How to Track Inventory KPIs Using Tableau

Building a custom dashboard in Tableau is an excellent way to get a clear, visual handle on your company’s inventory performance. Instead of drowning in spreadsheets, you can create interactive charts that show you what’s moving, what’s not, and where you need to take action. This article will guide you through the key inventory metrics you should be tracking and how to visualize them step-by-step in Tableau.

Why Track Inventory KPIs in Tableau?

Dumping your inventory data into a tool like Tableau transforms it from a static list of numbers into a dynamic decision-making tool. The primary benefit is visualization. You can instantly see trends, spot outliers, and compare performance across different product categories or time periods in a way that’s nearly impossible with raw data alone.

Using Tableau also helps you:

• Centralize Your Data: Connect directly to your ERP system, e-commerce platform (like Shopify), or even a simple Google Sheet to pull all your inventory information into one place.
• Enable Interactive Analysis: Allow your team to filter, drill down, and explore the data on their own. Instead of requesting a new report for every question, they can find answers themselves by interacting with the dashboard.
• Make Better Decisions: A clear view of your inventory health helps you optimize stock levels, prevent stockouts, and reduce carrying costs, directly impacting your bottom line.

Choosing Your Most Important Inventory KPIs

Before you start building anything, you need to decide what to measure. The right Key Performance Indicators (KPIs) give you a measurable way to track progress toward your inventory management goals. Here are some of the most essential inventory KPIs to consider.

1. Inventory Turnover Ratio

This KPI measures how many times your company sells and replaces its inventory over a specific period. A high ratio is generally good, indicating strong sales and efficient inventory management. A low ratio might suggest overstocking or poor sales.

• What it tells you: How efficiently you are managing your inventory.
• Formula: `Cost of Goods Sold (COGS) / Average Inventory Value`

2. Sell-Through Rate

Sell-through rate compares the amount of stock sold to the amount of stock received from a supplier during a specific period. It’s particularly useful for retailers who need to assess the performance of individual products or product lines.

• What it tells you: How quickly a product is selling relative to how much of it you have.
• Formula: `(Number of Units Sold / Number of Units Received) * 100`

3. Days of Inventory Outstanding (DIO)

Also known as Days Sales of Inventory (DSI), this metric tells you the average number of days it takes for your company to turn its inventory into sales. You generally want to keep this number low, but it varies significantly by industry. A fresh food grocer and a car dealership will have very different target DIOs.

• What it tells you: How long you hold onto inventory before selling it.
• Formula: `(Average Inventory / Cost of Goods Sold) * 365 Days`

4. Carrying Cost of Inventory

This is the total cost of holding onto unsold inventory. It includes costs like storage space, insurance, labor, and potential obsolescence. Tracking this helps you understand the hidden costs of overstocking.

• What it tells you: The true cost of your unsold stock.
• Formula: Sum of all inventory costs (storage, insurance, labor, taxes, etc.), often expressed as a percentage of total inventory value.

5. Stockout Rate

The stockout rate is the percentage of items not available when a customer tries to order them. A high stockout rate leads to lost sales and poor customer satisfaction, so keeping this KPI as low as possible is crucial.

• What it tells you: How often you are failing to meet customer demand.
• Formula: `(Number of Stockouts / Total Number of Orders) * 100`

Gathering and Preparing Your Inventory Data

Your dashboard will only be as reliable as the data it’s built on. Raw inventory data often lives in multiple places like an ERP system (e.g., NetSuite), an e-commerce platform (e.g., Shopify), or even just a set of Excel files. Before bringing it into Tableau, make sure the data is clean and structured properly.

For best results, aim for a simple, flat table format with columns like:

• Date/Timestamp: When the entry was recorded.
• Product_SKU: A unique identifier for each product.
• Product_Name: The consumer-facing name of the product.
• Product_Category: E.g., "Shirts," "Pants," "Accessories".
• Units_Received: The quantity of inventory added.
• Units_Sold: The quantity of inventory sold.
• Current_Inventory_Level: The stock on hand.
• Inventory_Location/Warehouse: The location of the stock.
• Per_Unit_Cost: The cost to acquire one unit of the product.

Clean data means fixing typos, ensuring consistent naming conventions (e.g., always "T-Shirt," not sometimes "tshirt" or "T Shirt"), and removing any duplicate entries.

Building Your Inventory KPI Dashboard in Tableau: A Step-by-Step Guide

Let's walk through creating a simple dashboard to track Inventory Turnover and Sell-Through Rate. For this example, we’ll assume you have an Excel or CSV file with the sort of clean data described above.

Step 1: Connect Your Data Source

Launch Tableau Desktop. On the "Connect" panel on the left, choose the appropriate connector for your data file — for this walkthrough, we'll use Microsoft Excel. Navigate to your file and open it. Tableau will display your data on the "Data Source" page, where you can verify the columns and data types.

Once you’re happy with the setup, click on the Sheet 1 tab at the bottom to go to the visualization workspace.

Step 2: Create Calculated Fields for Your KPIs

Tableau excels at letting you create new metrics from your existing data using a feature called 'Calculated Fields'.

To create your Inventory Turnover ratio:

1. Right-click anywhere in the "Data" pane on the left side of the screen and select "Create Calculated Field."
2. Name the field "Inventory Turnover."
3. In the formula box, enter your logic. If you have "COGS" and "Average Inventory" columns, it’s simple. If not, you might need to build them. For example, Cost of Goods Sold could be calculated as `` SUM([Units Sold] * [Per Unit Cost]) `. Assuming you have COGS, the formula would be:**

[Cost of Goods Sold] / AVG([Inventory Value])

To create your Sell-Through Rate:

1. Create another Calculated Field and name it "Sell-Through Rate."
2. Enter the following formula:

SUM([Units Sold]) / SUM([Units Received])

Step 3: Visualize Inventory Turnover Over Time

A line chart is a great way to see how your turnover is trending.

1. From the "Data" pane, drag your Date field onto the Columns shelf. Right-click it and select "Month" to see a month-over-month trend.
2. Drag your newly created Inventory Turnover calculated field onto the Rows shelf.
3. Tableau will automatically generate a line chart. Now you can easily see if your turnover is improving or declining over time. To see this by product line, drag your Product_Category field onto the 'Color' Mark card and Tableau will show a line color for each category.

Step 4: Visualize Sell-Through Rate by Product

A bar chart allows for easy comparison of sell-through rates across different products.

1. Drag the Product_Name or Product_Category field to the Columns shelf.
2. Drag the Sell-Through Rate calculated field to the Rows shelf.
3. Tableau creates a vertical bar chart. To make it more reader-friendly, go to the "Show Me" panel on the top-right of your screen and select a Horizontal Bar Chart. Now you can quickly identify your best- and worst-performing products at a glance.
4. Tip: To display the rate as a percentage, right-click the "Sell-Through Rate" pill in the Data pane, go to "Default Properties" > "Number Format…" and choose "Percentage".

Step 5: Assemble Your Dashboard

Now that you have individual worksheets (the charts you just built), you can combine them into a single dashboard.

1. Click the "New Dashboard" icon at the bottom of the window (the one with the four squares).
2. From the "Sheets" list on the left, drag your "Inventory Turnover" line chart and your "Sell-Through Rate" bar chart onto the canvas. Arrange them as you see fit.
3. To make the dashboard interactive, add a filter. For example, drag the Product_Category field onto the "Filters" card. In the dialog that pops up, select "Show Filter." This will add a checklist or dropdown menu to your dashboard, allowing users to select which product categories they want to view.

Quick Tips for an Effective Inventory Dashboard

• Use Color Strategically: Use colors to draw attention. For instance, you could configure a rule that shows stock levels below a certain threshold in red.
• Add KPI Cards: Create a separate worksheet to display high-level numbers, like Total Inventory Value or overall Average Days of Inventory Outstanding. Style it to look like a simple text card and add it to the top of your dashboard for an at-a-glance summary.
• Leverage Tooltips: Hovering over any data point in Tableau brings up a "tooltip." You can edit these tooltips to show more detailed information, like specific unit counts or costs, without cluttering the main view.

Final Thoughts

Transforming complex inventory data logs into clear, actionable insights is what Tableau does best. By identifying the right KPIs, preparing your data carefully, and building user-friendly visualizations, you create a powerful tool that helps your team make smarter, data-driven decisions to optimize inventory and boost profitability.

But the setup process, as outlined, can still feel complex, particularly if you're not a data expert. It requires cleaning data, building connections, creating calculated fields, and designing dashboards manually. This is exactly why we built Graphed. We connect to your data sources like Shopify, Salesforce, and your spreadsheets in seconds. From there, you can just ask questions in plain English - like, "Show me my sell-through rate for t-shirts last quarter" - and instantly get the visualization you need, saving you from the technical steps in-between.