Definition of Inventories List
Inventories list comprises of line-itemdetails of all the items of the stock of the company. It is a technique to have more control over inventory management and helps in the efficient utilization of 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 information such as stock name, description, units in stock, its value, and so on. Modern computer software is used nowadays to prepare this list which makes this data-intensive task easy and less error-prone.
Inventories list provide accurate and readily available details of stock which helps management in making decisions and smooth running of business operation. If the business comprises inventory that moves swiftly then the inventory should be updated on a daily basis, but in case of the slow movement of inventory, the business can update it on a weekly or monthly basis.
Examples of Inventories List
Below table is a sample of 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
Components of the inventories list given in the above template are explained as 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 in deciding when a particular inventory item needs to be 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 to the vendor again. The order is automatically placed at the reorder level in case 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
Advantages of the inventories list are as follows:
- Inventories list helps in the controlled management of the inventory.
- The list helps in tracking the inventory items in case of return of defective merchandise, multiple suppliers, and impacted items in case of a recall.
- It also helps in the clear categorization of 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 position and shortage conditions.
Disadvantages of Inventories List
Disadvantages associated with the inventories list are as follows:
- 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, therefore inventory list for the management of inventory is also important. Inventories list prepared through inventory management software helps a lot in the smooth running of business operations. Though the inventory list is data-intensive and prone to errors in case of manual intervention its usefulness overshadows all of its negatives.
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This is a guide to Inventories List. Here we also discuss the definition and components of the inventories list along with advantages and disadvantages. You may also have a look at the following articles to learn more –
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