There’s a lot that goes into successfully managing a retail store. A big part of it is learning how to efficiently manage, order, and track inventory so you always have the right amount of products to sell on hand.
Below, we define and discuss available to sell (ATS) inventory. As part of the overall process of inventory management, calculating and managing ATS inventory is an important part of reaching your sales goals.
What is available to sell (ATS) inventory?
Available to sell inventory, or ATS, refers to the number of units of a product that are currently for sale. It includes the amount of inventory you have available to sell, plus any open purchase orders that haven’t been shipped yet.
Any units that are pending shipment, set aside for existing orders, or marked for backorders aren’t counted as ATS inventory. They are not available to sell because they have already been sold.
Why is this distinction necessary? To accurately manage inventory, categorizing the products you have on hand is vital to successfully fulfilling orders—whether they’re backorders, pending, or existing orders.
For example, it’s important not to confuse available to sell inventory with available to ship inventory. Available to ship inventory refers to products that wholesalers have stored in their warehouses that are immediately available to ship to retailers.
ATS inventory vs ATP inventory
While ATS inventory refers to the inventory you have on hand to sell, the available to promise, or ATP inventory, denotes the amount of inventory in stock that isn’t marked for existing customer orders.
Businesses use ATP inventory to keep an amount of safety stock that’s just enough to cover orders. It’s a way to avoid creating backorders — which makes for a negative customer experience — while keeping warehousing costs low.
Importance of understanding ATS inventory
Again, ATS inventory is one of the many moving parts of inventory and supply chain management. Depending on how simple or complex your operations are, ATS inventory can help you:
Avoid overselling
What happens when you sell a handful of orders of a product you unknowingly didn’t have to sell? Knowing your ATS inventory helps you avoid these types of situations — which can be costly to fix and can harm the overall customer experience.
Avoid stockouts
Nobody likes looking through an empty shelf. Besides hurting your bottom line, stockouts can hurt your brand reputation long-term. Paying close attention to ATS inventory ensures better inventory management and helps prevent stockouts.
Improve customer service
Customers want to get the most value for their buck. Delays, stockouts, backorders, and anything else that stands in the way of getting them their products in a timely manner harms your customer experience. This in turn can hurt your sales numbers and the health of your business. That’s why you want to keep an eye on your ATS inventory numbers to make sure you always have units on hand for sale.
ATS formula: How to calculate ATS inventory
Fortunately, there’s a formula you can use to accurately figure out how many units of a given product are available to sell.
ATS = Inventory on hand – (Outstanding purchase orders + Outstanding sales + Future sales)
Here’s a closer look at each of these variables:
Inventory on hand: This is the amount of physical inventory you have on hand. It excludes inventory that’s being shipped to you or that has been purchased but is not yet on hand.
Outstanding purchase orders: When going through the ATS formula, exclude outstanding purchase orders. Those product units have already been sold.
Outstanding sales: Outstanding sales refers to purchases for which you are awaiting payment. These too have already been sold and should be excluded from your ATS number.
Future sales: Likewise, any future sales you’ve processed or plan to process should not be counted in your final ATS number.
Example of ATS inventory
Let’s say you’re running a sock factory and you want to know how much ATS inventory you have on hand. These are your current numbers:
- Inventory on hand: 6,300
- Outstanding purchase orders: 500
- Outstanding sales: 1,300
- Future sales: 50
Once you plug those numbers into the ATS formula, you get an inventory ATS total of 3,200 units. Depending on your required inventory levels, that number may reveal a need for more inventory or be just right.
3,200 units ATS = 6,300 – (500 + 1,300 + 1,300)
Tips for improving ATS inventory accuracy
Unified inventory system
One of the best things to do when trying to manage any process within the retail ecosystem is to make an effort to centralize operations. What does this look like?
In the case of inventory, centralization can be best achieved by onboarding inventory software. Your software of choice should be built to operationalize efficiency. This may look like:
- Easily integrating into your existing system
- Being customizable
- Being able to automate a lot of the inventory process
Centralizing your inventory software in one platform ensures you don’t get discrepancies in calculations, you deal with fewer inventory errors, and you quicken the process of managing inventory at scale.
For example, Netbiz’s POS system isn’t only designed to help process purchases. With its built-in inventory system it’s able to create low-stock reports and help you decide which products are worth repurchasing. It even tracks stock adjustments so you’re in-the-know every step of the way. Note that to streamline your inventory management process, it’s important to use software that not only integrates well with your existing applications, but with your hardware as well.
Hire an inventory specialist
While hiring an inventory specialist may be a substantial cost for a small business, the upside is reaping the long-term payoffs that employing an expert on the matter offers.
Hiring an inventory specialist ensures you’re actively managing your inventory levels while also establishing systems that streamline the process of inventory control. As noted, this helps bring costs down and increases marginal returns.
Manage ATS inventory at your store
As a retailer, you always want to have your ATS inventory figures on hand. It’s a critical metric that can help you account for backorders, prevent stockouts, and maximize sales. It’s also only one of a number of aspects of your inventory you need to be able to keep track of. Consider using inventory software to make the overall process easier to manage.
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