When running a retail or e-commerce business, keeping track of inventory data is a must. Inaccurate inventory tracking can lead to a variety of issues, from an inability to meet customer demand due to a lack of available stock to having too much inventory and wasting money on unnecessary holding costs.
Fortunately, inventory reports can help you track and monitor your inventory so that you never overstock or understock on products again. In this guide, we’ll walk you through the inventory reporting process, showing you how to generate inventory reports, which inventory reporting metrics to follow, and which types of inventory reports will be the best fit for your needs.
What is an Inventory Report?
An inventory report is an electronic or physical document that keeps an organized summary of how much inventory a business has at any given time. Good inventory reports contain up-to-date, detailed information on total current inventory, what products are currently in transit, how much stock needs to be ordered, what inventory is selling the most, and any future inventory requirements.
Accurate inventory reporting should tell you exactly where a product is in the supply chain in real-time.
Inventory reports should also contain each product’s stock keeping unit (SKU), as well as spreadsheets and visuals to make it clear how many of any given item are in stock. With all the pertinent information included in an inventory report, it should be no surprise how vital they are to the success of retail and e-commerce business owners.
The Importance of Inventory Reporting Metrics
There are many reasons why inventory reports are vital to a company’s long-term success. For one, detailed inventory data helps inventory managers make better decisions about what to order and when. By gaining clear insights into how products are moving through inventory and sales channels, companies can accurately predict how much stock to order to meet demand without ending up with too much overstock they can’t get rid of when a product becomes unpopular.
Inventory reports can also help businesses categorize their inventory, whether that be by profitability, stock location, product category, or some other metric.
Another benefit of inventory reporting is improved forecasting. The inventory reporting process can help predict future inventory requirements by providing past sales data and stock level fluctuations, keeping businesses prepared for future stocking needs. This allows businesses to better meet demand, increasing customer satisfaction.
Key Types of Inventory Reports
You can generate inventory reports that focus on different metrics, depending on your needs as a business. Here are some of the most common types of inventory reports and their benefits.
1. Inventory Performance Report
An inventory performance report is arguably the most versatile of all the different types of inventory reports. These comprehensive reports provide information on how different products are selling within a designated time period. This tells you what your best and worst-selling products are and how each of your products is performing in terms of year-to-year growth.
Using this information, you can determine what items need to be restocked, how much you should purchase, and when you need to place the order. In addition, the year-to-year inventory performance report offers a high-level view of how each item in your catalog is selling so you can identify patterns, get rid of unpopular items, and prioritize your successful products.
2. Inventory Value Report
An inventory value report provides a detailed breakdown of the cost valuation of every item in your inventory at a specific point in time.
The inventory valuation report enables accurate financial reporting and tax compliance by meticulously calculating the cost of goods sold. It is also a valuable inventory management tool, highlighting slow-moving or obsolete items that may need to be marked down or put on clearance sales.
By providing itemized breakdowns of quantities, descriptions, and cost valuations, the inventory value report empowers businesses to make informed decisions, manage cash flow, and optimize purchasing decisions.
3. Inventory Forecasting Report
An inventory forecasting report calculates how much inventory a business will need to fulfill future customer orders over a designated period of time. To ensure accuracy, calculations must take into account historical data from past sales, seasonality, promotions, external forces, and numerous other metrics in order to identify patterns and provide reliable forecasts.
4. Inventory Profitability Report
Inventory profitability reports track how much profit each product generates. Inventory profitability reports track SKU profitability, listing profitability, and trending profitability. Reports on SKU profitability show the true profits that each stock keeping unit generates.
Gross and unit margins on performance data of stock keeping units along with implied shares per sales channel determine listing profitability. Reports on trending profitability show product profitability over a designated period of time. By keeping track of every aspect of your company’s profits, you can cut company costs, eliminate deadstock, promote high-performing products, and increase revenue.
5. Stock Level Report
A stock level report in any reporting guide tracks critical levels, or the sales velocity and approximate stock out dates for all products. A stock report also monitors replenishment alerts, which notify businesses when inventory needs restocking.
By keeping track of both critical inventory stock levels and replenishment alerts, stock level reports help businesses keep their bottom line and maintain a constant revenue stream.
6. Sales Report
Sales reports show a retail company’s cash balances. With the help of a sales report, retailers can receive an entire accounting summary of each individual sales channel, from incomes and discounts to refunds and taxes. A sales report can also break sales down into different date ranges and categories of goods. Sales reports can even uncover sales trends and top customers, while also improving forecasting efforts.
7. Cost of Goods Sold (COGS) Report
A cost of goods sold report does exactly as the title suggests, determining the total cost of goods sold. With the information from this report, businesses can determine a fair price for products. Businesses can also use a COGS report to conduct yearly and quarterly taxes. Most importantly, knowing the cost of goods sold can help companies determine the true value of their businesses.
8. Purchase Order Report
An inventory reporting purchase order report tracks purchase order activity, allowing businesses to track what inventory is coming in and when. Purchase order reports also give businesses the ability to plan ahead and make space for new, incoming products.
9. Shipment Trends Report
A shipping trends report provides information on shipping trends and warehouse performance for every individual sales channel. With the information businesses get from shipment trends report, they can evaluate warehouse processes and identify inefficiencies in their supply chain.
10. Customer Analytics Report
A customer analytics report provides businesses with data on customer buying habits, returning customers, and customer lifecycles. With the help of customer analytics, businesses can determine who their highest order value customers and most frequent customers are.
Inventory Reporting Best Practices
An inventory report is only beneficial when conducted properly. To help you optimize the benefits of inventory reports, businesses should make use of the following inventory reporting best practices:
1. Regularly Track Inventory
One inventory reporting best practice is to regularly track inventory. This allows you to make the most out of your inventory reports and prevents inconsistencies and errors.
2. Pay Attention to Inventory Movements
Another best practice when conducting an inventory report is to pay attention to inventory movements when products are delivered to your warehouse. By paying attention to inventory movements, you may be able to pick up on product loss and see whether the stock levels are balanced or not.
Both product loss and unbalanced inventory quantities are issues because they mean that you either won’t have the products you need, or that some of your goods aren’t being delivered at the time they are supposed to, which can lead to possible stockouts and lost sales.
3. Start Counting Cycles
When receiving new products, it’s always good to ensure everything has arrived by conducting a counting cycle. This means taking the time to physically count a percentage of all inventory products each day over the period of a few days until you count all products.
By conducting a counting cycle over the course of a few days, you will be able to identify and clear up any differences between your actual inventory and inventory records.
4. Automate Inventory Management
When you automate inventory reporting with inventory management software, you can scale down personnel size, minimize risk of human error, improve accuracy, and ensure that your inventory is updated in real time.
Tips for Creating Effective Inventory Reports
It’s important that you are meticulous when creating inventory reports to avoid errors and ensure you are making decisions based on accurate information. Tips for creating effective inventory reports are detailed below.
Keep an Organized Stockroom
Keeping an organized stockroom is vital to inventory reporting success. This is because an inventory stockroom is the place that holds that vast majority of your inventory items. Thus, prior to inventory reporting, make sure that your stockroom is clean and organized and that each stock is in its designated place. That way, you minimize the chances of you losing or misplacing stock.
Decide What You Want to Report On
You can create an inventory report for any number of different data sets. For example, you can conduct an inventory report on best selling products, what inventory you’re currently missing, or how profitable your products are. The first step to accurate inventory reporting is having a clear understanding of what you want to report on.
Create a Column for Inventory Items and Descriptions
When creating an inventory report, create a list of items in your inventory using a vertical column. Then input the designated items into these columns according to their stock keeping unit (SKU).
Next, you should create another column for descriptions. You may also want to consider using different colors or text to add more context or detail about each product.
Assign a Price to Each Item
The next step to creating an effective inventory report is to assign a price to each item. That way, you can not only have an individual value given to each product but also calculate the total value of your inventory or calculate inventory carrying costs.
Create a Column for Remaining Stock
You should also create a column in your spreadsheet that identifies the number of units remaining in stock. Note that you’ll have to update this column to reflect new purchase orders and sales.
Pick a Good Time Frame
When creating an inventory report, it’s important to select a time frame in which you will regularly update the information within the report. Do you need weekly and monthly reports? The frequency of your updates will depend on your sales volume, inventory turnover, and lead times. It all depends on the needs of your business.
Audit Inventory Regularly
Inventory audits compare your actual inventory levels with your expected inventory and financial records. Perform inventory audits regularly to ensure that your inventory levels match your records at all times and any discrepancies can be resolved quickly.
Simplify Your Process With Inventory Planner’s Inventory Reporting Guide
With Inventory Planner, you can create a variety of different inventory reports to meet your e-commerce needs. Need help figuring out how much inventory will meet the demands of your customers? Use our forecasting reports feature to accurately predict what your customers will buy so you know what to stock, or check out our purchasing reports feature to ensure that you always know how much inventory you need to order so you have the right amount of each product in your catalog.
Here at Inventory Planner, we provide our customers with detailed and customizable reporting and analytics features specifically for retail and e-commerce businesses. So what are you waiting for? Stop wasting your time, money, and resources conducting faulty manual inventory reports and instead take advantage of Inventory Planner’s various inventory reporting tools. To find out how Inventory Planner can help streamline your business, book a demo today.
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