Metrics That Matter

Metrics That Matter for Inventory Planning Products

Inventory planning software lives or dies by operational outcomes. Unlike engagement metrics in consumer apps, the signal here is concrete: did the brand avoid running out of stock? Did they avoid tying up cash in excess inventory? Your product metrics must map directly to these business outcomes.

The Four Core Metrics

1. Days of Stock (DoS / DoH)
Days of Stock (also called Days on Hand) tells you how many days of sales your current inventory covers at the current sell-through rate. Formula: Inventory Units ÷ Average Daily Sales. A healthy DoS target varies by category — fashion might target 45-60 days, consumables 14-21 days. DoS is Tightly's primary health indicator for each SKU.

2. Stockout Rate
The percentage of SKUs (or revenue-weighted SKU-days) that had zero inventory during a period. Even one day out of stock on a high-velocity SKU can mean lost revenue that never comes back — the customer just buys from a competitor. Tightly's InStock feature is specifically designed to minimize stockout rate by managing backorders.

3. Forecast Accuracy (MAPE)
Mean Absolute Percentage Error: |Actual - Forecast| ÷ Actual × 100. Industry average for e-commerce brands is 25-35% MAPE; Tightly targets <15% on high-velocity SKUs by using composite scoring across velocity, trend, and seasonality. This is a core retention metric — when customers see forecast accuracy improve after onboarding, they stay.

4. PO Acceptance Rate
What percentage of Tightly-generated purchase order suggestions does the buyer actually approve without modification? A high acceptance rate (>80%) means the algorithm is trusted. A low rate means the buyer is manually overriding — a signal that the model parameters or supplier configurations need tuning.

Secondary Metrics Worth Tracking

Inventory Turnover: COGS ÷ Average Inventory Value. Higher is better; turns of 4-6x annually is healthy for most DTC brands.

GMROI (Gross Margin Return on Investment): Gross Margin ÷ Average Inventory Cost. Measures how much gross profit you earn for every dollar tied up in stock. GMROI > 200% is generally considered strong.

Lead Time Compliance: Are purchase orders arriving when expected? Variance here feeds forecast error, so tracking it helps attribute accuracy problems to supplier behavior vs. demand model behavior.

Reorder Frequency: How often is Tightly generating POs per SKU? Too-frequent small orders increase shipping costs; too-infrequent large orders increase stock risk.

PM Implications: Metric Ladders

As a PM, connect product features to metrics in ladders:

Smart Replenishment → DoS per SKU ↑ → Stockout Rate ↓ → Revenue Retained
Forecast Engine → MAPE ↓ → PO Acceptance Rate ↑ → Buyer Trust → Retention
InStock Module → Backorder Conversion Rate ↑ → Lost Revenue Recovered

When writing PRDs or OKRs at Tightly, always anchor to at least one of these operational outcomes. Stakeholders — especially the COO or Head of Operations at a customer brand — will immediately evaluate your credibility by whether you use these numbers fluently.