How to Improve Your IPI (Inventory Performance Index): Practical Steps

Improving your IPI (Inventory Performance Index) is a pragmatic process: identify which index components are dragging your score down, then apply targeted operational changes. Because IPI is a composite metric, small focused improvements across multiple areas usually yield the best results. This beginner-friendly guide lays out practical steps you can take, along with realistic examples and timelines.

Step 1 — Diagnose the drivers

1. Review the IPI components available on your platform or WMS. Typical breakdowns include sell-through, excess units, stranded inventory, and in-stock rate.
2. Sort SKUs by contribution to the drop in IPI. Often a small percentage of SKUs drive the majority of the decline.
3. Look for patterns: are slow movers seasonal, are certain categories overstocked, or do listings show errors that cause stranded stock?

Practical example

A midsize seller notices a 12-point IPI drop. Diagnostic reports show 20 SKUs accounting for most of the excess inventory and several listings flagged as missing product identifiers. Prioritizing these SKUs provides the fastest path to improvement.

Step 2 — Reduce excess and aged stock

• Run promotions or clearance campaigns to accelerate sell-through for slow-moving SKUs. Consider bundling slow SKUs with high-velocity products to create attractive offers.
• Use multi-channel sales (own website, marketplaces, wholesale) to expand demand options for excess inventory.
• When promotions won’t move the goods, perform removals or liquidation where economically justified; storage carrying costs can exceed margin benefits of holding on.

Practical tip

Schedule seasonal markdowns earlier in the season to avoid end-of-season pileups that depress IPI.

Step 3 — Fix stranded and unfulfillable inventory

• Audit stranded inventory for listing errors, missing barcodes, incorrect conditions, or compliance holds.
• Correct product information in your seller account or WMS immediately, re-upload missing images or certifications, and relist affected items.
• Implement simple checks in your inbound process to prevent future stranding (e.g., barcode verification, SKU matching).

Practical example

A seller had 150 units stranded due to mismatched SKUs. A one-day relabeling and upload fixed the issue and restored availability, improving both sell-through and in-stock rate components of IPI.

Step 4 — Improve forecasting and replenishment

• Adopt basic forecasting practices: use historical sales, seasonality, and lead times to set reorder points and reorder quantities.
• Differentiate replenishment by SKU velocity: fast movers need frequent, smaller replenishments; slow movers should be replenished conservatively or only on demand.
• Use safety stock formulas for variability, but avoid over-sizing safety stock as a crutch for poor forecasting.

Tools

A WMS, simple inventory planning spreadsheet, or basic inventory management software can automate alerts when SKUs approach reorder points.

Step 5 — Optimize inbound and receiving processes

• Streamline receiving to minimize delays between inbound shipment arrival and stock availability. Faster putaway improves in-stock metrics.
• Ensure accurate counting and scanning at receipt to prevent phantom inventory or discrepancies that lead to stockouts or overstatements.

Step 6 — Monitor and iterate

• Track changes weekly or biweekly. IPI moves more slowly than daily sales, so frequent small adjustments and monitoring work better than big, infrequent changes.
• Create an action log mapping remedial actions to IPI component changes; over a few cycles you’ll see which initiatives yield the best ROI.

Example improvement plan (30-90 day timeline):

1. Days 1–7: Run diagnostics, prioritize top 20 SKUs contributing to low IPI.
2. Days 8–21: Execute promotions, clear aged inventory, fix stranded listings.
3. Days 22–45: Adjust reorder points and safety stock for top SKUs, streamline receiving processes.
4. Days 46–90: Monitor results, iterate on slower-moving SKUs, and standardize successful processes.

Common interventions and their expected IPI impact

• Fixing stranded inventory: immediate positive impact on in-stock and sell-through components.
• Promotions/clearance: quick reduction in excess and aging; temporary increase in sell-through.
• Forecast and replenishment improvements: steadier long-term in-stock performance and fewer stockouts.

Final tips for beginners

• Start small: focus on the handful of SKUs that move the needle rather than trying to change everything at once.
• Use automation where possible to surface issues early (alerts for stranded inventory, aging thresholds, and low in-stock conditions).
• Balance speed and cost: some fixes (promotions) cut margin but free up space; others (better forecasting) reduce future costs.

If you treat IPI (Inventory Performance Index) as a practical operating metric — not an abstract score — you’ll find it a helpful guide to prioritize operations and reduce wasted working capital. Small, consistent improvements to sell-through, stranded inventory resolution, and replenishment discipline typically deliver the best results.