Wondering when to restock your inventory? It's a familiar puzzle for many retailers, especially those who don’t track their inventory levels. But neglecting this critical aspect of eCommerce operations could impact your bottom line.
In 2023, the IHL Group projected the global cost of inventory distortion to be $1.77 trillion.
And if your products are listed on Amazon, staying on top of their availability is non-negotiable. Amazon won't rank unavailable products at the top, as customers can't buy them right away.
Research shows that just one day of your product being out of stock lowers your Amazon search rank by 28%, while 3+ days drops it by 83%, and over 10 days by nearly 150%. Meaning potential sales can slip away! After all, you can't sell what you don't have.
That's why it's essential for brands to track product availability consistently to maximise conversions. This is where inventory reporting comes in. They provide accurate, timely data crucial for effective inventory management.
In this article, we'll cover the basics of inventory reports, including how to write one, templates, and more.
What are Inventory Reports?
An inventory report is a structured overview of your current inventory levels. It’s a detailed document outlining a company's inventory quantity, location, and status.
Available in electronic or physical formats, it shows figures for available stock for immediate sale, inventory in transit, and necessary restocking quantities.
Effective inventory reporting guides retailers in—
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Tracking stock levels
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Monitoring inventory movement within the warehouse
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Categorising inventory based on its cost
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Make better decisions in purchasing, production, and sales.
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Preventing over-ordering or inventory shortages
6 Reasons Why Inventory Reporting is Important for Ecommerce Retailers?
The main basis of recording and reporting inventory is to have a complete understanding of your stock level. Yet, these reports are more than just numerical data.
The inventory reporting metrics obtained from inventory reporting provide essential indicators of the operational efficiency of your eCommerce business.
These reports offer insights to help in meeting sales order demands while managing inventory costs. This knowledge empowers retailers to make informed decisions regarding restocking, stock rotation, and product line management.
By thoroughly understanding stock levels, businesses can operate more effectively and profitably.
Here are the advantages that eCommerce retailers can leverage by reporting inventory. Understanding them will help you to make the most of inventory reporting and analysis.
1. Makes Inventory Tracking Easy
Effective inventory reporting system facilitates inventory tracking. Because it categorises SKUs according to storage locations, there is a significant reduction in unnecessary inventory handling, thereby preventing inventory loss.
Plus, by using inventory reporting to monitor product locations across the supply chain, you ensure to always have enough stock on hand for timely order fulfilment.
Besides, it also helps you to optimise your inventory management practices. Accurate inventory tracking reveals sales patterns, leading to more accurate forecasts and improved inventory control.
2. Helps in Forecasting Demand Planning
Inventory reporting is essential for effective inventory forecasting and replenishment. By accurately predicting inventory needs, it ensures shelves are stocked appropriately and prevents popular items from depletion. Likewise, it ensures warehouses maintain the right inventory levels for orders, avoiding excess stock accumulation.
Moreover, it's a practical method to avoid overstocking and tying up excess capital. When executed correctly, it reduces the risk of holding obsolete inventory.
3. Guides Informed Buying Decisions
Inventory reporting and analysis provide valuable insights into product performance for businesses. You gain a deeper understanding of what drives your sales.
This enables them to prioritise purchasing high-demand products while minimising investments in slow-moving inventory.
With this knowledge at your fingertips, you can strategically allocate resources, focusing on high-demand products to drive revenue.
4. Helps Avoid Mix-Ups by Inventory Categorization
A smooth-running supply chain relies on organised inventory, and that's where inventory reporting steps in. Real-time updates in an inventory report help track inventory movement throughout the supply chain.
By categorising products based on factors like value, demand, and carrying costs, businesses gain clarity into their inventory landscape.
5. Optimises Replenishment and Reorder Points
Utilise inventory planner reporting to set up efficient replenishment strategies and establish reorder points.
By understanding your inventory levels and consumption patterns, you'll be equipped to replenish precisely when needed, minimising stockouts and taking your inventory control to the next level.
6. Identifies Stocks Nearing Expiration
Regular inventory reporting helps you to catch items nearing their expiration dates.
With regular check-ins, you can take proactive measures to prevent losses resulting from expired inventory. Such as running promotions or adjusting pricing to move these items faster, or reorganising your stock to prioritise their sale.
10 Types of Inventory Reporting You Should Know
Businesses have various ways to report inventory, depending on their needs and how detailed they want to get. While most know about stock availability and stock count reports, there are many others that give valuable insights. Here are some common inventory reporting methods:
1. Inventory Value Report
Staying updated on your inventory's value is important to manage your finances effectively.
An inventory value report keeps tabs on the total value of your current stock, considering both the inventory acquisition costs and its current market values. It helps you understand the profitability of each sale and make informed purchasing decisions.
The benefits of an inventory value report are twofold; you can have a quick overview of your product values across different warehouses. Alternatively, trending value reports may also give you detailed breakdowns within each location.
2. Stock Levels Report
The stock levels report is a handy tool to track your inventory. It provides you the much-needed insights into what items are available, so you can quickly spot low stock or potential stockouts.
By keeping a close eye on your inventory, you'll always be ready to fulfil customer orders and ensure uninterrupted supply chain operations.
The stock levels report can help you accomplish two important tasks. One, it tracks critical levels and two, it sets replenishment alerts.
Critical levels show how quickly products are selling and their estimated stockout dates. The replenishment alerts tell you what inventory needs restocking in warehouses. These help you make smart buying decisions and protect your revenue.
3. Inventory Performance Report
If you want a detailed overview of your inventory’s performance, this is the type of inventory reporting you should get familiar with.
By monitoring SKU velocity and inventory turnover, it identifies your top-selling and slower-moving products. This information is valuable for planning raw material reorders or replenishing stock.
For high-demand products, you can increase your order quantities accordingly. Moreover, you can optimise your inventory mix by prioritising popular SKUs and clearing out older, less popular inventory to prevent deadstock.
4. Inventory Profitability Report
You may want to track the profitability of your inventory to understand how well each product is doing financially. Matrics like sales revenue, cost of goods sold (COGS), and gross profit margins help you track the true profit each product generates.
Using these insights can help your brand save money, clear out deadstock, and boost profits by focusing on the best-performing items.
5. Inventory Forecasting Report
Inventory forecasting reports analyse past orders to predict future demand. They help determine how much of each product to stock, minimising carrying costs and ensuring you have what customers need.
Accurate forecasting optimises inventory levels, preventing overstocking or stock out, and improving overall supply chain performance.
6. Cost of Goods Sold (COGS) Report
The COGS refers to the expenses of manufacturing or buying products you sell. Raw material costs, labour, manufacturing, and associated overhead expenses make up a business's COGS.
COGS is an insightful measure of your eCommerce business’s financial health. By knowing your COGS well, you can set optimal product pricing, manage taxes, and identify growth opportunities. This type of inventory reporting also enables you to make informed decisions about investing in operations or improving inventory management.
7. Fulfilment & Shipping Trends Report
Fulfilment reports provide valuable insights into your storage expenses and average fulfilment costs, including picking and packing expenses per order. They also shed light on your average fulfilment speed.
Similarly, shipping reports offer details on average shipping times and costs, and may even analyse inventory distribution.
When you focus on shipping and order analytics, you gain a deeper understanding of shipping trends and warehouse performance across all sales channels. This enables you to evaluate warehouse efficiency with each shipping carrier, identify any issues, and promptly make improvements.
8. Sales Report
Looking to streamline your accounting and get a clearer view of your cash flow for your online store? The sales report is our answer to that.
This comprehensive inventory reporting method offers you a detailed accounting summary for each sales channel. Everything from income and discounts to refunds and taxes.
A robust sales report further breaks down sales by date ranges and product categories. It's invaluable for identifying trends, pinpointing top customers, and refining your forecasting efforts.
9. Inventory Discrepancy Report
Discrepancies between inventory records and actual stock counts can pose significant challenges for businesses, impacting sales, stock management, and overall asset valuation.
The inventory discrepancy report identifies the differences between inventory records and the actual quantity of stock on hand.
By examining this report, you can identify inconsistencies by product and location and promptly address potential issues.
10. Inventory Ageing Report
Inventory ageing reports provide insights into how long inventory has been held and in what quantities.
By documenting this data, companies can identify slow-moving and non-moving items. It also helps understand the length of time products remain in inventory and the associated costs of holding them.
By understanding these trends, you can allocate resources wisely and avoid investing in inventory that doesn't sell.
How to Create an Inventory Report in 4 Steps?
There are two inventory reporting methods—
1. Manual Inventory Reporting
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Offers insights into inventory counts at specific moments.
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Provides a basic understanding but lacks real-time updates.
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Prone to human errors and requires manual adjustments.
If you want to simplify your inventory reporting process and have instant access to your inventory levels, consider using inventory management software.
2. Inventory Management System
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Tracks inventory in real time, updating automatically with each transaction.
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Speeds up the reporting process and reduces errors.
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Enables sync across all systems, enhancing overall efficiency.
Below are a few steps to create manual inventory reports using Excel spreadsheet.
Step 1. Choose KPIs
Start by selecting the key performance metrics you want to track in your inventory reporting. Knowing which metrics matter most to your business will guide your inventory reporting method.
Effective inventory reporting goes beyond just monitoring stock levels. To truly enhance your inventory management, it's essential to establish key performance indicators (KPIs) aligned with your goals.
These metrics provide valuable insights into your inventory's status, enabling you to make informed decisions based on data.
You can monitor different KPIs including—
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Inventory accuracy
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Turnover ratio
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Inventory on hand
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COGS
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On-time delivery rate
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Backorder rate
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Product returns rate
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Inventory carrying costs
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Inventory shrinkage, etc.
Step 2. Create an Inventory List
A well-structured inventory list summarises all the products you currently have in stock, covering everything from raw materials to finished goods.
Each item is detailed with—
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SKU number
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Name
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Description
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Unit cost
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Stock quantity, and
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Reorder point
Businesses can make their own inventory list templates or use available options. Here's a free template you can download to get an idea of what an inventory list looks like.
Step 3. Decide a Timeframe
Reports offer a clear view of your inventory at a specific time, so you need to define the timeframe accurately.
Make sure to gather data from the same period to maintain consistency. Consider seasonal shopping trends when comparing different periods. Also, think about your operational pace, data availability, and decision-making frequency.
Step 4. Create and Review Your Inventory Reports
After collecting the required data and determining the reporting period, generate the inventory report. Use graphs, charts, or tables for clarity.
Thoroughly check the report for accuracy and any potential human errors. Compare the data with your expectations and industry standards to ensure accuracy.
Sample Templates for Inventory Reporting
Ready to track your inventory with ease? Start by using these free inventory report templates below. These templates are fully customizable to suit your specific business needs and products.
Inventory Tracking Report Template
6 Best Practices for Effective Inventory Management and Reporting
Here are some inventory reporting best practices to follow to improve accuracy, and optimise your operations.:
1. Periodic Inventory Audits
Keep your inventory in check with regular inventory audits. These checks help spot any discrepancies, damaged goods, or expired items, ensuring your records stay accurate. By staying on top of these audits, you safeguard your inventory and your bottom line.
2. Data Reconciliation
Keep your inventory records accurate with regular data reconciliation. By comparing physical stock counts with system counts, you catch any discrepancies early on. This ensures you maintain optimal inventory levels and make informed decisions based on reliable data.
3. Organised Warehouse
Maintaining an organised warehouse is crucial for efficient operations. It allows for easy item retrieval, streamlined inventory counts, prompt restocking, and prevents stock shortages. Despite the initial challenges, various layout examples and tools can simplify warehouse management.
4. Automated Alerts
Automated alerts for low stock levels can be a game-changer for inventory management and reporting. By configuring your system to notify you when stock falls below a set threshold, you can prevent stockouts and ensure timely replenishment.
5. Inventory Tracking with Barcode or RFID tags
Using barcode or RFID systems can significantly streamline your inventory management and reporting. They enable precise tracking of individual items throughout your supply chain, minimising errors and enhancing efficiency.
6. Data Analytics
Use data analytics to understand your inventory better. By looking at past sales and forecasts, you can spot trends and make smarter decisions about managing your inventory.
Conclusion
Inventory reporting is a crucial undertaking for the success of any retail or eCommerce store. Streamlining inventory data is important, but so is streamlining deliveries. That's where PACK & SEND comes in.
PACK & SEND simplifies eCommerce fulfilment, whether you're selling on eBay, Amazon, or your own online store. As Australia's leading parcel and freight reseller, we offer comprehensive services that consolidate the offerings of top carriers into a single access point for online retailers.
Our suite of shipping technology tools seamlessly integrates with online retail and eCommerce systems, providing you with benefits without the technical hassle. We also offer multiple solutions for international freight shipping from Australia, including air and ocean options for various cargo types.
With PACK & SEND International Parcel Post services, you can easily find the right solution for your business documents, airmail deliveries, mass mail-out campaigns, or economy small parcels. And need the cheapest shipping from the USA to Australia? We've got you covered!
To discover more about PACK & SEND order fulfilment services, request a quote today.
Frequently Asked Questions (FAQS)
1. What is inventory reporting?
Inventory reporting is the process of tracking and documenting the quantity, value, and movement of goods held in stock by a business. It generates reports that provide insights into various aspects of inventory management, such as stock levels, turnover rates, and valuation.
2. How to write an inventory report?
Writing an inventory report involves collecting data on your inventory, organising it in a structured format, and analysing the information to draw meaningful conclusions. Typically, an inventory report includes details such as item descriptions, quantities on hand, values, and any changes in stock levels over a specific period.
3. How to report inventory on the balance sheet?
Inventory is typically recorded as a current asset on the balance sheet. It is listed under the "Assets" section, usually right after accounts receivable. The value of inventory reported on the balance sheet represents the cost of goods held for sale or use in the normal course of business. It's important to accurately account for inventory to ensure the balance sheet reflects the true financial position of the business.
4. How does inventory reporting benefit eCommerce businesses?
Inventory reporting is crucial for e-commerce businesses. It aids in managing extensive product catalogues, monitoring inventory across various sales channels, and ensuring real-time synchronisation of stock levels. Using dedicated inventory reporting tools designed for eCommerce enhances operational efficiency and effectiveness.