We run a physical product business with long supply chain lead times and complex inventory. What weekly scorecard metrics should we track to maintain operational health and avoid cash flow crises?

Question

Tyler Smith · Accepted Answer

Running a physical product company requires a scorecard that acts as an early warning system for your cash and inventory. Unlike service businesses, your cash is constantly trapped in physical assets, and a single supply chain delay can stall your entire operations.

To protect your cash flow, you must track three critical weekly metrics.

First, track your inventory turnover rate or weeks of supply on hand. This tells you if you are tying up too much capital in slow-moving stock or if you are at risk of running out of inventory for your top-selling products.

Second, track your supplier on-time delivery rate. If your suppliers are consistently late, your production schedules will slip, leading to missed customer shipments and delayed revenue. Tracking this weekly allows you to address supplier performance issues before they impact your customers.

Third, track your order-to-cash cycle time. This is the average number of days from when a customer places an order to when the cash hits your bank account. Minimizing this metric is key to maintaining healthy liquidity.

By reviewing these numbers every week, you can anticipate inventory bottlenecks and cash shortages weeks before they show up on your profit and loss statement. This gives you the lead time you need to adjust purchasing, run sales promotions, or secure line of credit financing.