Managing inventory remains one of the most important components of any business, and it’s surprising to see many small retail businesses are nonchalant about it.
It involves the tracking and control of inventory items, from raw materials to finished products, and it’s a core factor business owners must consider.
Poor inventory management significantly affects your finances – with as much as a 20-30% increase to your total costs for every unit excess beyond your ideal stock levels. And one way to prevent and minimize such risks is to practice efficient inventory reporting.
In this guide, we will explore the various key reports that describe your inventory, as well as the best practices that you should apply in your business.
Read on to learn how to assess your inventory and make informed business decisions.
- There are at least ten types of inventory reports that describe the status of your stocks, together with their movements, valuation, turnover rates, and demand.
- With reporting, inventory managers get good visibility of their stocks, which enables better forecasting, improved cash flow management, and lower risk of stock-outs.
- Inventory reporting is most beneficial when paired with regular inventory tracking, cycle counting strategies, and automated inventory management.
Different types of inventory reports
There isn’t a one-size-fits-all report that will fully describe the state of your inventory. Here are ten types of inventory reports grouped according to their general applications.
Reports for inventory visibility
Having good visibility into the status and value of your inventory lets you detect potential issues and make data-backed steps in business.
1. Stock age inventory report
As its name suggests, this type of report details how old your inventory is, usually listing the oldest items first. Inventory managers can refer to a stock age report to accurately weed out products that are nearing their expiration date.
It’s worth mentioning that an average inventory age between 60 to 90 days is generally considered good. And it’s true not all items get sold out at the same time. Hence, you can use this report to identify slow-moving or stagnant inventory stock that might have to be liquidated or sold at a discount.
By identifying inventory that isn’t being converted into profits — tying up capital and storage space — you can apply appropriate inventory optimization techniques.
Another way to use a stock age report is to adjust your ordering and restocking practices, which avoids having insufficient or excess inventory.
2. Stock turnover inventory report
A closely related document to the stock age inventory report is the stock turnover report. This details how quickly your stocks are being emptied and replenished in a set period (for example, yearly). POS systems usually do this tracking of sales.
Businesses typically include their inventory turnover ratio in this report. This ratio is the number of times your stocks have been sold and topped up. A low ratio may indicate that inventory is not moving as quickly as it should.
A good inventory turnover ratio falls between 5 and 10 — you are effectively selling your products either monthly or bimonthly, translating to a successful sales period. If your ratio goes below or beyond these values, you can modify your pricing strategies, together with your restocking schedules, to ensure good turnover and profitability.
3. Stock valuation inventory report
If you’re looking to accurately adjust your inventory budget, generating a stock valuation report would be wise. It provides an overview of the value of your inventory at a particular point in time.
To be specific, it lets you know about the total cost of goods sold, together with the current price points on the market. In turn, you can use this as part of your sales report to determine your gross profit margin as well.
Another reason why you might want to generate your own reports is to understand sales trends in your products. Usually, these documents also detail which items are contributing most to your total sales, letting you determine how to optimize your selling price, promotions, and stocking.
Tracking inventory transfers
Your products will inevitably move out of your storage facility (that’s the point of your business, after all). Tracking how many items are being transferred to other locations, as well as those being returned by customers, is crucial to keeping accurate inventory at all times.
4. Stock movements inventory report
This is one of the most common inventory reporting metrics you’ll see. In general, a stock movement report shows which sets of products are getting moved between locations as well as their magnitude. So, inventory managers can precisely tally how much stock is left.
Stock movement reports might also involve the steps in a complete shipping process, detailing which ones are currently packed, in transit, and delivered. This improves traceability, which might be handy when investigating cases of inventory discrepancy in the future.
Businesses might also gain insights into which products need some optimization using this report. It also involves products that have been returned by customers.
5. Lost products inventory report
Inventory shrinkage, which refers to the loss of items and inventory, causes significant financial losses in product-based businesses. This is due to theft or item damage, and using a lost products report lets you identify and quantify them.
This helps mitigate problems brought about by an inventory discrepancy — the difference between what’s in your inventory records and the actual number of items in your warehouse. In addition, by assessing warehouse performance, you can amp up your protocols.
A lost products report might also provide insights into security. For example, you can implement POS or inventory management systems to record each product at every location. Performing regular checks with your inventory management software compliments this type of report too.
6. On order inventory report
If you’re running an ecommerce store through dropshipping and similar business models, ordering goods is a key step in your supply chain. And tracking your orders is critical, especially with the risk of loss or delays.
On order reports are helpful because they keep records of items that are still not delivered to your storage facility or warehouse.
By analyzing these reports, you can proactively communicate with your distributors to mitigate stock imbalances and customer dissatisfaction.
Meeting customer demand
Fluctuations in inventory levels and stock-outs can impact sales even if consumers like your products. Timely, regular inventory reporting helps prevent these situations.
7. Stock availability inventory report
A stock availability report details exactly what its name suggests — how much inventory is still available in the warehouse. But formally speaking, it refers to the number of items left per inventory location for specific categories.
Product category is an important concept here, especially since this report details stock availability on a fundamental level. So, for instance, you can generate a report to know how many products are left within the cosmetics category.
This report could help you adjust your stocking practices, and in turn, your budgeting for carrying costs. Setting an ideal stock availability level based on the figures also ensures you can still meet market demand or store enough raw materials for production.
8. Seasonal demand inventory report
Consumer spending habits vary depending on the season. For example, people might focus on buying personal care and romantic products during Valentine’s month. On the other hand, they may also shift their attention to Santa-themed items on Christmas.
One way to track these sales trends is through a seasonal demand report.
This provides a snapshot of how your inventory gets spent over busy selling seasons, which helps detect areas where you have too much inventory and those that are nearly out of stock. This supports timely replenishment and inventory planning when you consider the the products that were barely sold.
Restocking inventory is part of any business cycle, but this doesn’t mean you have to do it aimlessly. On the contrary, inventory reports that provide you with accurate numbers of how much you have to replenish are key to keeping your stock balanced without incurring losses.
9. Stock inventory report
If you’re looking for a comprehensive overview of your inventory at scale, a stock report (or, more appropriately, a “stock status report”) might be what you need.
While it’s similar to a stock availability report, this report details the item quantity for each category in your inventory (not just one section).
You can use this report to monitor stock levels overall and see where you might adjust your product turnover strategies, pricing, and similar factors. Its per-category details also supports accuracy in inventory reporting.
10. Reorder inventory report
This reporting document involves your restocking process: it determines which products are still abundant and which ones need replenishment in your inventory.
A reorder report also helps identify which merchandise doesn’t sell well among consumers.
Of course, the main benefit to a reorder report is determining a suitable reorder point, so you don’t have too much inventory. This limits the capital tied up in storing inventory.
Benefits of inventory reports
You can use inventory reports in almost every part of your supply chain management. For one, it offers insights that you can use for inventory forecasting, accurate reordering, and more.
Here’s a detailed list of the common benefits of accurate inventory reporting.
1. Improved inventory data, accuracy, and visibility
These documents bring clarity to your inventory, so you can assess more accurate and comprehensive numbers.
Without this visibility, you can’t identify potential problems that might occur to your stocks.
Plus, inventory reports can detail the transportation history of your merchandise – making it easier to track your goods more efficiently and tally your products accurately. A good example of this is tracking sold items recorded by POS systems at your retail stores.
2. Enhanced forecasting capabilities
Forecasting is a large part of any business. You must predict how much demand will be generated in the market that you need to meet. And the best way to do this is to see your inventory performance reports and determine which products have sold well depending on the turnover ratios and other figures.
They also help you with fluctuating consumer demands. You can generate inventory reports in real time, so you can execute better inventory planning immediately to meet market demand.
3. Improved cash flow management
Closely tied to forecasting is your cash flow management. Since you have predicted how much you need to spend, you can also accurately allocate your budget to maintain good cash flow.
Inventory reports also provide insights into the product categories that are stagnant, reducing storage expenses and letting you identify areas to liquidate.
4. Minimized risk of stockouts
With improved visibility, enhanced forecasting, and better cash flow, a cumulative benefit is the minimized risk of stockouts.
You are able to detect low stock levels and create purchase orders on time to replenish them. This reduces waste and improves customer satisfaction.
Best practices for inventory reporting
Inventory reports are critical, but they need to be run effectively. You must apply some practices to maximize their benefits.
Here are four best practices for inventory reporting.
1. Regularly track inventory
Set specific intervals to generate inventory reports describing your stock levels, from their availability to their transfer history. Even if your inventory performance seems sound, regular tracking helps you detect issues early and make informed operations and purchasing decisions regarding your supply chain.
2. Pay attention to inventory movements
While you can trust that your orders will be delivered to your warehouse or distributed to your client’s addresses, pay attention to the movement of your inventory, so you can see whether you’re suffering from product loss.
Another reason to do this is to ensure balanced stock levels. For instance, you can refer to on order reports to determine whether the goods will arrive on time at your storage facility. If not, then you can take appropriate steps to mitigate the consequences. You can also use stock availability reports to see which items are nearly depleted.
3. Adopt a cycle counting methodology
Doing a physical count of your products helps clear up differences between your actual inventory and records. However, doing a complete count all at once would lead to downtimes, which may incur losses in terms of sales revenue. Adopting a cycle count avoids this.
With cycle counting, you tally the number of a percentage of your total stock. While this is usually done over a couple of days, it is much more efficient and might lower your costs than an annual, single-day item counting. This also improves accuracy, which is vital to inventory reporting metrics.
4. Automate inventory management
You can’t remove human labor from your inventory management, but you can incorporate automated inventory management software that helps scale down your personnel size.
Inventory management software can also automate your procedures, minimize the risk of human error, improve accuracy, and ensure your inventory is updated on time.
Frequently asked questions (FAQs)
1. What types of inventory reports are there?
The most common and valuable types include stock-related age reports, movement reports, valuation reports, and turnover reports. You can also explore other reporting types, like those for seasonal demands and lost inventory.
2. What are the key features of an inventory on-hand report?
An inventory on-hand report mainly describes what’s currently present in your inventory at a certain time. In general, it would detail pieces of information about your stock levels, product categories, and the cost of goods sold.
3. What is an inventory aging report?
Inventory aging reports detail the length of time certain products have stayed in stock without depleting any time soon. This makes it easy to determine which items are not currently in-demand, which you can either liquidate or sell at discounted rates. The data here can also be used to calculate the turnover ratio.
4. What is an inventory movement report?
An inventory movement report describes the transit history of your inventory, whether inbound or outbound – detailing how much stock has been moved, together with its destination and costs.
5. What is an inventory valuation report?
An inventory valuation report describes the financial value of your stock by considering the overall cost of goods sold and current selling prices. You can refer to this to identify which products contribute to your sales orders the most, which is a crucial part of financial and sales reports.
6. What is an inventory turnover report?
An inventory turnover report tracks the number of times your products get depleted and restocked over a set amount of time. By knowing your turnover rates, you can plan when and how much to restock to maintain balanced inventory health. You can also use it as a reference when allocating your budget.
7. What are the best practices for inventory reporting?
To get the full potential of stock reporting, you should ensure regular tracking of your inventory and its transfer history. This allows you to immediately restock when your inventory runs low. Other practices include generating weekly and monthly reports, using cycle counting, and automating your inventory system.
Inventory reporting provides the figures you need to make informed business decisions.
There are a lot of ways you can generate reports to view your inventory from different angles. It’s important to learn these important reports and apply industry best practices.
If you want to automate your inventory reporting even further, you’ll definitely want to invest in inventory management software.
For instance, SkuVault Core can generate over 16 different types of on-demand reports that are easy to customize and export. That way, you can create, maintain, and share operational insights and improve your purchasing and forecasting decisions.
To learn more, sign up for a free demo here.