SKU Velocity: The rate at which a particular SKU is sold over a given period of time.
SKU Velocity refers to the rate at which a particular Stock Keeping Unit (SKU) is sold over a given period of time. It is an important metric used in inventory management and sales forecasting. The SKU Velocity is measured by dividing the total number of units sold of a particular SKU during a specific period by the number of days in that period.
For example, if a company sells 200 units of a particular SKU over a period of 30 days, the SKU Velocity would be:
SKU Velocity = 200 / 30 = 6.67 units/day
Measuring SKU Velocity can provide valuable insights into which products are in high demand and which ones are not. Products with a high SKU Velocity are those that are selling quickly, indicating strong demand from customers. These products can be a key driver of revenue and profitability for a company. Conversely, products with a low SKU Velocity are those that are not selling quickly, indicating low demand from customers. These products can tie up valuable inventory space and capital, potentially leading to excess inventory costs and a decrease in profitability.
Using SKU Velocity data, companies can make informed decisions about which products to stock, how much inventory to carry, and when to reorder products. By accurately forecasting demand for high-velocity products, companies can optimize their inventory levels and ensure they have the right products in stock to meet customer demand. Conversely, by identifying low-velocity products, companies can make decisions about whether to discontinue the product or adjust its pricing and promotional strategies to stimulate demand.
Overall, SKU Velocity is a critical metric for businesses that want to optimize their inventory management, improve their sales forecasting accuracy, and maximize their profitability.