Days of Supply

What is Days of Supply?

Days of Supply (DOS) is a metric that measures how many days of future customer demand your current inventory can fulfill based on historical or forecasted sales rates. It answers the question: "How long will my stock last at current sales velocity?" This KPI is essential for balancing inventory investment with product availability.

Why it matters for Shopify brands

For ecommerce businesses, Days of Supply directly impacts cash flow, storage costs, and customer satisfaction. Running too much inventory ties up capital that could fund marketing or product development, while running too little risks stockouts and lost revenue. By monitoring DOS, Shopify brands can optimize reorder points, reduce carrying costs, and ensure they're meeting demand without overcommitting resources. This is especially critical for multi-SKU operations and seasonal products.

Key facts about Days of Supply

• Calculation: DOS = (Current Inventory ÷ Average Daily Sales) × Number of Days. For example, 500 units ÷ 25 units per day = 20 days of supply.
• Varies by product: Fast-moving SKUs may target 7–14 days of supply, while slower items might carry 30–60 days to minimize frequent reorders.
• Industry benchmarks: Retail typically aims for 30–90 days, but ecommerce brands often operate leaner at 14–45 days due to faster inventory turnover and direct-to-consumer models.
• Accounts for lead time: Optimal DOS should factor in supplier lead times—if your reorder lead time is 14 days, your DOS should never drop below that threshold.

Common mistakes to avoid

• Ignoring seasonality: Using annual average sales rates without adjusting for seasonal spikes can leave you understocked during peak demand or overstocked during slow periods.
• Neglecting lead time variance: If supplier lead times fluctuate, setting a single DOS target may cause stockouts. Build buffer stock based on worst-case lead time scenarios.
• Treating all products equally: Applying one DOS target across all SKUs ignores demand velocity differences. High-velocity items need lower DOS; slower items need higher DOS to prevent waste.

Optimize your inventory planning and reduce stockouts with smarter supply chain tools—explore Forth Suite to automate DOS tracking and forecasting.