How to Track Inventory on Hand
Tracking inventory is the lifeblood of any business. However, knowing the right amount of inventory to have on hand becomes more challenging as customers expect faster delivery times. Knowing how to track inventory is the first step to smoothing out inventory fluctuations that can contribute to longer wait times and increase costs associated with carrying inventory.
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Instructions
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Set your goals. This requires organizing the movement of "new" goods and "work in process" goods. New goods should come in just as the last piece of inventory is leaving the shelf. While this might not be practical from a risk perspective, it establishes a goal. The goal of any inventory tracking system is to find an optimal order quantity that minimizes costs associated with holding inventory on hand.
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Establish a regular order cycle. Consider the costs associated with each order. This requires implementing a system which is tailored specifically to your business needs.
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Determine an optimal stock level and assess merchandise. This will help to avoid obsolesce. It is always better to mark down inventory rather than hold it indefinitely.
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Check the figures and review items in your tracking system. Take physical stock of your inventory monthly. Market demand can change faster for some industries than others so it is important to tailor this to the products being sold in your business. Fashion merchandise will be outdated faster than groceries.
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Open a single instance in Microsoft Excel. Now that you have the right information you can use MS Excel to help track changes from month to month. Open "Inventory-Cost of Goods Sold Analysis" by clicking the "Office" button and selecting a "New" file. Select the "Inventories" category and choose "Inventory Cost of Good's Sold Analysis."
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Type in your product categories in the "Inventory Unit Analysis" section. You will need to use Step 4 to determine the number of units at the beginning of the period, number of units sold and production.
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Enter the dollar value of goods and purchases. Your ending inventory will be calculated automatically. Update monthly per changes observed in Step 4.
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