Inventory Report: Definition, Use Cases and 10 Different Types of Inventory Balance Sheets for eCommerce Businesses in 2023
Inventory is one of the key aspects of any eCommerce enterprise. It is the means through which they can achieve their central goal – to sell products and generate enough revenue to offset all the expenses that were incurred in terms of research and development, production, marketing, logistics, and operations and have enough left to be profitable. Therefore, managing inventory effectively and efficiently also becomes a central task for retailers.
One of the main ways to do this is to maintain a systematic inventory report that summarizes important details about the current status of the available inventory. In this blog, we will go into detail about inventory reports, what their use cases are, how to create one, and the different types that retailers can use.
- What is an Inventory Report?
- Use Cases of an Inventory Report in 2023
- How to Create an Inventory Report in 4 Simple Steps?
- 10 Types of Inventory Balance Sheets to Scale Your Business in 2023
- Conclusion: Take Advantage of InventoryLogIQ to Manage Your Inventory in 2023
- Inventory Report: FAQs
What is an Inventory Report?
An inventory report, also called a stock audit report, provides a detailed look at the available inventory that a business has during a specified period of time. They can either be drafted physically or digitally and contains information regarding the number of products and units that a business can currently sell, inventory that is currently ordered or will be ordered in the future, and inventory that is utilized for internal purposes.
An inventory report generally needs to consist of up-to-date information and visual cues, such as graphs and charts, to accurately represent the number of units of a particular item that are available in stock. This helps businesses ascertain the appropriate amount of inventory they require during a particular time period and helps in preventing overstocking and understocking situations from occurring.
Use Cases of an Inventory Report in 2023
Inventory management is a major business operation that requires the use of an accurate and legible inventory report. For inventory management to be successful, businesses require access to data and facts that can help them make well-informed decisions, and this is provided by a stock audit report.
It can help businesses determine their reorder point and prevent them from ordering fresh stock too early, which could hold up capital, heighten the risk of damaged products, and requires additional storage space. Conversely, it also avoids situations where fresh stock is ordered too late, which results in items running out of stock and the inability to fulfill customer orders.
Tracking Inventory Across Fulfillment Centers
Keeping track of the amount of inventory in storage is an important task for eCommerce businesses, especially ones that are expanding rapidly and have inventory stored in multiple fulfillment centers in various locations.
This can seem like an insurmountable task but through the use of an inventory report, every unit of every product can be easily accounted for. Additionally, it can help to filter inventory by date, supplier it was ordered from and product type, among others, and can identify products that are damaged and need to be replaced.
At the manufacturing plant, inventory needs to be segmented into categories based on their completion, such as raw materials, works-in-progress, and finished goods, as each category has to be valued for accounting purposes. Once the goods are dispatched and have been stored in fulfillment centers, it is up to retailers to store their inventory as per their requirements.
For retailers who deal in large amounts of inventory, trying to locate a particular product in an unorganised heap of boxes can be disconcerting. Alternatively, locating products that are neatly labeled and organised based on a variety of factors such as demand, price, supplier, or type can speed up the order fulfillment process and result in less wastage of time, effort, and manpower.
How to Create an Inventory Report in 4 Simple Steps?
Shortlist Reporting Topics
Shortlisting the topics that need to be tracked and mentioned in the stock audit report depends on a variety of factors, such as the goals of the business, the industry it operates in, the growth strategy it employs, and the type of products it sells. Different inventory management key performance indicators (KPIs) can be used for different businesses with varying goals. Retailers need to identify the ones that are best suited to their business and can paint a clear picture of their inventory currently in stock and that needs to be ordered in the future.
Frame a List of Items
After coming up with a list of reporting topics, retailers need to frame a list of items which can either be exported from their inventory management system or POS system or can be listed manually. The list of items generally needs to contain detailed information that is needed for each product such as the number of units that are currently available, different varieties if applicable, serial numbers, pricing and anything else that will help to identify it and provide insight that is needed.
Create a Time Frame
Choosing a time frame is critical to frame an accurate inventory report. Keeping up to it is arguably just as important because if all the KPIs are not measured during the same time period, it can create a vast amount of disparities in the stock audit report, which will result in a flawed summary of information that can lead to misinformed business decisions. Companies with a growing volume of sales will need to constantly refresh the data in their inventory reports to account for fluctuations in variable KPIs that could lead to a change in results.
Suggested Read: How to Achieve High Inventory Accuracy?
Automate Wherever You Can
Companies can automate a wide range of inventory management processes by opting to use an advanced inventory management software, including the tracking of inventory by receiving real-time updates whenever inventory is purchased or sold, across multiple fulfillment centers and eCommerce marketplaces. This enables the use of more accurate and fool-proof data recording, which can be used while framing the inventory report, which helps firms make efficient decisions. Additionally, these software solutions also reduce the amount of time, effort, and labour that is required to complete various important tasks.
10 Types of Inventory Balance Sheets to Scale Your Business in 2023
Customer Analytics Report
A customer analytics report is a type of stock audit report that tracks various customer-centric metrics such as the geographic location that has the most demand, which customers have placed repeat purchases, the income levels and spending patterns of a company’s target audience and much more.
This helps retailers assess patterns in terms of customer demand and which supply chain solutions are successfully tackling that demand and which aren’t, through which they can determine what practices are generating more revenue, repeat, and new customers, and enhancing customer satisfaction, as opposed to others so that the most successful ones can be permanently utilised to capitalize on the momentum.
Shipment Trends Report
An inventory report that tracks trends in shipping, delivery, and warehouse management is known as a shipping trends report. These reports provide insight into various factors that affect delivery speed and efficiency, customer satisfaction, and warehouse performance.
This allows retailers to streamline any process that is causing a delay or that is not performing up to the mark. It also assesses a shipping aggregator’s performance in comparison to other services that the retailer has used, allowing them to identify which service is providing faster and better operations.
Purchase Order Report
A purchase order report is a type of stock audit report that tracks KPIs relating to the purchase of inventory from a supplier or manufacturer, such as pricing, rate of on-time delivery, transaction details and much more.
This enables firms to assess the performance of their manufacturing partner and can suggest ways to improve certain aspects that may be delaying the shipment of inventory to the relevant fulfillment centers. Companies can also determine when they need to clear space for incoming inventory and how much space they will allocate to the new shipment.
Cost of Goods Sold (COGS) Report
Cost of Goods Sold (COGS) is the total amount of expenses incurred in the process of manufacturing, selling and delivering a product to the end customer. A COGS inventory report is needed to understand the collective costs that a business has spent on the sales and distribution of its inventory and how to reduce the expenditure on certain processes.
It also aids in managing taxes, identifying areas that can help in scaling the business and determining if retailers need to spend more capital on their operations or inventory management.
A sales report is a stock audit report that provides vital information about a company’s sales, cash balance and an accounting summary for each selling channel, such as discounts, incomes, taxes and refunds.
This helps businesses identify their best-selling products, locations that have the highest number of sales, slow-moving items and various trends that will help them improve their sales processes to generate more revenue.
Inventory Forecasting Report
The primary goal of an inventory forecasting report is to attain the optimum inventory levels that are required to fulfill orders, based on product volumes that a company is expecting to sell in a specified duration.
This estimation is done by analysing historical sales data, previous promotional campaigns and any other factor that affect supply and demand, in order to provide the most accurate depiction of the future inventory that is needed by a company.
Stock Levels Report
A stock level inventory report provides insights into products based on their risk of running low on stock levels and the rate at which they need to be replenished. This helps firms establish which types of inventory sell faster and need to be restocked more often depending on the sales channel and the fulfillment center they are stored in.
This data assists in optimizing inventory levels and mitigating storage and operational costs, as the accurate amount of inventory will always be kept, in order to fulfill demand.
Inventory Value Report
An inventory value report is a type of inventory report that summarizes inventory based on the value of each product.
This provides a look into the total value of all of a company’s products, the volume that is stored across all warehouses and fulfillment centers, and the performance of individual products, based on their value, lifecycle, storage duration, and inventory turnover ratio, which will help companies understand which items need to be handled with extra care and how long their shelf life will be.
Inventory Profitability Report
Companies generally track inventory profitability in 3 distinct phases – trending profitability, listing profitability and SKU profitability. Trending profitability is an inventory report that shows the consolidated profitability over a designated time period. Listing profitability is an inventory report that summarizes performance data per SKU, by gross and unit margins.
Finally, an inventory report summarizing the SKU profitability of a company is considered to be the most important due to the ease with which the profitability of each SKU can be monitored. Using an inventory profitability report, companies can become more cost-effective, limit the amount of deadstock they have and increase profits by selling better-performing products.
Inventory Performance Report
An inventory performance report is a stock audit report that provides information specifically in regard to performance figures of a company, such as the best-selling products, worst-selling products, yearly expansion, and much more.
Knowing which products are performing well and which aren’t can lead to firms customizing their product offerings by placing more focus on commodities that are generating the maximum profits for them and getting rid of items that are taking up space through sales or donations. They will also get a better idea of how the overall business is performing and can make changes and tweaks to the relevant processes.
Conclusion: Take Advantage of InventoryLogIQ to Manage Your Inventory in 2023
Inventory reports are a supremely important tool to keep eCommerce retailers informed about a plethora of different metrics that impact the performance of their inventory and business processes. As discussed above, there are many different types of stock audit reports and KPIs that companies can opt for but choosing the right one depends on the nature of the business and its products, the short-term and long-term goals that it envisions and the type of information that it wants to track and summarize.
Once those details are figured out, it will be a much simpler process to shortlist the type of inventory reports that are needed. If you are an eCommerce retailer and need assistance with choosing the right inventory report or any other activity involved in managing your inventory, consider partnering with InventoryLogIQ.
InventoryLogIQ is one the leading inventory management and storage solutions in India that provides a whole host of services, encompassing every aspect of preparing your inventory to be shipped to their respective customers. Some of the unique features we offer include:
Analytics for Inventory Level Tracking
We provide you with important analytics and data to allow for frequent reviews of inventory position and to react to changes in the business while maintaining an ideal inventory level for each SKU.
Optimization of Storage Space
Blue lists that identify unsold or excess inventory are presented in a precise manner in order to save storage space.
Bundling of Products
Product bundling analytics can help businesses increase sales by locating the ideal products for promotional bundles and combinations.
Segmenting of Items
Keep an eye on daily demand fluctuation and separate rapid movers from sluggish movers that require more concentration and attention.
Red list goods that are getting close to running out of stock can be found using reports from replenishment inventory planning reports that are simple to observe.