How to use reports for inventory management
Published on 17/04/2023 by Andrew Blair
Reporting helps small to midsize enterprises (SMEs) accurately track and measure metrics to optimise business performance. Similarly, reports for inventory management help manage inventory as accurately and optimally as possible to enhance business performance. Find out how to utilise inventory reporting to help manage your business more effectively.
In this article
Effective inventory management is essential for almost all businesses holding goods or materials for future use. Most companies that have inventory understand that inventory management is a complicated discipline in Australia, especially when it comes to fluctuating demands in stock. Challenges such as labour shortages and natural disasters will likely disrupt supply chains and the logistics industry, highlighting the need for efficient inventory control.
The entire inventory management process means there is plenty of information about stock levels or specific products or materials. Centralising this information can enable business owners and managers to make informed decisions. This article focuses on how businesses can use reports for inventory management from inventory data to help decision-making and ensure your business runs as efficiently as possible.
What are reports for inventory management?
A company that holds stock understands that its inventory is one of its most important assets. As such, knowing how well that stock is performing is vital. Inventory reports can inform businesses how long a product has been on the shelves, how much stock there is, its value, and the performance of its products.
Inventory management versus warehouse management
Inventory management differs from warehouse management, and knowing the functionality of each and their uses for an organisation can help determine which reports will be more beneficial for your business needs.
As a result, inventory management reports can save businesses money by informing and enabling owners to take control of their stock. Inventory reporting can not only save companies money but can also streamline processes.
Why use reports for inventory management?
The main benefit of inventory reporting is the insight it gives decision-makers about their business. Inventory reports can provide an inventory summary of stock performance or a detailed zoom-in analysis of a particular product. The use of data in inventory reporting can tell a compelling business story and help give businesses direction.
Reports for inventory management provide business owners and managers with an up-to-date, organised summary of how much inventory they have or had at any given time. Furthermore, an inventory management report helps categorise inventory, which helps companies know where their products are and the cost of goods sold (COGS). This sales report includes the costs of materials and labour directly related to the production of a product.
Additionally, inventory reporting also improves inventory forecasting to meet the future demands of customers. The use of trends and previous data can be used to predict future inventory requirements, which can help companies manage their stock strategically and ensure there is enough to fulfil customer orders.
A successful inventory management system that meets customer orders can also improve customer satisfaction and loyalty. Stockouts can cause a negative experience for a buyer wanting to purchase a particular product that is no longer in stock. Businesses can optimise their inventory handling and tracking through reports to avoid stockouts.
How can inventory reports optimise inventory tracking?
Manually managing all aspects of a supply chain can be extremely time-consuming and often causes inaccurate results. The advancements in automated inventory tracking have made manual processing unnecessary by providing users with tools to manage orders with suppliers, make new orders when stock is needed, and make changes to existing orders.
An inventory tracking system can help businesses meet demand more effectively and improve their inventory accuracy. Knowing how to keep track of inventory can avoid inconsistencies such as double-handling of products or lost inventory. An inventory report can facilitate inventory tracking, which can help businesses not only track the location of products throughout the supply chain but also maintain stock levels, improve inventory accuracy, and avoid shortages.
What are the uses of inventory reports?
Firstly, businesses must decide what they want from an inventory report. Outlining the key performance indicators (KPIs) they will track can aid that decision-making process. Narrowing down which metrics to follow can help keep the reporting process focused and actionable.
5 types of inventory reports
- Inventory on hand report: Indicates the amount of stock available and the inventory value. This report measures how much capital a business has in its inventory which helps with budgeting and forecasting.
- Inventory ageing report: Informs businesses which products are the most popular and profitable. It gives visibility into inventory performance and can help identify sales trends.
- Shrinkage report: Monitors stock and reports when there are fewer items in stock than recorded which can impact a business's bottom line. Shrink reports can help monitor stock movement over time and allow businesses to address problems early on.
- Low stock report: Records stock levels and informs on the inventory status of low stock. Low stock reports can minimise the impacts of stockouts on a business and help businesses be proactive in reordering.
- Inventory valuation report: Reflects the total cost of inventory and its potential profits per sale. This report allows businesses to determine revenue goals, save on taxes, and get small business financing.
Businesses can use data from spreadsheets to process reports manually or use inventory management software to streamline the process and eliminate human error. However, businesses will still need to build an inventory list that includes inventory descriptions and prices and establish a timeframe for when to retrieve the data when using inventory reports.
Keep inventory organised
More efficient inventory organisation can result in accurate inventory counts and mismanagement of stock, which can negatively impact a company's sales and profitability. Inventory reports can help businesses keep track of inventory and organise their stock, which can help find shopper requests, run efficient inventory counts, and quickly restock inventory. Businesses can therefore avoid stockouts while meeting customer demand by fulfilling purchase orders while keeping their business running smoothly.
This article may refer to products, programs or services that are not available in your country, or that may be restricted under the laws or regulations of your country. We suggest that you consult the software provider directly for information regarding product availability and compliance with local laws.