Why Profitability Needs Inventory Management Reporting

Why Profitability Needs Inventory Management Reporting

Have you ever used “invisible ink” to write a secret message, then a special UV light to reveal what’s been written? Sometimes, your important business data can seem like it’s written in invisible ink. With so much data being captured and processed daily, it can be next to impossible to see what’s actually going on. Luckily, the right reporting can be like a UV light, clearly revealing what you need to see.

The Importance of Inventory Management Reporting

When it comes to finance, reporting is recognised as a crucial tool for knowing your financial position and understanding the profitability of your business. So why is it that inventory reporting doesn’t always get the same focus? Given that inventory can be a business’ most important asset, it’s just as important to get your inventory reporting set up correctly to understand and improve your warehouse efficiency and profitability and empower you to make more informed, agile business decisions.

Define What You Need

Before you get started with setting up your reports, take a moment to define what information you need and how often you’re going to need it. Being able to see your top selling products gives you an indication of which items you may want to purchase more frequently, or in larger quantities. Getting a view of your slowest moving products can help you figure out if you could run a promotion or marketing campaign to get them out the door quicker and free up more of your valuable warehouse space.

You’ll also want to consider the frequency of your reporting. Do you need to be tracking changes daily, or is a weekly review more in line with what’s realistically manageable for you?

Scheduling and Automating

close up of a calendar.jpegOnce you’ve defined and set up your reports, you’ll want to minimise the human effort involved to update them each time. Many cloud ERP systems will provide real-time reporting which can be delivered to you automatically, according to pre-defined schedules or specific triggers.

Having automation delivering your reports can also help keep you in the habit of reviewing and understanding your stock situation at regular intervals. With everything else you need to keep in mind with warehouse management, it can make all the difference having inventory reports arrive in your inbox at the same time each day or week – reminding you to review and make any necessary changes to your stock situation.

If you’re using the right cloud ERP software, you’ll also be able to set advanced trigger-based automations. These can include receiving alerts when items reach minimum or maximum levels and prompt re-ordering when needed.

Analyse and Strategise

With your reporting set up and your scheduling and automations running, analysing the results and trends can now give you a better picture of potential issues, changes to anticipate and where to leverage cost savings and sales opportunities to increase your warehouse profitability. You’ll want to pay particular attention to:


Understanding the overall trends for your product lines can give you some great insights. Are there certain times of year in which demand for certain lines increases or decreases? Or perhaps there are trends being influenced by other factors, such as newer, superceding products being released into the market, or new competitors coming into the mix. Figuring out these trends with accurate supporting data can help you pre-empt potential issues and get other business stakeholders on-board to take decisive action and quickly turn things around.


Are you receiving products from your suppliers swiftly, only to see a slow down at the receipting stage? Or maybe it’s taking time to allocate the products to orders or to complete the pick, pack, ship process? Identifying where these bottlenecks are happening will help you implement the process improvements you need to solve those issues. The more areas of your order to ship process that can be streamlined, the greater the increase in overall warehouse efficiency you can expect to see.


Back view image of businessman drawing graphics on wall.jpegYour actual profitability will involve more than just the difference between your buy and sell prices for your different product lines.

Get a true picture of your warehouse profit by looking at each product line’s sales volume and the margin you’re making, while also relating this to how long it takes to move those products through your warehouse and the operational costs involved. You’ll then begin to see a more accurate representation of profitability per product line and be able to make better decisions on what to continue or discontinue stocking. For example, a product line with low margin that sits in your warehouse for a long time before shipping out to customers may be better managed as a “special order” order drop shipment.

Invisible Ink

These are just a few of the tips on inventory management reporting which can start revealing those “invisible ink” clues hidden within your inventory data. Getting to know the stock trends, bottlenecks and true profitability will help you see your stock position clearly and know where to focus efforts.

Using the right cloud ERP software, you can also leverage best practice processes, advanced automations, demand forecasts and more to streamline your warehouse, reduce costs and further boost your warehouse profitability. For more information, get in touch to start a conversation.

Also get your free eBook – The Ultimate Guide to Inventory Management for more ideas and strategies on managing your warehouse more efficiently.


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