Updated July 17, 2023
Definition of Inventories List
The inventories list comprises line-item details of all the items of the stock of the company. It is a technique to have more control over inventory management and helps efficiently utilize the inventory. The list is updated from time to time, the frequency of which is dependent upon the type of the business.
Explanation
An inventory list is a list that contains the details of the items lying in the stock of the company. These details include stock name, description, units in stock, their value, and so on. Modern computer software is used to prepare this list, making this data-intensive task easy and less error-prone.
It provides accurate and readily available stock details, which helps management make decisions and smooth business operations. Suppose the business comprises inventory that moves swiftly. In that case, the inventory should be updated daily, but in case of the slow movement of inventory, the business can update it weekly or monthly.
Examples of Inventories List
The below table is a sample of the inventories list that businesses use for inventory management purposes:
|
Inventory ID |
Name | Description | Unit Price in $ | Quantity in stock | Inventory Value in $ | Reorder level |
Reorder time in days |
| IN0001 | ABC | CBA | 4.00 | 50.00 | 200 | 30 | 11 |
| IN0002 | DEF | FED | 2.00 | 40.00 | 80 | 25 | 3 |
| IN0003 | GHI | IHG | 1.00 | 100.00 | 100 | 70 | 10 |
| IN0004 | JKL | LKJ | 3.00 | 120.00 | 360 | 70 | 13 |
| IN0005 | MNP | PNM | 6.00 | 70.00 | 420 | 40 | 6 |
| IN0006 | OQR | RQO | 8.00 | 80.00 | 640 | 40 | 6 |
Components of Inventories List
The components of the inventories list given in the above template are explained below. Though there is no strict format that is followed across the companies, the below components are more or less present in every inventories list:
- Inventory ID: It is a unique code assigned to each item in the inventory, which serves as its identifier in the inventory management system.
- Name: The field represents the name of the particular inventory item.
- Description: Description specifies the details of the inventory item, such as its specifications, color, measurement, etc., which can help in its identification later on.
- Unit price: It indicates the purchase price of a particular item per unit basis.
- Quantity in stock: The field represents the remaining quantity in the stock. It serves as a basis for reorder level and helps decide when a particular inventory item needs reordered.
- Inventory value: This indicates the total value of the inventory in the stock i.e. product of the quantity of an item and its unit price.
- Reorder level: If an item reaches the reorder level, the order will be placed with the vendor again. The order is automatically placed at the reorder level if the inventory management system software is in place.
- Reorder time in days: This suggests the time lag between the placing of reorder and its physical receipt.
Advantages of Inventories List
- Inventories list helps in the controlled management of the inventory.
- The list helps track the inventory items in case of return of defective merchandise, multiple suppliers, and impacted items in case of a recall.
- It also helps clearly categorize inventory since it contains useful information such as item number, description, etc.
- Inventories list helps in the effective utilization of items in stock. Also, it helps in avoiding overstocking positions and shortage conditions.
Disadvantages of Inventories List
- Nowadays, companies use computer software to manage inventory or prepare inventories list, which is quite expensive, while manual intervention requires a lot of effort and is prone to errors.
- Inventories list can be a little complex to be prepared through software, while manually, it can be cumbersome due to a lot of data.
Conclusion
Since inventory is an integral part of every business, an inventory list for managing inventory is also important. An inventory list prepared through inventory management software helps smooth business operations. Though the inventory list is data-intensive and prone to errors in the case of manual intervention, its usefulness overshadows all of its negatives.
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