3 Helpful Inventory Management Reports

3 Helpful Inventory Management Reports

If you can’t manage your business inventory efficiently, it causes higher costs, lower revenue—and lost customers.

Out-of-stock merchandise leads the average retailer to lose 4.1% of revenue, and overstocking leads to the loss of another 3.2% of revenue, according to “Retailers and the Ghost Economy: $1.75 Trillion Reasons to be Afraid,” a report from retail analyst IHL Group commissioned by OrderDynamics, an analytics software company.

In North America, that adds up to $129.5 billion lost every year because retailers don’t have items when customers want them, and $123.4 billion lost from having too much product on hand, thanks to costs such as price reductions. The good news is that retail businesses can cut their losses 50% to 70% with better inventory systems, forecasts and insights.

It’s estimated that only about a third of small- and mid-sized businesses use inventory control software or systems. Nearly half either don’t track inventory, or use some type of manual process.

An inventory system should provide information about the status of your products as well as information you can analyze to improve efficiency and sales. Look for one that provides:

  • Real-time data. Capture information at the point of sale instead of relying on a person manually taking inventory, which can cause delays and errors. Automated inventory systems also increase productivity.
  • Multichannel data. Even if you have good systems, if they don’t work together you won’t have a full picture of your inventory and what is selling at individual stores and through other outlets, such as online sales. When you know a product sells better at one location than another, you can improve collaboration between your stores.
  • Product details. How you track items—by UPC, SKU, serial number, expiration date or something else—will determine which information you have available, such as the color of items in stock.
  • Re-order triggers. Systems such as Zoho Books allow users to receive notifications when a quantity reaches a certain number. That makes planning your ordering easier.

Mark Canes, president of Blue Link Associates Ltd. recommends businesses without a purchasing department use these three inventory accounting reports:

  • Inventory ranking by profitability. Check the gross margin on each product to help decide which items aren’t worth the space in your warehouse or store.
  • Inventory “hits.” This report allows you to compare how often someone buys a product; review it with the ranking report. If you are stocking a large amount of inventory for a product that rarely sells, that is costing you money.
  • Daily average sales. Make sure this report includes what didn’t sell, the amount in inventory and the value of each product. That information allows you to fine-tune your purchasing.

Review those reports for periods such as the last month, quarter and year.

Check reviews of inventory management applications at GetApp and Capterra, and read reviews of POS systems with inventory control features at DirectCapital. Tightening up your inventory management with technology is an easy way to save and make money.

Amy Beth Miller is a writer and editor helping people succeed in business for more than a decade. She has written news articles, features, blogs, newsletters, e-letters white papers and training manuals.

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