Did you know that creating an inventory is key, even if you sell online?
Yes, in the world of business and business management, inventory plays a crucial role.
To the point that it is important even if you have a small startup. Join me for a detailed look at the definition of inventory, the characteristics and how to create an easy one today with examples.
What is an inventory
An inventory is simply a systematic record of all the products that a company or business owns at any given time.
A well-managed inventory allows you to:
- Meet customer demand efficiently.
- Optimize the supply chain and reduce costs.
- Prevent product shortages and lost sales.
- Evaluate the profitability of individual products.
That’s why it’s necessary, even if your business is not large, as we’ll see below.
Why have an inventory if you sell online
Having an inventory is important even if you sell online, because your customers will expect the products they see in your online store to be available for purchase.
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That’s where inventory comes in, as well implemented, it ensures that you can fulfill their orders and deliver products in a timely manner.
Lack of inventory can lead to customer dissatisfaction and loss of confidence in your business.
Hand in hand with this, with an inventory you will also be able to:
- Have greater control of your inventory,
- Avoid out-of-stocks of popular products
- Reduce the accumulation of unsold products.
- Plan your orders to suppliers.
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Inventory features
What you need to know about inventories is that:
- They all have an associated economic value, which represents the acquisition or production cost of the stored products.
- The products in inventory physically exist in the warehouse or in a designated location within the company.
- In addition, they are recorded and controlled through specific systems and processes. This involves keeping track of incoming (purchases) and outgoing (sales) products, as well as stock levels on hand at any given time.
- They are in constant motion due to business transactions, such as purchases, sales and returns. This requires active management to maintain adequate stock levels.
- Each item in inventory is stored in a specific location, making it easy to track and retrieve when needed.
- Inventory management involves planning and forecasting to determine how much inventory to keep in stock based on expected demand and sales projections.
Types of Inventory
There are several types of inventories based on their status and location in the production process:
- Raw Materials Inventory: It is composed of the materials necessary for the manufacture or production of products.
- In-process inventory: Includes products that are in the middle of the manufacturing process.
- Finished Goods Inventory: Contains products that are ready to be sold or distributed.
These types of inventories are managed differently depending on the needs of each business.
How to create an inventory in Excel
- Open Excel or another platform and create a new spreadsheet.
- Define your columns. In the first row (row 1), type the column headings that will represent the attributes of your inventory. Some common columns include:
- Product: The name of the product.
- SKU Code: A unique code for each product.
- Quantity in Stock: The quantity of products on hand.
- Cost Price: The unit cost of acquisition or production.
- Selling Price: The price at which the product is sold.
- Supplier: The name or code of the supplier of the product.
- Location: The physical location of the product in the warehouse, if applicable.
- Notes: Any additional information you wish to record.
- Then, starting with the second row (row 2), begin entering your inventory data in the appropriate columns. Each row will represent a different product.
- You can then apply specific formats to the cells according to your needs. For example, you can use the currency format for prices or apply a number format for the quantity in stock.
- As an optional step, if you want to perform automatic calculations, you can use Excel formulas. For example, you can add a column to calculate the total inventory value by multiplying the quantity in stock by the cost price.
- Finally, be sure to save your Excel spreadsheet regularly and make regular backups to prevent data loss.
Once you have created your inventory in Excel, you can easily update it as the stock of your products changes.
Use inventory management software to automate the process.
In addition, you can use Excel functions and filters to perform analysis and obtain valuable information about your inventory, such as total value, stock quantity tracking and supplier management.
Conclusion
Only with a well-managed inventory can companies optimize their operations and meet customer demands effectively.
Inventory management is essential to ensure continuity of business operations.
The good news is that you can do it even from a simple spreadsheet, as we show you in this article.
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