Inventory KPIs are the metrics that measure how well you are managing your inventory in relation to your inventory targets and business objectives. They help you track your inventory performance, evaluate your inventory efficiency, and identify your inventory issues and opportunities. Common inventory KPIs include the inventory turnover ratio (the number of times you sell and replace your inventory in a given period), inventory accuracy (the percentage of agreement between your physical inventory and your inventory records), inventory days (the number of days it takes to sell your current inventory), and inventory shrinkage (the percentage of inventory that is lost, damaged, or stolen in a given period). To set these KPIs, you need to define your objectives, select relevant KPIs, establish benchmarks, and measure and analyze them regularly. For example, you may want to increase the turnover ratio by monitoring sales, levels, and costs; or improve accuracy by monitoring counts, adjustments, and variances. Additionally, benchmarks can be based on historical performance, industry averages, best practices, or competitors. By collecting accurate data using tools such as barcodes or RFID and interpreting it with trend analysis or variance analysis, you can compare results with benchmarks to identify strengths and weaknesses.