What Is Inventory Tracking? and what are Methods, Benefits?

A QR code scanner – such as a smartphone camera – reads the data and performs the desired action. RFID is a method of tracking inventory that uses radio waves to transmit data from a small chip embedded in a tag or label. An RFID reader activates the chip and reads the data without requiring direct contact or line of sight. A barcode scanner reads the stored data and sends it to a database for processing.

Damaged goods are another category that your inventory tracking method should account for. Any products that are damaged and unable to be sold should be reflected in your inventory levels data. If you don’t deduct damaged goods, you may end up thinking that you’re fully stocked, when in reality those items are not fit for sale.

Why do you need inventory tracking?

The actual audit consists of recording the location and quantity of inventory you have stored for each SKU and the movement of stock (inflow and outflow). This data is then compared with the data collected from previous audits and further evaluated. Matthew what is inventory tracking Rickerby is the Director of Digital Marketing at Extensiv, the leading solution for multichannel, multi-warehouse D2C brands. For the past ten years, he’s covered ecommerce topics ranging from conversion rate optimization to supply chain management.

It’ll sync the data each time stock levels change, and even generate reports for you. Automated inventory tracking methods offer real-time data and visibility into the process when you have inventory-keeping units across multiple locations. The best thing about automated methods is that they generate real-time reports that help streamline the entire process. Access to real-time data helps forecast customer demand and plan raw material sourcing and other activities in the supply chain. Doing so helps businesses achieve an optimal inventory level and manage performance even remotely. Using inventory apps helps you avoid errors and flaws resulting from manual methods like Excel Spreadsheets.

What is the importance of tracking inventory?

Here at Thill, our order management software helps you track all of your moving inventory. There’s 3 ways to track inventory, manually, using software or a combination of the two. Although spreadsheets are a step up from paper copies, you still have to enter information manually. But if you use Google Sheets, there’s a way to automatically update your inventory every time it changes.

This means that you will have access to each product’s current location, available stock, relevant purchase and sales orders, etc. If not, inventory software such as Sortly makes it easy to generate custom barcodes and QR codes and then print new labels using regular printers and everyday label paper. These barcodes and QR codes hold tons of data and can be synced to inventory management software, so your team can access critical details about stock in the blink of an eye. With a starting price tag of $4,395 per user, and annual support renewals starting at around $1,395 per user, Fishbowl Inventory can be pricey for small businesses with several users. However, manufacturers can streamline production by tracking parts through assembly phases, storage and fulfillment. Likewise, large-scale shippers, especially those that bundle products or sell subscription boxes, can benefit from Fishbowl’s granular multichannel sales and multi-warehouse fulfillment features.

Inventory management systems

With these systems, you should still audit your count regularly—monthly if your inventory turnover is high, or quarterly if your sales cycle is slower. Warehouse inventory management (or just warehouse management) is a subset of inventory management, in which the inventory being tracked is stored in a warehouse rather than in a back room or on a sales floor. Warehouse management comes with additional considerations, including managing employees, organizing products, managing shipments between warehouses, and fulfilling customer orders. If someone asked you how many products you have on hand right now, would you be able to give them an accurate figure? Inventory tracking is a critical part of running a retail business, and as your operations develop, you may find that you need more than a spreadsheet to keep an eye on your stock levels. With inventory tracking, you can view every single one of your products throughout its life cycle—from the moment they enter your warehouse or storage space, to the time they leave.

  • If you’re using RFID technology, you’ll want to affix those tags to inventory per the manufacturer’s instructions.
  • This technique provides businesses with an accurate depiction of the ending inventory and its value.
  • If you can’t account for each product, you risk not getting orders delivered on time, lost inventory, and even inaccurate financials.
  • Inventory as an entity does not count directly as income on a person’s income statement.
  • Inventory tracking is the art and science of monitoring stock levels and exactly where inventory is at any one time.

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