Did you know that poor data quality costs the average organization $12.9 million every year?

By implementing data-driven strategies, businesses can identify trends, reduce waste, and improve forecasting accuracy, preventing costly errors before they impact the bottom line.

But what exactly does inventory management analytics consist of, and how can you maximize its potential?

Read on to discover how analytics can transform your business efficiency and profitability.

What are inventory management analytics?

Inventory management analytics refers to the process of collecting, analyzing, and interpreting data related to your inventory levels, stock movement, and demand trends.

It helps you make data-driven decisions to: 

• optimize stock levels, 
• reduce waste, and 
• improve order fulfillment efficiency.

With the right analytics, you can spot trends in sales, supplier performance, and seasonal fluctuations, ensuring that you always maintain the right stock balance while keeping holding costs low.

How do inventory management systems help with inventory analysis?

An Inventory Management System (IMS) makes your life easier by automating the tedious parts of inventory tracking.

Instead of scrambling to count stock or track them on spreadsheets, you get real-time data that keeps you ahead of the game.

Here’s how an IMS helps you analyze inventory efficiently:

✅ Tracks stock movements in real-time: Know exactly what’s coming in and going out across all your locations.

✅ Eliminates spreadsheet chaos: No more juggling endless Excel sheets – get structured, real-time reports at your fingertips.

✅ Identifies patterns in demand: Spot seasonal trends and adjust your stock levels accordingly.

✅ Prevents stockouts and overstocking: Smart alerts help you restock before you run out and avoid excess inventory.

✅ Reduces human error: Automated calculations eliminate mistakes from manual tracking.

When you have an IMS handling the data for you, making inventory decisions becomes faster, easier, and far more accurate.

Pro tip

Fabrikatör simplifies inventory management for Shopify stores by automating purchase order creation, forecasting, and reporting tasks.

You can effortlessly import your existing data from Excel or Google Sheets directly into the platform to make the transition even smoother.

Furthermore, its integrations with platforms like QuickBooks and Klaviyo unify workflows across inventory, sales, and customer communication, turning complex processes into simple, efficient solutions.

Inventory management analytics types

Different types of inventory analytics have distinct purposes. Some help you understand past trends, while others predict future demand or offer actionable recommendations.

Here’s how each type of inventory analytics works and how you can use them to optimize your stock management.

📊 Descriptive inventory analytics

Descriptive analytics is the foundation of inventory analysis, as it looks at past data to help you understand what happened with your inventory over a specific period.

This analysis provides insights into sales trends, stock movement, and demand fluctuations, giving you a clear picture of your inventory performance.

🔹 Example: If you check last quarter’s sales and notice a particular SKU selling slower than usual, you can adjust reorder quantities to avoid overstocking and allocate storage space to faster-moving products instead.

💡 What can help: Implementing real-time inventory tracking and automated sales reports ensures you detect slow-moving stock early and adjust purchasing decisions before excess inventory builds up.

Pro tip

Fabrikatör’s Control Center simplifies inventory tracking by highlighting key performance indicators like Average Order Value, bestsellers, and dead stock.

Regularly reviewing these insights lets you quickly identify sales trends and adjust stock levels before issues arise.

🔎 Diagnostic inventory analytics

When something goes wrong with your inventory, for example, frequent stockouts, excess stock, or unpredictable demand, you need to understand why it happened.

Diagnostic analytics helps you uncover the root cause of inventory inefficiencies, whether it's supplier delays, inaccurate demand forecasts, or poor stock allocation.

🔹 Example: If you consistently run out of a best-selling product, diagnostic analytics may reveal that supplier delays are the issue.

💡 What can help: To prevent this, you can negotiate better lead times, work with multiple suppliers, or set up safety stock levels to avoid constantly facing shortages.

Pro tip

Fabrikatör allows you to forecast stockouts in advance by listing products expected to run out within 7, 30, or 60 days.

Use the Forecasted Stockout filter to set a custom date range, ensuring you can adjust replenishment strategies before shortages impact sales.

📈 Predictive inventory analytics

Instead of reacting to inventory issues, predictive analytics helps you anticipate them before they happen.

It analyzes historical data and trends to forecast future demand, allowing you to stock the right products at the right time.

🔹 Example: If your winter clothing line sells out every December, predictive analytics can recommend ordering higher quantities before peak season.

💡 What can help: Demand forecasting tools, seasonal inventory planning, and AI-driven predictive models can help you optimize restocking decisions and avoid lost sales.

Pro tip

Fabrikatör allows you to enhance predictive inventory analytics with AI-powered demand forecasting, factoring in seasonality and trends for more accurate planning.

With a single click, you can turn demand forecasts into actionable supply plans, ensuring you always stock the right products at the right time.

🛠️ Prescriptive inventory analytics

Prescriptive analytics takes things a step further by offering data-based recommendations.

It doesn’t just tell you what might happen but suggests specific actions to improve stock management, pricing, and supplier relationships.

🔹 Example: If you have excess stock of a slow-moving item, prescriptive analytics may suggest bundling it with a fast-seller to efficiently clear inventory.

💡 What can help: Automated inventory management systems with AI-powered insights can provide real-time recommendations for discounting, bundling, or liquidating slow-moving products before they become dead stock.

Inventory management analysis methods

Choosing the right inventory analysis method is key to optimizing stock levels, reducing waste, and improving order efficiency.

Different methods focus on value, usage frequency, cost, or criticality, helping you categorize inventory and make better purchasing decisions.

Here’s a breakdown of the most effective inventory analysis methods and how they help you improve stock control and reduce unnecessary costs:

🔠 ABC analysis

ABC analysis helps you prioritize inventory based on its impact on your business, sorting stock into three categories based on value and sales volume.

This method ensures you focus on high-value items that contribute the most to revenue while efficiently managing lower-value stock.

✅ A-items: High value, low quantity – These products require tight inventory control and accurate demand forecasting since they account for the largest revenue share despite smaller stock levels.

✅ B-items: Moderate value and volume – These fall between A and C items and need a balanced inventory strategy to avoid shortages while preventing excessive stock.

✅ C-items: Low value, high quantity – These items are low-cost but sell in high volumes, requiring bulk storage and efficient restocking processes to maintain availability.

Pro Tip

Fabrikatör enhances ABC analysis by automatically categorizing your products into:

• A (fantastic), 
• B (moderate), 
• C (poor), and 
• Additional fourth category, D (idle - items not sold in the last 30 days),

based on their sales performance.

This classification helps you to quickly identify best-selling products, optimize inventory levels, and improve profitability by prioritizing resources where they are most needed.

📌 VED analysis

VED analysis prioritizes inventory based on how critical it is to your business operations.

This is particularly useful in industries like healthcare and automotive, where certain components are essential to keeping operations running smoothly.

✅ Vital: Stockouts of these items could severely disrupt operations, making strict inventory control and emergency backup stock essential.

✅ Essential: Important but manageable in small shortages—monitoring lead times and ensuring fast replenishment helps prevent issues.

✅ Desirable: These are non-essential but still useful, meaning you can stock them based on budget and demand trends rather than strict inventory policies.

💰 HML Analysis

HML analysis focuses on the cost of individual inventory items, helping you determine which products require strict tracking and control versus those that can be managed with more flexible stock policies.

This method is useful for businesses handling a mix of high-end and budget-friendly products.

✅ High-cost (H): These items require close monitoring and strict inventory control due to their significant impact on capital investment. Overstocking can tie up cash, while shortages can cause missed sales.

✅ Medium-cost (M): These items need moderate tracking—they’re not as financially risky as H-items but still contribute a good share of inventory costs.

✅ Low-cost (L): These items are low in value and easily replaceable, meaning they require minimal tracking and can often be reordered in bulk.

🤔 How do you choose which method to use?

With so many inventory analysis methods available, choosing the right one depends on your business needs, product types, and operational priorities.

No single method works for everyone, so consider what matters most to your inventory strategy.

Here’s how you can decide which method fits your business best:

✅ If you want to prioritize high-value products, ABC analysis helps you focus on the items that drive the most revenue while managing lower-value stock efficiently.

✅ If certain products are critical to your operations, VED analysis ensures vital stock is always available while avoiding unnecessary spending on less essential items.

✅ If cost is your main concern, HML analysis helps you balance expensive stock investments with lower-cost inventory that requires minimal oversight.

✅ If you want a mix of control and efficiency, you can combine multiple methods. For example, ABC should be used for sales priority, and HML should be used to monitor high-cost items more closely.

Key inventory management analysis KPIs & metrics

Tracking key inventory metrics allows you to measure stock performance, optimize replenishment strategies, and minimize losses.

These Key Performance Indicators (KPIs) help you make informed decisions about purchasing, storage, and fulfillment, ensuring you maintain the right balance between demand and supply.

💰 Gross margin return on investment (GMROI)

GMROI measures how effectively your inventory generates profit.

A higher GMROI means your stock is profitable, while a lower GMROI suggests you may be carrying excess inventory or underpricing products.

If your GMROI is low, it may be time to reassess pricing strategies, reduce slow-moving stock, or negotiate better supplier terms.

🔄 Inventory turnover rate

This metric shows how many times your inventory is sold and replaced within a given period.

A high turnover rate indicates strong sales and efficient stock management, while a low turnover suggests overstocking or weak demand.

A healthy turnover rate ensures you’re not tying up cash in slow-moving stock, helping maintain a lean inventory.

🚨 Stockout rate

Stockout rate measures how often you run out of inventory, which directly impacts customer satisfaction and revenue.

Frequent stockouts can lead to lost sales and frustrated customers, while occasional stockouts may indicate effective demand planning.

Balancing stock levels carefully ensures you meet demand without excessive overstocking.

📦 Available to promise (ATP)

ATP helps you determine how much inventory is available for new orders after fulfilling existing commitments.

This metric is crucial for businesses handling pre-orders or high-demand products.

Accurate ATP calculations prevent overselling and ensure reliable delivery timelines.

🎯 Customer service level (CSL)

CSL measures the percentage of orders fulfilled without stockouts or delays.

A higher CSL means customers receive their orders on time, which improves retention and brand loyalty.

Low CSL scores may indicate stock shortages, inefficient fulfillment processes, or supplier delays that must be addressed.

📊 Days sales of inventory (DSI)

DSI calculates how long inventory stays in stock before being sold.

A lower DSI means you’re moving inventory quickly, while a high DSI suggests slow-moving stock that may need markdowns or promotions.

Keeping DSI within an optimal range helps you free up cash flow and prevent dead stock buildup.

📈 Sell-through rate

The sell-through rate tracks how much of your received inventory is sold within a specific period.

A high sell-through rate indicates strong demand, while a low rate may suggest pricing issues or ineffective marketing.

Monitoring sell-through helps you make better purchasing decisions and avoid excessive stock buildup.

📉 Backorder rate

The backorder rate measures how often customers place orders for out-of-stock items, showing how well you manage inventory availability.

A high backorder rate may indicate supply chain issues or inaccurate demand forecasting, requiring adjustments in restocking strategies.

Conclusion

Streamlining operations, improving forecasting, and optimizing stock levels all start with the right analysis method.

Fabrikatör takes this a step further with powerful tools that help you scale, automate, and optimize your inventory management effortlessly.

Let’s explore what makes us the ideal choice.

How can Fabrikatör elevate your inventory management analytics?

Fabrikatör takes inventory management analytics to the next level, helping you make smarter, data-driven decisions while automating key processes to improve efficiency. With real-time tracking, AI-powered insights, and seamless integrations, Fabrikatör ensures you always have the right stock at the right time.

✨ Track and analyze 100+ inventory metrics to monitor sales trends, stock movement, and overall inventory health.

✨ Automate restocking with AI-powered replenishment, preventing stockouts and reducing excess inventory.

✨ Gain real-time visibility into incoming inventory, ensuring Shopify stock levels are always accurate.

✨ Identify dead stock and slow-moving items so you can take action before they impact cash flow.

✨ Seamlessly manage supplier-specific SKUs, avoiding errors in stock tracking and purchase orders.

✨ Forecast demand more accurately with advanced analytics, reducing the risks of under- or overstocking.

✨ Sell out-of-stock items with the backorder feature, preventing lost sales while inventory is in transit.

Beyond analytics, Fabrikatör helps you scale and optimize inventory operations effortlessly:

✅ Create and manage purchase orders with customizable templates, MOQs, and supplier tracking.

✅ Integrate with Shopify, QuickBooks, and Klaviyo to streamline your eCommerce workflows.

✅ Simplify supplier communication and PO approvals, saving time on procurement processes.

With Fabrikatör, you don’t just track inventory – you optimize, automate, and future-proof your entire supply chain.

Ready to take control of your inventory analytics?Try Fabrikatör or request a demo today!