Why Inventory Movement Analysis Plays a Crucial Role in Businesses?

What is movement analysis?

Stock movement analysis is understanding and analysing carefully the inward and outward supply of stock in your business. Movement analysis report is used for comparative studies. They give an insight into the flow characteristics of the stock in an organization. It also helps in finding out the slow-moving items which cause blockages in the flow of the working capital of the organization. When running a business, it is important for business owners to practice a periodic Inventory Analysis to have a better inventory control.

Benefits of Inventory Analysis

While there are numerous advantages of inventory analysis, the most important is that it contributes a lot to a business owner’s decision on what steps must be taken to protect valuable assets. Additionally, an Inventory Analysis, along with the classification of your products, can help improve your policies for better Inventory Control. Here are some of the other Inventory Analysis benefits which will add value to your business.

1. Accurate Inventory Planning and Recording

Keeping a close tab on the inventory will help business owners to take accurate and timely decisions about client requests and prospective projects. Inventory analysis will help understand the stock movement which will help identify the reorder levels of stock items. Business owners can also review the inventory records to identify inventory trends over time and make some basic predictions about inventory that might run out faster than usual.

2. Minimise the Blockage of Financial Resources

The importance of inventory control is to minimise the blockage of financial resources. It reduces the unnecessary tying up of capital in excess inventories and also improves the liquidity position of the firm. With proper inventory tracking module, business owners can take quicker decisions about the stock lying in the warehouse more wisely.

3. Stock Ageing and Warehouse Analysis

With an accurate inventory movement analysis report, business owners will get a clear picture about the amount of time a particular stock is spending time in the warehouse. The shelf life of a stock helps assess the demand and supply of the same which further leads to quicker and smarter decision making for the entrepreneur. You can easily evaluate the time and money you need to invest in that stock and eventually help him an informed decision.

4. Centralised Access to Inventory Data

With real-time visibility to the stock and its movement, business owners can get consolidated reports at a flick. Without having to move around to get a hold of different reports, inventory data can be accessed at the blink of an eye, making business owners keep costs down and grow profits. Movement Analysis further aids in accurate data collection and reporting and effectively evaluating current and future inventory requirements, enabling inventory to be managed at a more granular level.


Tally.ERP 9 gives several movement analysis reports which help draw a comparative study of the stock’s flow within the organization. Movement analysis shows the analysis of only those inventory transactions which are integrated with the accounts, i.e. inventories which are also recorded in the books of accounts. Inventory vouchers which affect the stock only in quantitative terms are not considered.

You can analyze stock movements by stock groups, categories, financial group or ledger. Different types of movement analysis reports that can be generated in Tally.ERP 9 are; Stock Group Analysis, Stock Category Analysis, Stock Item Analysis, Group Analysis, Ledger Analysis and Transfer Analysis. These reports help in getting real-time inventory visibility which records the data related to stock variance efficiently and makes necessary adjustments to generate an accurate view of stock levels.

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