Retailers, do you know what a power of technology blended with your inventory management system could result in? You may think you know a lot about their uses and how they may fit your needs but you could be way behind on the current technology as well. Let us see how inventory management reports can help you.
An ideal inventory management report consist of information on basic stock list, inventory turnover, product availability, back up stock, forecast, order point and order quantity.
Basic stock list is the list of SKUs (products) along with the description, its stock number, quantity of items on hand and sales of last specified weeks. The weeks may be for 4 weeks or 12 weeks or as per the retailers needs. These basic information about inventory helps to arrive at sales forecasts and order quantities.
Inventory Turnover is the ratio of turnover to inventory. In other words it’s the total amount of SKUs sold at a given time. The main concept behind inventory turnover is to find the return of investment on each product i.e., how much amount can be generated from the amount invested on a SKU. The retailer must plan their turnover to achieve reasonable profits.
Product Availability means the product availability status when the customers’ demand for it. Retailer must maintain minimum amount of inventory as well as not run out of stock. Retailer must have managerial judgment skills in order to preplan product availability.
Backup Stock, commonly known as safety stock, is used when the customer demands exceeds or forecasted demands exceeds or when there is delay in delivery of goods by vendor. It acts as lifesaver during above mentioned situations.
Forecast gives many valuable insights to retailers. Sales forecast are straightforward in nature. There are various forecasting techniques that are used to arrive at accurate forecast value. Based on these forecasted values retailers can optimize the inventory.
Order point is a point of inventory stock below which quantity available shouldn’t go or the inventory would be stock out before the next order arrives. Order point equals lead time quantity plus the safety stock. Lead time is the time gap between the next orders needs to be placed and when it arrives at the retail shop.
Order Quantity, the planner should determine when the quantity available is less than the order point. The planner should order in such a manner that the sales do not dip into backup stock before the next order arrives.
For an inventory management report, the retailer must keep track their data and store them. From these stored data, required information is extracted and formatted to a report. The reports, hence, could be used to make strategic decisions.