Accurate inventory tracking can lead a business to success. It provides data about your inventory that helps you streamline your inventory management process. To get the most out of it, you can use this data and condense it into a report form.
However, there are many types of inventory reports. Here, the question is – what kind of inventory report does your business need?
In this article, we will explain what an inventory report is, its types, and how to create an inventory report. Let’s get started!
What Is an Inventory Report?
An inventory report is a sheet that lists what your business has on hand. In a way, you can think of it as a way to calculate the capital you have tied up in your products. This report helps you categorize all your products based on factors like cost, quantity, color, etc.
Why Does Your Business Need Inventory Reports?
Inventory reports are important because they help a lot in maintaining the workflow of your business. As these reports provide you with insights like sold-out stock, remaining stock, and trends in purchases, you can plan better and make comprehensive financial decisions. Therefore, knowing how to make an inventory sheet is crucial to lead your business to new heights.
Furthermore, you can avoid both stockouts and overstocking with these stock reports. This is because stock reports can help you forecast when you will need to buy more of certain items. So, you can make an informed decision about which items you tend to over-buy.
The Types of Inventory Reports
Inventory reports can cover a variety of dimensions of your stored products, such as price, color, etc. What decides the main focus of your inventory document is your business aim, and it should align with your inventory document.
Here are the report types you can use:
1. Performance Report
An inventory performance report calculates which of your products move the fastest and slowest. Your fast-moving inventory can be considered well-performing since they are selling often. Conversely, items that linger in your warehouse are poor-performing. This metric can help you know which products you need to acquire more frequently.
2. Value Report
An inventory value report demonstrates the costs of items. And so value reports can help you understand the capital you have tied up in your inventory. In addition, the value report lets you know how long items have stayed in your warehouse.
3. Purchase Management Report
This type of inventory report helps you calculate how long it takes for inventory to arrive from the supplier. When you know well about the time frame of incoming and outgoing stocks, it prevents you from problems like stockouts.
4. Stock Level Report
An inventory stock level report states which items are at critical levels. It tells you which items sell quickly and requires immediate replenishing.
5. Location Report
If you have multiple warehouses, the inventory location report is especially useful. A location report tracks where all your inventory is. It can help you manage multiple warehouses because it creates a distinction between items stored in different warehouses. For example, you can more clearly see if there is an issue in one warehouse.
How to Create an Inventory Report
A stock report can mix the attributes of multiple types of inventory documents.
Here’s how to do an inventory report:
1. Narrow the Scope of Your Inventory Report
Firstly, you need to make an inventory document focused on what you need. For instance, you could add a color category to your inventory list. In this example, tracking which colors of an item sell the best could be a valuable asset. However, if you only sell white paper, you won’t need this metric.
2. List Your Items
When making an inventory report, list all the products in your warehouse. For better management, start with a focus on specific items, such as new products you want to study. Then, you can track your best sellers or focus on the products you are currently advertising.
As you list your items, consider the information you will attach to each product. Your report should include the following things:
- Name of the product
- Code
- Color
- Size
- Price
3. Choose a Time Frame
As part of how to make an inventory list, you need to pick a time frame. For instance, you can pick your standard financial year or observe the state of your inventory over the years.
Regardless of which time frame you pick, ensure that it serves you. Let’s say you want to know how your inventory fared during the cold season. In this example, you should measure your inventory only during the cold seasons or over a whole year. In this way, you can compare the warm and cold seasons.
4. Formulate Your Report
You can write your stock reports in two ways – manually or through an inventory management tool. If you enter the information manually, you risk making a mistake. This could ruin anything you plan using your stock report. On the other hand, by automating an inventory management system, you can eliminate human error.
Conclusion
The basic purpose of making a stock report is to summarize the products you’re storing in a warehouse. Knowing how to make inventory list can help you manage your stock and plan purchases with a focus on a variety of aspects such as cost, location, and duration of stay in the warehouse. Furthermore, you can create an inventory document by hand, with a program, or an inventory management system. While you can implement any stock report in your management process, you should pick one that suits your needs and focuses on your business vision.
