revenue ones. ABC classification provides a simple way to differentiate between your variants, helping to highlight the products that contribute the most towards your revenue.

The ABC class metric is based on the Pareto Principle, which states that roughly 80% of outcomes stem from 20% of causes. In terms of profit optimization, this means that, in general, 80% of your revenue comes from 20% of your items.

The ABC class metric breaks this down further, sorting your items into 3 groups:

Considering ABC classification over a shorter period (for example, 30 days) lets you respond to emerging trends and seasonality, while considering it over a longer period (for example, a rolling 12-month window) shows you which items consistently generate revenue.

ABC classification is also applied to your entire catalog—it can’t be selectively applied to your bestsellers, for example, or any other subset of items.

In Inventory Planner, you can customize how you use ABC classification.

Inventory Planner uses ABC classes to support replenishment for variants and assemblies.

You can also view ABC classification for bundles and products, but as they don’t get replenishment recommendations, it’s solely to understand sales demand.

Learn more about ABC classification in Inventory Planner.

As A-class variants contribute the most to your revenue, you can prioritize keeping A-class variants in stock to ensure you’re always maximizing your revenue generation.

Furthermore, as C-class variants contribute the least, overstocking them can leave your cash tied up in items which aren’t selling. You can review your C-class variants to see if they need to be discontinued or, when replenishing, whether you can tolerate potential stockouts for these items.

Inventory Planner provides several key metrics in reports and on the Details page Summary tab, to help you take a deeper dive when making decisions.

Learn more about the Details page summary tab.

Two metrics, AVG stock cost (average stock cost) and GMROI (Gross Margin Return on Investment) look at your stock costs and margins to help you understand if your stock has been profitable.

AVG stock cost is the average amount spent on stock per day over the period. A high AVG stock cost can indicate you have too much cash tied up in inventory, which in turn can increase storage costs and the risk of discounts or dead stock. Keeping your AVG stock costs low frees up cash for faster-selling items, keeping you flexible.

Additionally, GMROI is calculated as your profit divided by your average stock cost expressed as a percentage, showing you how much profit you’re getting for every dollar spent on buying inventory for the variant.

The higher your GMROI, the more profitable your product is—and the lower your AVG stock cost, the higher your GMROI.

Using these metrics in conjunction with ABC class rules means you’re making sure your A-class items don’t just deliver revenue, but are truly profitable.

Past performance is a strong indicator of future performance, so keeping track of how your buying decisions have performed so far is important to ensuring you’re making the right buying decisions.

Sell-through % calculates how fast your variants are selling compared to how fast you’re bringing them in. A high sell-through % indicates your products are selling quickly and indicates your buying decisions are matching customer demand.

Stockouts % shows how often your variants were out of stock, while past lost sales converts that into an estimate of the financial impact. They can help you understand whether you've under-stocked a particular variant and therefore missed out on sales.

Using these metrics with ABC classification is helpful when making replenishment decisions, as a low sell-through % on C-class items can lead to overstocking, while a high stockout % on A-class items results in more revenue being lost. Conversely, a high stockout % on C-class items could be a tactic to concentrate your cash in more valuable items.

Combining the metrics mentioned above with how sales have performed over time can highlight changes in performance. Inventory Planner provides a percentage of sales over the last 30 and 365 days, showing you both short and long-term performance.

Items that once had a high GMROI and sell-through % were great past buying decisions, but if you’re seeing a steep decline in sales, you may need to change your future replenishment approach.

You can use all these metrics when deciding what to replenish. They allow you to narrow your focus and use your resources on the most important items in your catalog.

When you’ve created a purchase order, once you’ve adjusted for minimum order quantities and units of measurement, and once you’ve made sure you’ve hit any vendor spend requirements, you can use these metrics to make sure you’re still optimizing your orders for value to the business.

Inventory Planner offers these metrics in several places, so they’re always easily accessible: