This measure calculates field finished goods inventory days of supply by dividing the annual field finished goods inventory by the "value of transfers divided by 365 days." Field inventory is defined as inventory kept at locations outside of the manufacturing plant, i.e. in a distribution center or warehouse. The value of finished goods inventory is defined as the value of finished goods inventory at standard costs before removal of excess or obsolete inventory. This measure is part of a set of Process Efficiency measures that help companies optimize the performance of their "operate warehousing" process by minimizing waste and refining resource consumption.
Field finished goods inventory days of supply
Process efficiency represents how well a process converts its inputs into outputs. A process that converts 100% of the inputs into outputs without waste is more efficient than one that converts a similar amount of inputs into fewer outputs.