All about Inventory List

In layman’s language, a list that helps a person track inventory is called an inventory list. A typical inventory list contains the stock/inventory items and their inward and outward movement. According to you, which sector will require maintaining an inventory list? Agriculture? Manufacturing or service sector?

Well, all sectors require maintaining an inventory list, but length and breadth would vary depending on the size of the business.

Meaning and definition of inventory list

Inventories list is a mechanism to exercise more control over the inventory of a business entity so that the inventories can be utilised efficiently. It is usually made in an orderly fashion where it is simply represented as a list of stock items with details about each line item.

An inventory list helps us track movements in stock items:

1. Purchases/production (inward movement)

2. Sales (outward movement)

3. Scrap and waste

4. Location-wise stock

5. Stock transfers (example stock transfer from head office to branch)

Advantages and disadvantages of the inventory list

The advantages are:

1. An inventory list will indicate whether a particular stock is fast-moving or slow-moving. This helps a person decide the performance of the product.
2. An inventory list indicates consumption/usage and closing stock of an item on a running basis. This helps to calculate the re-order level for an item. Whenever the closing stock of an item reaches the reorder level, the system automatically places the order with the vendor reducing stock-outs.
3. Transfer of Stock: A Head Office can look into all branch’s inventory lists. Any case of any excess or shortage of stock at one branch, the other branch can transfer the same.

The disadvantages are:

1. With the use of inventory management software, maintaining an inventory list is not burdensome. The problem arises when a business deals with many items. If an incorrect item in the inventory list is selected, the whole purpose of the inventory list goes for a toss. It will consume a lot of time to locate and rectify the error. 
2. The business undertakes numerous transactions leaving very little time for physical verification. The list will be worthless if the inventory list is not reconciled with physical stock. Certain events (e.g. loss by theft) aren’t recorded automatically by the system.

Components of the inventory list

1. Inventory ID: This is a unique ID or number given to a particular stock/item (e.g. A001, AB001). The inventory ID can be numeric or alpha-numeric. 

2. Inventory name: This represents the name of stock/item (e.g. basket, sheets, steel, etc.)

3. Quantity: This number represents stock available with us

4. Unit of measure: This represents how a stock is measured (e.g. kgs, ltr, number, etc.)

5. Price (value): The cost at which the stock was purchased. Stock is purchased from different vendors at different prices. Accordingly, this value will be calculated as the average price.

6. Location: The place the stock/item is located.

7. Reorder level and days: The level at which the stock is reordered with the vendor is called the re-order level. The number of days remaining to order refers to reorder days.

Template

Inv. ID

Name

Quantity

Unit

Price

Value

Location

Reorder Level

Reorder Days

Examples

Inv. ID	Name	Quantity	Unit	Price	Value	Location	Reorder Level	Reorder Days
AB001	Metal	100	kgs	50	5,000	Head Office	75	20
XY002	Oil	1000	ltr	75	75,000	Factory	500	40

The inventory list is advantageous to the business when maintained regularly. Businesses have adopted barcode or scanner systems to make this process more convenient.