Velocity

Velocity is a word that comes up a lot when looking at how fast things move, whether it’s orders, shipments, or inventory. In logistics, tracking velocity helps teams understand how quickly products are moving through their system.

Let’s go over the basics in a simple way.

What Is Velocity in Logistics?

In a supply chain or warehouse setting, velocity refers to how quickly a product moves from one point to another. This could be from storage to shipment, or from order received to order fulfilled.

Understanding velocity helps businesses stay efficient, avoid delays, and plan inventory better.

Why Velocity Matters

When you keep track of velocity, you can spot where things slow down. It gives you a better view of how long products sit in your warehouse or how quickly your orders are processed.

Faster velocity often means:

• Lower storage costs

• Better customer satisfaction

• More efficient use of space and labor

If things are moving too slowly, it might mean you’re overstocked, under-staffed, or need to improve your workflow.

Formula of the Velocity

The formula of the velocity depends on what you’re measuring. For inventory, a common version is:

Velocity = Total units sold / Average units in inventory

This tells you how many times you’re turning over stock in a certain period. Higher numbers usually mean products are moving quickly.

How to Find Velocity in Your Operations

If you’re wondering how to find velocity, start by tracking how long items stay in your system. For example, how many days between receiving and shipping? Or how long between order and delivery?

Most WMS or logistics systems can calculate this automatically. If not, a simple spreadsheet can do the job using order timestamps and inventory data.

Measuring Unit of Velocity

There’s no single measuring unit of velocity, it depends on the context. You might measure it in days, units per day, or even how often inventory turns over in a month. What matters most is using a consistent approach so you can compare over time.

Final Thoughts

Velocity isn’t just a number, it’s a sign of how well your logistics are working. Newl helps businesses track and improve velocity with smart, practical systems that keep operations moving smoothly. From inbound shipments to last-mile delivery, we make speed and accuracy easier to manage.

Frequently Asked Questions

1. Does velocity apply to services, or only physical products?

Velocity can also be used to track service timelines, like how quickly a warehouse processes a return or how fast a team responds to new orders.

2. Is average velocity formula different for e-commerce?

Not really. The average velocity formula works the same way, but e-commerce businesses often track it more frequently, like weekly or even daily.

3. Can improving velocity help reduce freight charges?

Yes. Faster movement often means fewer holding costs and more efficient shipping planning, which can lead to better freight rates.