Return on Investment (ROI) is a financial performance measure used to evaluate the efficiency of investments made in supply chain processes and inventory management. It calculates the return generated relative to the cost of an initiative, such as implementing a new inventory system, warehouse automation, or supplier consolidation.In inventory optimization, understanding ROI helps justify capital expenditures by quantifying benefits such as reduced carrying costs, improved order accuracy, and increased throughput. Organizations use ROI to prioritize projects that deliver the greatest value, ensuring resources are allocated to initiatives that enhance supply chain performance and profitability.
