In order to successfully run and grow your business, you must be able to track inventory efficiently and consistently so that you know which products are selling well, which ones aren’t, and when it is time to reorder.
However, keeping track of all of your inventory isn’t always easy. Maintaining an organized and efficient warehouse can take time, and it appears that the more people are involved, the more difficult inventory tracking becomes. Luckily, inventory management software can help. An efficient inventory tracking system can automate this otherwise tedious process and easily track all of your inventory from one place.
In this post, we explain what inventory tracking is, and why it is important. You will also learn about inventory tracking systems, how to keep track of inventory, and how to select the best inventory tracking method for your company.
Image by: aleksandarlittlewolf on Freepik
What is Inventory Tracking?
Inventory tracking refers to the systems and methods through which a company keeps track of all of the inventory it has. Although the term ‘inventory’ has several meanings, it is most frequently used to refer to raw materials, unfinished goods, and products that are ready for sale to customers.
With the help of inventory tracking, you can obtain information about your exact inventory levels, the most recent delivery statuses, the location of each product, and other inventory-related details. Typically, an inventory tracking system can monitor the following information:
- Inventory accuracy
- Inventory levels
- Inventory locations
- Inventory turnover
- Delivery status
- Carrying costs
- Reorder levels
- Damaged goods
- Customer returns
The objective of inventory tracking is to have the proper amount of stock to satisfy consumer demand at all times, which is essential to generating revenue.
Why is Inventory Tracking So Important?
Implementing an inventory tracking system will provide you with accurate inventory data that has a direct influence on your business’s bottom line. Here are some of the most important benefits of inventory tracking:
- Improved stock visibility and clarity. Effective inventory tracking will help you eliminate any guesswork in your supply chain and, as a result, reduce the number of errors by providing a clear image of crucial metrics including inventory turnover ratio, order fulfillment rates, and stock on hand. This will result in better inventory planning and more informed business decisions to support the growth of your company.
- Space savings. With demand forecasting and planning tools in inventory tracking software, you can precisely forecast demand at particular points in the supply chain, making sure inventory arrives on time. This understanding of inventory cycles results in a more organized and more efficient warehouse space.
- Better forecasting. If you have an accurate count of your stock at various points during the year, you’ll be able to estimate how much inventory you will need to have on hand to meet future demand. This might help you make informed purchasing decisions and prevent under-stocking or overstocking.
- Increased customer satisfaction. Inventory management systems provide inventory status to customers in real-time, and some solutions can even send automated tracking updates, which results in improved customer experience and increased sales revenue.
What is the best way to keep track of inventory?
Using reliable inventory management software and/or inventory management apps is the best method to track your inventory. With inventory management software and/or inventory management apps, you’ll be able to automate what normally is a time-consuming process prone to mistakes, receive notifications in real-time, scan QR codes and barcodes, etc. You may use inventory software or inventory management apps to keep track of all inventory activities, get real-time notifications, and keep everything in one place.
How to Track Inventory With Software
Inventory tracking will look different depending on the type of software you’re using; however, the following are some of the most popular features that can facilitate inventory tracking:
- Product categorization and custom tagging. This feature enables users to use drop-down menus or custom tags to categorize products by various attributes. Then, you can generate reports that, for instance, list every product a customer has bought in the previous year.
- Barcoding. Retail business owners can physically scan everything entering and exiting their facilities using mobile device barcoding, which automatically tracks the location and updates inventory levels.
- Inventory reporting. Visibility and transparency are important components of inventory tracking. But how do you make sure that all parties have the most recent inventory data in a way that is simple to understand? This can be handled for you with inventory reporting. For instance, you can use your inventory data to create visuals that demonstrate a rise in customer demand for a particular product over the previous quarter, the time it takes for certain products to arrive at your facility after being ordered, shortages in supply compared to the demand for a particular inventory item, etc.
Image by zinkevych on Freepik
How to Track Inventory More Efficiently
Inventory costs are significant for the majority of companies, regardless of their size. That’s why it is very important to understand how it moves and make sure that it gets to the correct destination on time. Here are some ways to improve the effectiveness of your inventory tracking:
1. Forget about manual inventory tracking
Spreadsheet-based manual inventory tracking not only takes a lot of time and effort but is also prone to error and challenging to scale. Change to a tracking system that reduces manual work and updates information in centralized databases automatically. Use standalone software programs and inventory management systems, which include automatic functions for stock replenishment and data tracking.
2. Audit your inventory tracking
Inventory tracking isn’t a one-off task. It’s important that you audit your inventory monitoring system on a regular basis in order to weed out inefficiencies, double-check accuracy, and identify opportunities for improvement.
Any errors in the inventory record can be found and fixed with the use of cycle counting. Cycle counting can be done by incorporating frequent, routine counts of sections or bays into daily operations. Consider assigning warehouse staff to specific areas and conducting daily counts using inventory cycle counting techniques.
In addition, be sure to compare inventory numbers to your financial statements. If, for instance, the revenue from things sold in your financial accounts doesn’t match the inventory statistics, you should look into the matter further.
3. Record your inventory tracking procedures
Look for possibilities to enhance the flow of goods through your company by studying the supply chain. Consider what other businesses in your field are doing and adhere to inventory control best practices and inventory management formulas. Keep an eye on hiring decisions, seasonal demand, and purchase patterns as well, and ask frontline staff if they notice any tracking inefficiencies. Look for saving opportunities as the stock goes from the supplier through the warehouse to the customer. Then, use this data to establish best practices and record your inventory tracking procedures for future reference.
4. Consider hiring an inventory manager
If your company manages a large amount of inventory made up of a variety of products (especially if these products are perishable), you might want to hire a full-time inventory manager. Inventory tracking may be one of a manager’s tasks if physical inventory is a lesser portion of your company.
The Bottom Line
Even though inventory tracking might seem like a fairly straightforward operation, it can be rather challenging when there are multiple products and more staff involved. After a certain point, tracking your stock manually and maintaining an efficient warehouse is no longer a possibility. This is where an inventory tracking system can be useful.
An inventory tracking system helps you keep track of your inventory’s location and movement. Although there are some standalone systems used just for inventory tracking, the majority of inventory tracking systems are part of inventory management software, such as ApparelMagic. Using ApparelMagic’s inventory tracking system ensures that your data is updated in real-time, accurately and efficiently.