Inventory turnover ratio: the KPI Swiss SMEs ignore

If you only track one metric for stock management, this is it. Inventory turnover tells you whether your inventory works for you or against you.

Yet most Swiss SMEs don’t calculate it. They manage by gut feeling and discover problems during annual counts — when it’s too late.

The formula

Turnover = Cost of Goods Sold (COGS) ÷ Average Inventory

Example: a Geneva distributor has COGS of CHF 2.4M and average inventory of CHF 600K. Turnover = 4, meaning stock renews every 91 days.

What’s a good ratio?

Food & perishables: 12-20. Products expire, fast turnover is vital.

Consumer goods distribution: 6-12. Top performers aim high.

Manufacturing: 4-8. Longer production cycles justify deeper stock.

Spare parts / specialized equipment: 2-4. Availability trumps turnover.

Why your ratio is too low

Precautionary over-ordering: fear of stockouts leads to “just in case” ordering. Across hundreds of SKUs, this creates structural overstock.

No demand forecasts: reordering based on intuition instead of data.

Undetected end-of-life products: items whose demand dropped years ago still sitting in stock.

High minimum order quantities: suppliers impose minimums exceeding actual needs.

How to improve

ABC classification: A items (20% of SKUs, 80% of revenue) need daily attention. C items — that’s where dead stock hides.

Calibrate reorder points: base each item’s threshold on actual demand and supplier lead time.

Liquidate dead stock: better to sell at a loss than keep paying to store it.

Go further with AI

In 5 days, we analyze turnover for every item and identify the highest-impact actions. Per-item forecasting, anomaly detection, reorder simulation.