What is the primary goal of a velocity inventory?

The primary goal of a velocity inventory is to monitor inventory turnover. This method focuses on understanding how quickly items are sold or used over a certain period, allowing for optimal inventory management. By tracking the rate at which stock is replenished and sold, organizations can effectively maintain adequate inventory levels, thus minimizing overstock and reducing holding costs.

Velocity inventory emphasizes identifying which items are moving quickly and which are stagnant, providing critical insights for making informed inventory decisions. This approach helps in aligning procurement strategies with actual demand, ensuring that popular items are always available while less popular ones aren't taking up valuable storage space. It plays a crucial role in inventory planning and helps organizations respond dynamically to market demands.