It is calculated by multiplying inventory turns by the gross margin percentage. The Turn Earn Index (T/E Index) is a metric that balances inventory turnover and gross profit margin. A good inventory management system can help optimize inventory levels, reduce costs, improve customer satisfaction, and increase profitability.īut how do you measure the success of your inventory management system? What are the key performance indicators (KPIs) that you should track and monitor? One of the most useful KPIs for inventory management is the Turn Earn Index (T/E Index). It involves balancing the costs and benefits of holding inventory, such as storage, handling, obsolescence, and opportunity costs, with the revenue and profits generated from sales. Inventory management is a crucial aspect of any business that deals with physical goods.
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