Inventory Reporting Done Right
When it comes to retail, both inventory reports and sales reports are priceless in the amount of gold you can get from their data. It doesn’t matter what size your business is, you need the ability to report on inventory, sales, inputs, outputs, etc.
You’re going to need to reports that are accurate and is made available when it needs to be in your hands. These data points are invaluable when it comes to decision making and a business running at peak performance. There’s no question about it, inventory tracking is key for retail businesses.
If you stock inventory, you already know how important it is to keep the right amount of stock on hand. You already know “cash” is tied up in your inventory. Inventory is a double edged sword, too much stock holds up cash and too little stock cost you sales, the key is a delicate balance in between.
To do that, you need your numbers to be accurate – how else are you going to know when to reorder inventory, right? If you’ve been using your inventory management software for some time, you’ve likely began to identify patterns you see – whether that is patterns in inventory or sales, you can find them. You can use these to forecast seasonal rises in demand, which is going to allow you to budget accordingly.
What’s scary – over 50 percent of small businesses don’t track inventory at all or they do so manually, no reliance on technology or software. Are you kidding? Unfortunately, it’s true. This survey shows just how many businesses don’t use proper technology to track their inventory.
All of this information comes from having the right inventory system in place and evaluating it regularly. This allows you to generate inventory reports that clearly show you what you have and what you need.
Before we jump deep inside the topic, we have to set the foundation: What is an inventory report and how can inventory reporting make it easier to run your ecommerce business?
What Is An Inventory Report?
An inventory report is a summary of a retailer’s current stock. While these reports differ, they do allow you to see how much stock you have, what categories are performing best, which products are selling the quickest, and other information about the status and performance of inventory. There are many types of inventory reports you can use, each serving its own purpose.
The best inventory reports contain current information with visual key details that allow someone to clearly see what’s in stock. They also help you avoid over-ordering inventory or running out of inventory when customers buy your products online. This is why they’re so important.
What Are Inventory Reports Used For?
Inventory reports help you run your business at peak performance. They allow you to make the best possible decisions in all areas of your inventory. Inventory reports can also help you cut costs and lower your risk of running out of stock. Inventory reporting is often frowned upon, don’t be that business owner. You can save you a lot of money, time, and energy if you incorporate it into your business.
(1) Managing Inventory
One of the most common uses of inventory reporting is inventory management. We touched on this earlier, you need to always know what inventory you have. If you don’t have enough inventory on hand, you’re going to miss sales. If you have too much inventory, you’re going to have cash tied up.
It goes beyond just that. If you have too much inventory on hand, that means you need extra space to store it. If you don’t have enough inventory, you may not be able to fulfill customer orders. Accurate inventory reporting is vital to running lean and efficient.
(2) Inventory Categories
The manner that you categorize your inventory can depend on a number of different things, especially when it comes to the specific industry you operate in. A lot of inventory is stored in cardboard box, so as you can imagine, it’s going to be tough finding what you’re looking for with a warehouse full of boxes.
Rather, you want to ensure you’re using a list of items that tracks each category in real-time. You need to have the ability to track inventory as it moves throughout the supply chain. If you don’t have the right tools and software, that’s impossible.
Manufacturers are a great example to use here. Most of them need to have the ability to track inventory as raw materials, goods in process, or inventory ready to sell. The inventory valuation of each category or step is a necessary part of tracking the cost of goods sold for tax purposes and inventory accounting.
Once it’s in your fulfillment center, you’ll want to track each product as inventory received, stowed, picked for an order, packed in a box, and shipped to a customer.
(3) Warehouse Inventory Tracking
What about those of you that have thousands of items and high sales volume, and also using multiple locations? You think one location or store is tough, imagine having to manage hundreds of stores and tens of thousands of products, it can get complicated! You need the ability to track the location of your inventory within the warehouses you’re using for order fulfillment. This is why inventory tracking is so important. On a small-scale, sure, it can be done manually. If you have a lot of inventory, you need technology to track it accurately.
You can use SKUs to track inventory storage locations and keeping everything organized. This is going to make your life a lot easier.
Besides the obvious, it can also help with orders from multiple suppliers, orders that have specific date ranges, and returning damaged items. Do keep in mind, if you have perishable inventory, you may need to track locations with first in first out (FIFO) or last in first out (LIFO) inventory rules.
How To Create An Inventory Report
Creating a basic inventory report is simple. In fact, you can create a basic inventory report by using Excel or Google Sheets. We still highly recommend automation, this example is just a one-time snapshot of your inventory.
Here’s what you need to create a basic inventory report.
*Build A Column For Your Inventory Items – The first step is building a column for your inventory items. Similar to an inventory sheet template, create a list of items in your inventory using a vertical column. This should be done at the SKU level (i.e., if you have a red shirt in four sizes, you would list out each size for a total of four entries, not one) and can be recorded as the SKU name. The more SKUs you have, the more difficult and time-consuming it will be.
*Create An Individual Column For Descriptions – Describe the items in another column. If you have a variety of colors, sizes, etc., you can provide more context or detail here to validate what makes it a unique product for inventory reporting and tracking purposes.
*Assign A Price To Each Item – List the price of each item so you can quickly pull out the total value of your inventory and the value of each item, based on price and quantity. Depending on your business, you may need to track the purchase or manufacturing cost separately from the selling price. Inventory valuation can also help you calculate inventory carrying costs.
*Create An Individual Column For Remaining Stock – Next, add a column to track the number of units currently in stock. This column will be updated with new purchase orders and sales orders to make sure the number is current.
*Choose A Specific Time Frame – How frequently you choose to update your inventory report will depend on your needs. The higher your sales volume, the more often you’ll update it since your numbers can change rapidly.
Frequency would also depend on how much safety stock you carry. If you have a cushion of inventory between your reorder point and zero, you can get away with less frequent updates. Just remember that excessive safety stock adds to your expenses.
How Often Do You Generate Inventory Reports?
The only one-size-fits-all answer in terms of inventory reporting frequency is that you should make it a regular habit, and always do it before and after a known busy period.
*Weekly And Monthly – You always want to utilize your POS and inventory management solution, you can use these to pull inventory reports by exporting data weekly and monthly. Now, depending on how you use your data, weekly and monthly reports can support different things.
*High Demand Selling Seasons – You definitely want to make sure you’re doing inventory reports after high demand selling seasons. Your sales trends will always be important but don’t forget about your period over period growth, such as summer 2021 vs summer 2020.
*Based On Your Business Operations – What’s the cadence of your ordering? Is it daily, monthly, every 3 months? Inventory reports usually contain important insights that will help you with purchasing. “You always want to keeping an up-to-date eye on your inventory health.
Inventory Reporting For Ecommerce
Even if you have a small retail shop, you need inventory tracking. However, your needs are going to be very different from a large ecommerce business owner when it specifically comes to inventory management. Unlike a brick-and-mortar business, ecommerce purchases can be made at any hour, at any location across the globe. If you don’t have the infrastructure for that, you can run the risk of not having inventory for customer orders. You don’t want that!
Fortunately, ecommerce business owners can avoid this from happening by using inventory reporting.
Inventory levels should be updated on a regular process, this ensures your inventory is kept accurate. The only way to keep accurate inventory is by using automated systems that sync with your point of sale software.
Automate Your Reporting With Thill Inc.
Here at Thill Inc., we can help you simplify the process through accurate inventory reporting. Thill can integrate with your ecommerce store and handle every step of your ecommerce fulfillment. All of your inventory will be stored at any combination of Thill’s warehouses throughout the United States, we handle all your inventory reporting.
Since we’re able to connect with your ecommerce platform, our inventory reports are updated in real-time to reflect exactly what you have in stock, minute by minute. We have an amazing platform that gives you all the visual reports you’ll ever need.
With Thill Inc., you can track inventory across our fulfillment network all from one single dashboard.
What’s The Right Solution For My Business?
While creating manual inventory reports are great for smaller businesses with low sales volume, it’s not a solution for larger sales volume.
If your business has a large sales volume, is quickly growing, or sells online through an automated platform, automated inventory tracking is the best solution you can choose.
Thill Inc. has a great solution to help you keep your items in-stock, help you reduce costs, and avoid lost sales.
To learn more about Thill’s order fulfillment services, be sure to reach out for a no obligation quote. Get started here.