We were shocked to find out that around 50% of small businesses don’t track their inventory through efficient manual means. The issue with this is that if you don’t track inventory, your reports have more chance of being inaccurate and will not express data regarding your inventory in a precise way, which can then negatively enhance business decisions.

In this article, we will give a detailed overview of what an inventory report is and why they are so crucial to businesses of all sizes and backgrounds, helping you to devise future inventory reports in a more accurate way.

 

What is an inventory report?

An inventory report shows data regarding a retail business’s existing stock. Inventory reports help managers to have an increased level of insight over different elements of their stock, from which product is performing best, the performance and status of inventory and other information on product categories.

You can use different inventory reports to analyse various aspects of the business inventory, from low stock reporting to product performance reports and sale summaries. Reporting on these other elements helps to have a well-rounded view of what is going well in all aspects of product performance, from the moment they are stocked to bought to shipped.

 

The Reason All Businesses Should Pursue Inventory Reporting

Any business wanting to leverage its business and continue growing at a sufficient rate should consider completing inventory reports. The backbone of any retail business and the reason they thrive will always be down to product performance, so monitoring this is essential for analysing how much capital is being generated.

Inventory data will show trends and give business owners increased insight into their product’s performance. In contrast, inventory reporting metrics can provide specific or more comprehensive data to provide business owners insights into all aspects.

For example, managers could focus on the inventory turnover rate to see if they are keeping up with product demand in the most effective way. Businesses that don’t pay attention to this data run the risk of not keeping up with demand, resulting in reduced inventory visibility, which could see inventory stock run out quicker and not come back in stock to keep up with demand.

 

Things To Consider Before Reporting

Before you physically carry out an inventory report, we recommend that you consider what your goal is with your report. For example, do you want your inventory report to give you a deeper insight into sales trends, or would you like to know more about your inventory turnover ratio?

You should tailor your report to whatever aspect you would like to concentrate on. With so many types of inventory reports to choose from, this will help you to angle your data with a specific goal and result in mind.

 

Types of inventory report

To fully understand how to create an inventory report, we need to show you the various types of inventory reports you can choose from. Once you select the type you would like to use by using the tips we stated above, and you can finally gain insight into your data.

 

Inventory Performance Report

As the name suggests, this report goes into great detail on all aspects of your product performance. You will be able to gain insight on best sellers, worst sellers and overall projections. In addition, this report is excellent at giving business owners a genuine understanding of what is performing well, helping you to see key performance indicators and product areas that may be worth rethinking.

As well as gaining a more detailed overview of how your products perform, you will also be able to see which raw materials and ingredients need to be continuously invested in to ensure your best sellers have enough stock to keep up with demand.

 

Stock Levels Report

Having insight into your stock levels is incredibly important, as you don’t want to unknowingly run out of any stock or be unaware of over-ordering certain products. In addition, understanding your business stock needs is essential to having an effective inventory management system, so a stock report is a great way to determine this.

 

Inventory Forecasting Report

To run a successful business, you must always keep ahead of the curve. In most cases, only considering your current stock isn’t enough to keep your business workflow at its most efficient level. To fulfil future customer demand, it is essential that you forecast and anticipate their orders by creating an inventory forecasting report.

Your forecasting report will take data regarding your past sales whilst also taking upcoming promotions, current bestsellers and any other outside factors that may affect your product performance. This report will help to ensure you are always stocked up on the products you need, keeping up with customer demand at all times to ensure customer satisfaction.

 

Sales Report

If you want to focus your vision on your company’s cash balance and accounting, a sales report will be a great type of inventory report for you to complete. Doing a sales report will allow you to look deeper into different sales channels, creating a solid accounting summary and overview. Doing this will help you to recognise where your top revenue is coming from, regarding customers and trends, with sales broken down into category performance for a more detailed outlook.

 

Purchase Order Report

You can never plan too far ahead, and a purchase order report is an excellent method for having a more robust inventory management system. Purchase order inventory reports delve into your purchasing decisions and activity, helping you to monitor and keep track of your business expenditure in a more efficient way. This report also gives you an increased awareness of new inventory stock that you are expecting to receive, helping you plan for more stock to come when the time is right.

 

Inventory value report

Another type of report that helps you keep track of purchasing decisions is the inventory value report, which allows business owners to manage cash flow more effectively. Additionally, a snapshot value report will give an overview of the total value of all products in the inventory warehouse, analysing a product’s performance by its worth and inventory turnover rate.

How To Create Professional Inventory Reports

Of course, it is beneficial if you use a type of technology to assist you in creating an inventory report. Whether you use excel or invest in a more costly service integrated with your POS system or inventory management software, you will eliminate the risk of human errors, allowing you to produce accurate reporting.

Once you have selected the type of report you want to use, you should complete specific steps to ensure that you create a well-structured report that makes sense. Here’s how;

 

Write a List

Exporting the list of items that you want to include in your report is essential, and for accuracy, you should take the official names of items from your POS system or inventory management software. You will want all the necessary information to be included in this list, from the number of units currently in stock to the price and SKU numbers. Remember, every inventory list will be different and rely on the specific question you would like to answer.

Choose Specific Time Periods

To make this report fair and accurate, you should choose data from the same time frame. So, for example, if you are carrying out a sales report for 2022, you would need to make sure that you don’t include any information on sales previous to this year.

Run Reports Using Automation Software

Once you have all of the data you want to include in your report, now is the perfect time to collate it into a digital platform. As we briefly stated earlier, you can use Excel to do this, which is probably one of the most accessible means of inventory reporting for smaller businesses.

Using automated technology ensures you can keep your reports up to date whilst eliminating the chances of human error when working out equations and collating data. Storing reports digitally also ensures business owners can access this information from anywhere, making it much harder for this data to be misplaced.

Final Thoughts

To summarise everything we have touched on in today’s article, it is evident that inventory reports are one of the most efficient ways for businesses to keep track of average inventory data and statistics. Having this data at hand will help the company to keep track of its stock, sales and performance, which can play a huge part in forming more educated business decisions in future.

Being transparent with different elements of the business will help in several ways, from lowering costs by reducing over-ordering and spending habits with purchase order reports to increasing knowledge of which sale channel needs the most development and attention in future.

Frequently Asked Questions

What is inventory and its importance?

Inventory refers to a business’s products or goods that are available to sell or the raw materials used to produce these products. The three types of inventory are raw materials, work in progress and finished goods, which are monitored through inventory reporting.

What are inventory reports?

Inventory reports are used to summarise the inventory a business currently stocks. Produced either physically or digitally, these reports are made up of data that provides figures for products suitable to be sold, inventory now being shipped or needing to be ordered, or inventory that can no longer be used due to being outdated.

What is the main purpose of inventory?

The purpose of the inventory is always to have suitable supplies or raw materials to actively support business operations. Reporting inventory correctly will help a business to determine how much inventory they need to order and how much stock they currently have at hand to ensure they never run out of stock.