As a retail business owner, some of the worst scenarios that can occur with your inventory are product stock-outs, dead stock, or excess inventory. Keeping accurate and timely data helps you make sound decisions and manage your operations smoothly. That’s where inventory reporting comes into play.
While it is possible to generate inventory reports with spreadsheets, it is much better to opt for retail inventory management software that can provide advanced, in-depth metrics and give you a holistic view of your inventory status.
Below, we’ll walk you through inventory reporting and how to create an inventory report to improve your retail business. We will also discuss the different types of inventory reports and why you should choose inventory management software to streamline your inventory management.
Key Takeaways
- Accurate inventory reports help avoid stock-outs, excess inventory, and dead stock by providing insights into stock levels, sales velocity, and product categories.
- Retail inventory management software, like KORONA POS, offers advanced features that automate and streamline inventory reporting. These features reduce human error and provide real-time updates on stock levels and supplier interactions.
- Automated inventory reports enhance accuracy and efficiency by updating in real-time, reducing the need for manual updates.
- Essential inventory reports include stock levels, gross margin return on investment (GMROI), inventory profitability, and sell-through rate.
What Is An Inventory Report?
An inventory report is a physical or electronic document that accurately states the amount of inventory a retail business has on hand at a particular time. It provides information on stock valuation, which products sell the fastest, those that sell the least, the amount of inventory by category, and many other valuable metrics.
The primary purpose of the inventory report is to help you avoid over-ordering or out-of-stock situations, thus contributing to efficient inventory management. It can be generated manually or preferably from inventory management software.
How Do Inventory Reports Benefit a Business?
Retail businesses use inventory to generate revenue and profits. There‘s nothing to sell without it, so maintaining the right amount of inventory is vital to a business’s success. An accurate inventory report offers many benefits, including better inventory planning, seamless inventory tracking, and organized inventory categorization, which help ensure revenue growth while maintaining a healthy profit margin.
The quality of inventory reports primarily comes down to the insight they give retailers into their business. The most successful retail companies are data-driven, and inventory reporting metrics provide a comprehensive and highly accurate view of the business. Here are some other benefits of inventory reports:
Reduced Stock-outs
Stolen goods, misplaced products, and, most importantly, inaccurate inventory data resulting from delivery discrepancies are all common reasons that can lead to a stock-out. Stock-outs can be one of the most frustrating experiences for shoppers, whether in a physical store or online. Not only do they lead to disappointment, but they can also prompt the customer to turn to a competitor.
A good inventory report should give you information on inventory forecasting. Such forecasting uses data to reduce stock-out situations. The report shows you what products are in stock and what items will run out, allowing you to make preventative decisions in advance.
Faster replenishment
Registering your suppliers’ details and associating them with relevant products will speed up replenishment. This is the advantage of using automated inventory management software—thanks to the inventory report, you know when a product is sold out, which lets you know when to contact suppliers and how much it will cost. Purchases are automatically emailed to suppliers, saving you time.
Increased Visibility
Purchasing through a system means that everyone on your team can see what has been ordered and when it will be delivered. This increased efficiency allows your team to spend more time building your business. You no longer have to dig through spreadsheets to get inferior forecasts. KORONA POS, one of the best inventory management software options designed specifically for retail businesses, gives you more accurate predictions to help you replenish your stock.
Quick Note: KORONA POS’s shipping tracking feature lets you know when items have been shipped and what’s in them. Plus, you don’t need to request an inventory report before knowing which products or items are running low on stock. You can get notifications of low stock, overstock, and out-of-stock items directly from your POS system. You also can get a report card on each item in your product catalog with a single click. KORONA POS has an inventory application for added convenience and flexibility. Every employee can have it on hand, allowing anyone to keep track of inventory. If you want to learn more about KORONA POS, click here for a product demo with one of our product specialists.
Increased Accuracy
Accurate inventory management is one of the primary uses of inventory reports. You need to know what you have to ensure you don’t run out of stock before customer orders are fulfilled. Ordering too late leads to stock-outs and lost sales.
Ordering too much too soon ties up your cash, increasing the risk of inventory spoilage and requiring more warehouse space. So, accurate inventory reports tell you exactly when your stock levels reach the reorder point so you can replenish your inventory on time.
Inventory Reports Vs. Inventory Management Reports
While similar, an inventory report and an inventory management report serve different purposes for business.
An inventory report provides a snapshot of current inventory levels and statuses, detailing quantities, values, and product performance at a specific point in time. It focuses on a business’s immediate operational needs such as stock quantities, item locations, and sales performance.
In contrast, an inventory management report offers a broader analysis of inventory practices over time and focuses on optimization and efficiency. It includes metrics like inventory turnover ratios, reorder points, and gross margin return on investment (GMROI).
While inventory reports help day-to-day operations prevent stock-outs or overstocking, inventory management reports are used for strategic planning and improving inventory control practices. The latter is the bigger-picture tool for measuring how well your business is managing inventory over time.
What Are The Most Important Types of Inventory Reports?
Inventory reports provide a wealth of helpful information, such as useful product details and retail KPIs about how many items are in stock, whether certain items are at low levels, which items are selling the fastest, which categories are performing the best, and other relevant information about the status and performance of your inventory.
It’s important to know that you can produce different types of inventory reports, each with its own importance. Here are some of the types of reports you can generate with KORONA POS:
Stock Levels
Stock levels reports have two main benefits: they track critical inventory levels and establish replenishment alerts. Critical levels reveal sales velocity and estimated out-of-stock dates for all your products, while replenishment alerts provide insight into the type of inventory requiring replenishment in inventory-dependent warehouses. All of these elements are integral to your purchasing decisions and can help you preserve your revenue stream to keep your bottom line where you want it.
Conversion Rates
Conversion rates measure how effectively inventory drives sales. Specifically, they assess the percentage of customers who make a purchase after interacting with your inventory. Monitoring conversion rates helps retailers optimize inventory levels and product placement, ultimately improving sales performance and inventory turnover. With KORONA POS, you can see how often an interested customer makes a purchase to gain insight into your marketing and sales numbers to decrease your business’s cart abandonment and revamp your marketing strategy.
Gross Margin Return on Investment (GMROI)
Gross Margin Return on Investment (GMROI) is an inventory profitability metric that analyzes a company’s profitability of inventory investments. It calculates how much gross profit is earned for each dollar invested in inventory, providing insight into your business’s efficiency of inventory management. GMROI allows you to optimize pricing by tracking your gross margin ROI for each item in your catalog, enhancing your overall profitability.
Inventory Profitability
An inventory profitability report provides a detailed analysis of how well inventory items contribute to your business’s overall profit. It is done in three parts:
- SKU Profitability: Measures the profit generated by each Stock Keeping Unit (SKU), assessing individual item performance. Considered the best type of eCommerce data, SKU profitability reports help identify which specific products are most profitable and which are underperforming.
- List Profitability: Evaluates the profitability of different product categories, such as brands or types. By analyzing profit margins and sales data across these lists, retailers can identify which categories are driving profits and which may need strategic changes.
- Trend Profitability: Tracks profitability over time, providing insights into how profits from inventory items or categories evolve. Trend profitability helps retailers identify seasonal trends, changes in consumer preferences, and long-term profitability patterns to guide inventory strategies.
Using these product performance analytics can help your brand reduce costs, eliminate dead inventory, and increase profits by promoting top-performing items.
Sell-Through Rate
The sell-through rate (SR) measures the percentage of inventory sold during a set time period (usually one month) relative to the amount received from suppliers. A high sell-through rate indicates strong sales performance and effective inventory management, while a low rate may suggest overstocking or lackluster demand. With KORONA POS, you can get an overview of the seasonal evolution of your inventory via sell-through rate reports.
Inventory Replenishment
Inventory replenishment, also known as stock replenishment, refers to moving inventory from reserve storage to sales floors and ensuring that stock levels meet demand without overstocking.
The inventory replenishment report displays information such as your ending inventory, items sold per day, days of coverage, and average cost. This can help you understand how certain products are selling so you can order inventory accordingly. You can also use inventory replenishment reports to gain valuable insight into customer demand and market trends, which can inform your inventory management decisions.
It is worth noting that inventory replenishment is sometimes used to define sales-ready inventory and raw materials from suppliers.
ABC Analysis
ABC analysis is an approach to classifying inventory items based on their consumption value. It divides inventory into three categories based on demand, cost, and risk data: A, B, and C. A-items are high-value products with the highest consumption rate, demanding the most oversight, while C-items are low-value products with the lowest consumption.
This classification helps retailers prioritize inventory management efforts, optimize stock levels, and allocate resources effectively by focusing on high-impact items.
How To Build An Inventory Report
Implementing inventory reports into your operational workflow can save your business time and money, depending on your method. While it’s possible to create a basic inventory report in Excel or Google Sheets to track inventory by hand, this could take your business much longer than is necessary.
With the slew of modern inventory tracking technology on the market today, leveraging the proper software can make your inventory reporting more straightforward, accurate, and valuable by speeding up your processes, avoiding human error, and synchronizing data between tools.
Below are some simple, actionable inventory reporting best practices to ensure optimal results for your business:
1. Build a complete list of your products
Once you’ve decided what to report on, you need to develop a list of inventory items. Then, export these items from your point of sale, inventory management software, or database of choice. Be sure to include information such as the number of units you have, the location of those units, product variants, serial numbers or SKU numbers, and prices. Also, remember that your list of items will depend mainly on the questions you wish to answer.
2. Set your timeframe and stick to it
One of the most underrated best practices in inventory reporting is choosing a timeframe and committing to it. To avoid disparate data and discrepancies, pulling all measurements from the same time period is essential. It’s up to you how often you update your reports, but if you have a relatively high volume of sales, you’ll probably want to update them more often because this data can change quickly.
3. Automate your inventory reports
Once you have established a list of items and chosen a timeframe, it is time to choose the reports you will run and generate the numbers. Inventory management systems have automation that can update your reports in real-time to reflect exactly what’s in stock, down to the minute.
Point of sale dashboards and canned reports are a great starting point for your analysis and valuation. That’s why it’s recommended to start with automatically generated, or canned, reports.
Investing In An Automated Inventory Management System Like KORONA POS
Creating inventory reports may seem tedious, but it is an essential step in understanding how your business operates and identifying areas for improvement. The use of inventory management software is essential to obtain more accurate data.
KORONA POS is not only an inventory management software but also a point-of-sale system specifically designed for retail businesses such as grocery stores, thrift stores, convenience stores, vape shops, liquor stores, wineries, and more. KORONA POS offers many features to seamlessly manage your inventory and give you a complete overview of your business. Book a demo with one of our product specialists now to learn more.
“Most important thing in the liquor industry is inventory management. We buy and sell at such a rapid rate, and product prices increase daily, so it’s important for us to have the right reporting and the right information on profit margin so that we sell our products at the right price and so that we stay competitive. So KORONA’s reports on inventory and how you can handle stock receipts and your purchase orders it’s all very seamless. One report that I found right away was I was able to, on the back end, calculate exactly what it costs me per hour to be open. We were able to calculate how much traffic and what the sales revenue was from a certain point of time in the day to decide whether or not we need to be open anymore.“
Kristen Lee, Owner of the Pine and Peoria Liquor Store.
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FAQs: Inventory Reporting
The purpose of an inventory report is to reveal the amount of inventory a retailer has in stock, which products are selling best, performance by category for specific SKUs, and other insightful information regarding product conditions. The inventory report should provide an accurate account of items in stock, so business owners can avoid stock-outs and overstocks to make clear and precise decisions based on reliable data.
Inventory reports are a necessary resource for both eCommerce and brick-and-mortar businesses. By using inventory reports, businesses can reap several benefits, from better inventory planning, transparent inventory tracking, and organized inventory categorization. All of this ensures profitable growth and sets you up for continued success.
If you’re new to inventory reporting, integrating inventory performance and profitability analytics is a great starting point. With these numbers, your company can see its best and worst sales, year-over-year growth, and profitability for each SKU, allowing you to eliminate dead stock and promote top-performing products.
It is possible to use Excel spreadsheets for manual inventory reporting; However, an effective inventory management system will make your reporting smoother and provide more accurate information. A calculation error can be detrimental to your business and negate your efforts.
Key Takeaways
- Utilizing inventory reports helps avoid stock-outs, excess inventory, and dead stock by providing crucial insights into stock levels, sales velocity, and product categories.
- Retail inventory management software, such as KORONA POS, automates and streamlines reporting processes, reducing manual errors and providing real-time updates on inventory and supplier interactions.
- Automated inventory reports enhance accuracy and efficiency, updating data in real-time to prevent stock issues and support better decision-making in inventory management.
