Guide to Calculating Inventory Turns for Efficient Stock Management

Calculating Inventory Turnover Rate

Efficient inventory management is essential for small businesses and retail managers to maintain profitability and a smooth supply chain. One of the key metrics for achieving this is the inventory turnover ratio. It helps you understand how efficiently your stock is moving and when to replenish inventory, ultimately reducing holding costs and preventing stockouts. This guide walks you through calculating and interpreting inventory turnover and applying it to real-world scenarios.

Understanding Inventory Turnover Ratio

The inventory turnover ratio measures how many times a company sells and replaces its stock over a specific period, such as a year or a quarter. A high turnover ratio usually indicates good sales and efficient inventory management, whereas a low ratio could signal overstocking or slow-moving goods.

Formula for Inventory Turnover Ratio:

Inventory Turnover Ratio = Cost of Goods Sold (COGS) / Average Inventory

Example 1: Clothing Retailer

  • COGS = $160,000
  • Average Inventory = $20,000

Calculation:

Inventory Turnover Ratio = $160,000 / $20,000 = 8

This store replenishes stock 8 times per year, which balances fashion trends and steady sales.

Example 2: General Retail Business

  • COGS = $200,000
  • Average Inventory = $50,000

Calculation:

Inventory Turnover Ratio = $200,000 / $50,000 = 4

A lower turnover ratio indicates inventory moves only 4 times per year, suggesting room for optimization.

Calculating Inventory Turnover Rate (Days to Replenish)

The inventory turnover rate tells you how many days it takes, on average, to sell and replace your inventory. This insight helps in planning restocking schedules more effectively.

Formula for Inventory Turnover Rate:

Inventory Turnover Rate = Days in Period / (COGS / Average Inventory)

Example 1: Clothing Retailer

  • Days in Period = 90 (1 quarter)

Calculation:

90 / (160,000 / 20,000) = 90 / 8 = 11 days

The store’s inventory is replenished every 11 days, ideal for fast-moving fashion trends.

Example 2: General Retail Business

  • Days in Period = 365 (1 year)

Calculation:

365 / (200,000 / 50,000) = 365 / 4 = 91 days

This business takes 91 days to replenish inventory, which could lead to high holding costs if stock is not moving efficiently.

Interpreting and Applying Inventory Metrics

Here’s how business owners can use the inventory turnover ratio and rate to improve stock management:

  1. Optimize Reorder Schedules:

Align your restocking frequency with turnover rates to avoid stockouts and overstocking.

  1. Identify Poor-Performing Inventory:

Analyze low-turnover items to determine if they should be sold at a discount or replaced with faster-moving alternatives.

  1. Improve Cash Flow:

Faster inventory turnover minimizes holding costs and frees up cash flow for other operational needs.

  1. Tailor Inventory to Demand:

Use historical data to predict demand and adjust inventory accordingly. For example, a clothing retailer might stock less frequently for off-season items.

Why Inventory Turnover Matters

Efficient stock management is about striking a balance. A high inventory turnover ratio indicates your products are selling quickly, reducing costs associated with excess stock. A low ratio, on the other hand, may signal that your products are gathering dust.

By calculating and monitoring your inventory turnover, you stay proactive in identifying trends, optimizing supply chains, and responding to market demand. Whether you’re running a seasonal boutique or a bustling parts store, leveraging this insight ensures smoother operations and better profitability.

Final Thoughts

Managing inventory effectively is critical to the success of any retail business. By understanding how to calculate and interpret both the inventory turnover ratio and rate, you can make informed decisions that enhance efficiency and lessen costs. Start tracking your inventory metrics today and watch your business thrive.

Have questions about optimizing your inventory contact our team at Medallion Fulfillment & Logistics to get started.

What is a 3PL?

What is a 3PL?

Unlocking the Benefits of a 3PL for eCommerce Fulfillment

The meteoric rise of eCommerce and virtual storefronts has made third-party logistics (3PL) a buzzworthy concept in the world of fulfillment services. Managing operations like warehousing, transportation, and order fulfillment can be challenging for small to mid-size online retailers. If you’re asking yourself whether outsourcing these tasks to a 3PL provider is right for your business, you’re not alone. This article highlights the key benefits of using a 3PL and why Medallion Fulfillment & Logistics should be your trusted partner.

What Is a 3PL?

At its core, a 3PL provider steps in to manage essential supply chain operations for your business. These services can include:

  • Warehousing for inventory storage
  • Order fulfillment that ensures accurate packing and shipping
  • Transportation and shipping brokerage to optimize freight and reduce costs
  • Supply chain strategy to streamline operations and meet customer expectations

Whether you need help with all of these functions or just one, a 3PL offers a way to offload operational complexity while maintaining control over your brand. Notably, 86% of Fortune 500 companies rely on 3PL providers for an average of three services, proving their immense value for businesses of all sizes.

Why Use a 3PL Provider for Shipping and Fulfillment?

If you’re an eCommerce business owner, fulfillment is likely one of your biggest expenses—not just in terms of finances but also in time and energy. Here’s why outsourcing to a 3PL like Medallion Fulfillment & Logistics could transform your operations:

  1. Focus on Growing Sales

Sales are the lifeblood of any business. Yet, without a 3PL, valuable time is often spent juggling inventory management, shipping logistics, and warehouse supervision. By outsourcing operations to a trusted 3PL provider, you can free yourself to focus entirely on scaling your sales and engaging customers.

  1. Cost-Effective Operations

Running your own warehouse and employing a logistics team is expensive—especially for small to mid-size businesses. Outsourcing allows you to cut costs on facility rentals, equipment, and staff salaries. Additionally, 3PLs can often negotiate significantly reduced shipping rates with carriers like FedEx or UPS, thanks to their high-volume shipments. These savings can be funneled back into growing your business.

  1. Meet Customer Delivery Expectations

Fast shipping is no longer optional. Same-day and next-day deliveries have become industry standards, and customers expect their orders to arrive quickly and reliably. With their established distribution networks, 3PLs like Medallion Fulfillment & Logistics ensure orders are delivered on time, no matter where your customers are located.

  1. Maintain Control Over Your Brand

Outsourcing doesn’t mean losing control. With a 3PL, you’re still the face of the company, managing branding, customer service, and the overall customer experience. The 3PL simply handles the behind-the-scenes logistics, working seamlessly to align with your business’s goals.

  1. Leverage Strategic Warehouse Locations

The location of your inventory impacts both delivery speed and shipping costs. With Medallion’s dual warehouses on the East Coast and West Coast, eCommerce providers can enjoy rapid shipping across the nation while lowering transit times. Storing inventory at both locations means reaching customers faster while cutting down on costs.

  1. 3PL Options for Every Business

You don’t need to be an enterprise company to reap the rewards of working with a 3PL. Even startups with limited resources can benefit. Medallion’s specially-designed flat-rate fulfillment program ensures that smaller businesses get access to professional logistics solutions without breaking the bank.

The Key Functions and Benefits of Partnering with a 3PL

Collaborating with a 3PL provider allows businesses to optimize their workflows in several ways:

  • Improved Efficiency: A 3PL handles the complexities of fulfillment, allowing you to operate more efficiently.
  • Scalability: Partnering with a 3PL makes it easier to scale your business operations during periods of growth.
  • Access to Technology: Advanced logistics platforms provided by 3PLs monitor inventory, automate processes, and increase transparency within your supply chain.
  • Expertise at Your Fingertips: Logistical expertise means fewer delivery delays, packaging errors, or inventory management hiccups.

Why Choose Medallion Fulfillment & Logistics?

With decades of experience in fulfillment, Medallion Fulfillment & Logistics differentiates itself not just with top-tier logistics services but also with a focus on customer satisfaction. Medallion stands out by:

  • Offering customized solutions for businesses of all sizes, including startups.
  • Maintaining a coast-to-coast warehouse network for nationwide shipping efficiency.
  • Providing a flat-rate startup program, making professional fulfillment accessible.
  • Enabling detailed shipment tracking and tasting notes to deliver a premium customer experience.

Medallion is committed to helping businesses like yours thrive in the competitive world of eCommerce, ensuring seamless fulfillment and unparalleled support.

Is a 3PL Right for Your Business?

Outsourcing fulfillment is about more than just saving time—it’s about setting your business up for long-term success. By partnering with a 3PL provider like Medallion Fulfillment & Logistics, you can streamline your processes, meet customer expectations, and remain focused on what you do best—selling great products.

Interested in taking the next step? At Medallion Fulfillment, we specialize in creating tailored solutions for eCommerce businesses. Contact us today to learn how we can make your operations more efficient and cost-effective.

Start building a stronger, faster, and smarter fulfillment operation with Medallion—because your business deserves the best.

When to Hire a 3PL Provider for Your Business

3PL (3rd Party Logistics)

Managing logistics is one of the biggest challenges for small businesses and ecommerce brands. As your business grows, keeping up with order fulfillment, inventory, and shipping becomes increasingly complex and time-consuming. This is where a 3PL (Third-Party Logistics) provider can make all the difference.

But how do you know when it’s the right time to make the move and hire a fulfillment company? Below, we explore key signs and benefits of partnering with a 3PL to help you decide.

Recognizing Growth Challenges

If your business is growing rapidly, you may be struggling with increased order volumes, managing new market demands, or handling a growing list of SKUs. These are clear signs that your logistics operations have outgrown your internal capacity.

For instance, if you’re a small ecommerce business expanding internationally, managing customs, shipping, and returns can quickly become overwhelming. A 3PL has the systems, expertise, and scalability to take these burdens off your plate.

Cost Efficiency with a 3PL

Running in-house logistics can be expensive. From leasing warehouse space and hiring staff to investing in tech infrastructure, the costs add up fast. A 3PL provider allows you to benefit from economies of scale—such as reduced shipping rates and operational efficiencies—saving you time and money.

Imagine being able to allocate your budget toward your product development or marketing, instead of logistics overhead. This is one of the biggest advantages of hiring a fulfillment company.

Focus on Your Core Business

Logistics challenges don’t just drain your budget—they also steal your time. By outsourcing fulfillment to a 3PL provider, you can focus on what you do best, whether that’s developing products, marketing campaigns, or scaling your customer base.

With logistics in expert hands, you have more bandwidth to grow your business and strengthen your core operations.

Avoid Infrastructure Investments

Hiring a 3PL saves you from making large up-front investments in warehouse facilities, vehicles, and cutting-edge logistics technology. These resources are essential for smooth operations but are costly to set up and maintain.

By partnering with an experienced fulfillment company, you can access state-of-the-art infrastructure without the heavy financial commitment—and scale your operations without worrying about space or capability limitations.

Identifying Pain Points in Your Operations

Consider this checklist to determine if it’s time to hire a 3PL provider:

  • Are you consistently missing shipping deadlines or struggling with order accuracy?
  • Is your business expanding into new markets with different fulfillment requirements?
  • Are logistics eating into the time and resources needed for product development and marketing?
  • Are rising logistics costs cutting into your profit margins?

If you answered “yes” to most of these questions, bringing on a 3PL partner might be the solution you need.

Taking the Next Step

A partnership with our fulfillment company can transform your logistics operations, boosting efficiency, cutting costs, and giving you the room to grow. Assess your current logistics challenges and take an informed step toward finding the right 3PL provider for your business.

The right time to hire a 3PL is when your business is ready to focus on growth—not logistics roadblocks. Contact Medallion Fulfillment and Logistics Today.

Happy Holidays From the Team At Medallion Fulfillment: Avoiding the Post Holiday Sales Slump

eCommerce Team Working with a Fulfillment Team

No matter how successful the holiday selling season is for your eCommerce business, there’s no time to rest on your laurels. You can’t afford to ease up and have a soft start to the new year. Let our fulfillment company team share some valuable tips to help avoid that dreaded post-holiday sales slump.

1. Conduct a post-holiday sale.

Sales and discounts are part of your holiday marketing plan, but there’s no reason they can’t be part of after-holiday marketing as well. Top global brands such as Nike are known to run clearance sales straight through the month of January. This strategy can pay some additional benefits:

• Offering deep discounts or buy-one-get-one sales is a good way to clear out old inventory and make room for new merchandise.

• Great pricing can mitigate the effect of post-holiday returns by enticing customers to spend more money to upgrade.

2. Retarget your existing customer base.

When email ads are retargeted, studies show that the click-through rate is 180.6 percent higher than the initial email run. This plan also builds loyalty that pays benefits in the long run.

3. Highlight season-appropriate items.

This is where your market research will come in handy. Have you identified any specific buying patterns during the beginning of each year? In addition, there are many products such as outerwear and snow removal equipment that are sure-fire sellers during this time of year.

4. Up your social media game.

Holiday activities may have slowed down social media use, but during the post-holiday lull, old habits are sure to come back. If you’ve been meaning to try TikTok or include more interactive content, there’s no time like the present.

Partner with Our Fulfillment Company in 2025

Let Medallion Fulfillment & Logistics help make 2025 your best year yet. Contact us to learn more.

3PL Unlocked: Elevate Your Small Business Logistics Strategy

3PL Partner

Imagine if you could scale your small business without worrying about the complexities of logistics. What if I told you there’s a game-changing solution that could streamline your operations, improve customer satisfaction, and save you time and money? Welcome to the world of Third-Party Logistics (3PL). In this guide, we’re going to unlock the potential of 3PL for small business and ecommerce owners, showing you not just what it is, but how it can be your secret weapon for growth and efficiency. Let’s dive in and elevate your business to new heights with an unbeatable logistics strategy.

Understanding 3PL

Third-Party Logistics (3PL) providers handle the logistics operations for businesses, including warehousing, inventory management, and shipping. By outsourcing these tasks, small businesses can focus on their core activities and benefit from the expertise and resources of seasoned logistics professionals. With a 3PL partner, you gain access to advanced technology, network optimization, and cost-effective solutions that might otherwise be unattainable on your own.

Identifying Your Needs

Before selecting a 3PL partner, assess your business’s unique logistics requirements. Consider factors like the volume of orders, seasonal fluctuations, and specific services you need, such as international shipping or returns management. Make a list of non-negotiables and nice-to-haves to guide your search. This clarity will ensure that you find a provider who aligns with your business goals and can support your future growth.

Choosing the Right Partner

When evaluating potential 3PL partners, consider their cost structures, service offerings, and industry reputation. Look for testimonials and case studies from similar businesses to gauge their success. It’s crucial to choose a partner who offers scalable solutions and has a proven track record of reliability and efficiency. Don’t forget to consider their technology—integrations, tracking capabilities, and real-time data access are vital for seamless operations.

Integration with Your Business

Successful 3PL integration requires alignment between your processes and the provider’s systems. Start by evaluating your existing technology and identifying potential compatibility issues. Establish clear communication channels and define roles and expectations from the beginning. Regular check-ins and feedback loops will ensure a smooth transition and foster a strong partnership.

Tracking and Managing Shipments

A key advantage of partnering with a 3PL provider is their ability to efficiently manage inventory and shipments. Leverage their tracking systems to monitor your products in real-time, providing transparency to both you and your customers. Develop a process to address any discrepancies or delays promptly, ensuring customer satisfaction and maintaining your reputation.

Future-Proofing Your Strategy

Your logistics strategy should evolve as your business grows. Regularly review and assess your 3PL partner’s performance, adapting your approach as needed. Stay informed about industry trends and technological advancements to ensure you’re leveraging the best solutions. Continuously seek feedback from your partner and customers to refine your logistics operations.

Ready to take your business to the next level? Explore our 3PL solutions today and discover how Medallion Fulfillment can streamline your logistics and empower your growth. Get in touch with us to discuss your unique needs and start elevating your business logistics strategy.