Days of Inventory (DOI),
The Most Overlooked Supply Chain KPI

What Is Days of Inventory?

Days of Inventory (DOI), also called Days Sales of Inventory (DSI) or Days Inventory Outstanding (DIO), measures how many days your current stock will last before it runs out, assuming current consumption or sales rates continue. It is one of the most important supply chain KPIs, and one of the least commonly tracked by Pakistan SMEs.

Why DOI Is the KPI Nobody Talks About

A business with 180 days of inventory has six months of cash tied up in stock. At a 25% annual holding cost rate, that is 12.5% of inventory value spent on carrying costs alone. Reducing DOI from 180 to 90 days would release 50% of working capital and halve holding costs without impacting service levels, if done properly.

DOI vs Inventory Turnover Ratio

DOI and inventory turnover ratio (ITR) are inverse measures. An ITR of 4 equals 91 days of inventory. An ITR of 6 equals 61 days. DOI is more intuitive for operations teams because it speaks in days rather than a ratio. Use both, they tell the same story from different angles.

Worked Example

A manufacturer with Rs 12 million in average inventory value and Rs 48 million in annual COGS calculates DOI as (12,000,000 / 48,000,000) x 365, which comes to 91 days. Benchmarked against a general manufacturing range of 45 to 75 days, this flags meaningfully excess stock worth investigating by category.

Common Mistakes to Avoid

• Using a single period-end inventory value instead of an average, which can skew DOI significantly depending on when in the cycle the count was taken
• Not separating fast-moving and slow-moving SKUs, which hides real excess stock inside an otherwise healthy blended number
• Benchmarking DOI against another industry's typical range instead of your own sector's norms
• Reacting to a DOI change without first checking whether it was driven by inventory value or by a shift in COGS