Manufacturers collect a large amount of information from suppliers, stores, merchandisers. But this data helps to evaluate the production (manufacturer) efficiency and benefit the business only when it is correctly analyzed by the company: the necessary metrics are monitored and there is an understanding of what the data shows, together with an answer to the question “why this happened”. This approach to FMCG analysis allows companies to keep track of causes and effects and make the right management decisions.

Today we’ll discuss metrics that help a company to understand its market standing, where it is successful, and where it is worth reviewing some processes.

Out of Stock Rate, On-Shelf Availability, Margin by Product Category and other FMCG metrics to monitor

FMCG metrics for monitoring

While communicating with our customers, we have identified ten metrics that FMCG manufacturers and distributors are monitoring or strive to monitor on an ongoing basis to ensure increase in sales.

FMCG market share

1. Market share is the percentage of total sales that a company or product holds. This metric allows assessing competitive performance, planning marketing strategies correctly, identifying growth drivers, etc.

The FMCG market is changing rapidly, so it is essential for companies to continuously monitor this indicator over time and make timely adjustments to their strategy.

Inventory Turnover Ratio in FMCG

2. Inventory Turnover Ratio (ITR) shows the efficiency of a company’s inventory management. According to Statista, the global average inventory loss rate in the FMCG industry was 2.85% in 2023. This means that companies failed to receive revenue from almost 3% of their inventories. 

Therefore, companies need to understand how long it takes to sell the average stock of goods in the warehouse. For this they need to know their ITR. This can be done in two ways: calculate the ratio of the cost of goods sold to the average annual inventory balance or the ratio of revenue to the average annual inventory balance.

Knowing the inventory turnover ratio, the company can calculate the turnover ratio in days. Using this indicator, they can determine how many days the warehouse stocks will last for stable sales, or the materials at the enterprise will last for the production of the required quantity of goods.

Out-of-Stock FMCG Rate
3. Out-of-Stock Rate shows the percentage of an item that is out of stock at any given time. It is important for businesses that the store is able to replenish stockouts at any time and display these goods.  It is believed that the lack of goods drives demand. But this statement is controversial in relation to FMCG. If a customer fails to find his favorite brand of milk in the store several times, the customer will switch to another brand, rather than look for it in neighboring stores. According to studies, the out-of-stock (OOS) rate should be kept below 10%.
Supply Chain Performance in FMCG
4. Supply Chain Performance (Delivered On-Time & In-Full (OTIF) shows the quantity of ordered goods that were delivered to stores on time and in the right quantity. By maintaining a track record of OTIF, companies understand the performance of their supply chain.  This indicator helps to identify problems with order execution and reliability of suppliers. It is calculated as the ratio of timely deliveries in the quantity ordered to the total deliveries and multiplied by 100. It is recommended to keep this indicator at 90% and above.
On-Shelf Availability in FMCG
5. On-Shelf Availability is the number of goods that customers can purchase in the store at a certain time. There are multiple reasons for out-of-shelves items: inaccurate sales forecasts, poor supply chain performance or logistics, excessive workload of merchandisers or store staff who do not have time to deliver the items to shelves.  Out-of-shelves items have a direct impact on sales to the manufacturer, so companies definitely need to monitor this indicator.
Sold Products within Freshness Date in FMCG

6. Sold Products within Freshness Date measures the percentage of products sold within the freshness date of the total number of goods. Expired products are one of the sources of losses for an FMCG company, so it is important to keep track of the products sold within due date and try to increase it. To do this, companies run promotions and offer discounts for goods that may soon become “expired”.

But there is one problem: if a company wants 100% of its products to be sold and have no expired products, it must be prepared for an out-of-stock situation. In the real world, it is almost impossible to accurately calculate the volume of supplies and the time frame within which the products will be sold. Therefore, you have to face a trade-off between the availability of your products on the shelves and sales within their expiration date.

Sales Volume and Margin by Product Category in FMCG
7. Sales Volume and Margin by Product Category will help businesses understand their strong areas. In terms of sales volume, it is important to monitor the plan/actual figures to let you know if you are behind the planned goals or not. This information will help companies identify issues and find their reasons. Margin by product category helps you determine how much of each euro or dollar made in sales actually stays with your company.
Reject rate in FMCG company
8. Reject rate shows the share of defective SKUs in the total amount of goods. A high percentage of defects in an FMCG company may result in loss of confidence of counterparties, financial losses and loss of market power. Therefore, it is important to monitor product quality to avoid these problems.
Return On Marketing Investment in FMCG
9. Return On Marketing Investment (ROMI) assists in understanding how much marketing costs have paid off: TV advertising, online advertising, billboards, email campaigns, etc. This metric shows which strategies work best and allows companies to allocate budget and resources more objectively. ROMI is the ratio of marketing revenue to marketing investment as a percentage.
Sustainability FMCG indicators
10. Sustainability indicators. According to the latest trends, sustainability is an essential factor in the market success of an FMCG company. Buyers are becoming more environmentally conscious and more demanding when choosing products.  Therefore, FMCG companies today need to monitor and improve indicators such as carbon dioxide emissions, packaging efficiency, waste management, utilization rate of recycled resources, etc. According to Nielsen’s Global Corporate Sustainability report, 81% of people around the world believe that companies should help preserve and improve the environment. In addition to the five metrics described above, FMCG and CPG companies also monitor Supply Chain Costs, Carrying Cost of Inventory, Average Time to Sell, and other performance metrics.

KPIs must be aligned with strategies

Keeping track of KPIs in FMCG

Keeping track of KPIs helps companies to ensure sales control, determine their strengths and weaknesses; understand whether the current strategy is well-performing and get answers to many questions.

Keep in mind that companies evaluate each process: logistics, marketing, sales, etc. In order not to be swamped with an immense amount of data, select key indicators that will demonstrate business performance and meet the company’s goals at the moment, for example, some indicators will be tracked to expand market representation, and others will be tracked to increase revenue from online channels.

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