Why GMROI is the Most Overlooked Metric in Inventory Management ♂️
Let’s be real—inventory management is like juggling flaming swords ️. You’ve got a million things to track, and somehow, Gross Margin Return on Inventory (GMROI) ends up being the awkward kid at the party that no one talks to. Why? Because GMROI is like trying to solve a Rubik’s Cube blindfolded . But here’s the thing—it’s crazy valuable for managing your inventory and boosting profitability .
So, why doesn’t everyone use it? Well, if you’re on SAP, QuickBooks, or even some space-age software, you won’t find a magical “GMROI” button ✨. The only way to get it is to roll up your sleeves and build it yourself. But hey, it’s not rocket science (ok, maybe just a little bit). Here’s what you need to make it happen:
1️⃣ Month-End Inventory: Start with the basics: Part ID, Quantity on Hand, Extended Inventory Value (using whatever wizardry you use for inventory valuation), and Month-End Date. It’s your GMROI foundation ️.
2️⃣ Shipment History: This is the juicy stuff—Shipment Date, Customer, Product ID, Units Shipped, Extended Invoice Price (a.k.a. the moolah ), and Extended Product Costs.
3️⃣ Product Hierarchy: Because who doesn’t love a good hierarchy? Organize by Part ID, Type, Family, and Product Line, and boom—you’re cooking with gas.
4️⃣ Accounting Calendar Table: You’ll want a date breakdown with a sequential month number (pro tip: you’ll need this to impress your accountant friends ). Example: If your business launched in January 2020, you’re at month 56 as of August 2024. Not that anyone’s counting…
If you can wrangle all this data, you’ll be ready to build your own little data empire . Want a shortcut? Microsoft Access is a trusty sidekick (and if you have 365 Enterprise, it’s like getting free fries with your burger ). For the more adventurous, Power Query and DAX are solid tools too.
Still overwhelmed? No sweat! Just give us a shout, and we’ll be your GMROI sherpas, guiding you through the wild terrain of inventory management.
Get on our calendar to chat about your goals:
