Inventory Tracking: Definition, Importance & How-to Guide

inventory tracking methods

Leaders at HomCo Lumber & Hardware in Flagstaff, Ariz., understand how hard it is to rival big companies, since it competes with two Flagstaff Home Depot stores. Inventory tracking is critical to ensuring its commercial customers get the goods they need when they need them and that the shelves of its retail store are adequately stocked, said Dan Groth, CFO at HomCo. To help supply chain and inventory professionals understand how best to do this, here are five inventory management techniques. “And my use of inventory is part of how I devise the best supply plan to fulfill demand.”

  • Intelligent, self-correcting AI will make inventory monitoring more accurate and reduce material waste.
  • Government & Civil Assets Explore asset tags designed for permanent attachment to government assets such as traffic signs, equipment and infrastructure.
  • Many OEM machine manufacturers include embedded metering depending on the type of finished good being produced.
  • This article is for business owners who store inventory, either in a warehouse or their physical store, and need to develop an effective way of managing it.
  • The need to offer competitive shipping has led many companies to adopt expedited next-day and even same-day delivery.
  • First in and first out – first in and first out technique is used mainly in the retail industry as they have an expiry date and customers need to purchase before inventory is expired.
  • Your inventory management system needs to be adequate to the task of anticipating fluctuations in consumer demand and maintaining stock levels appropriately.

The idea is to get more of the material moving through the network at an appropriate velocity and doing it cost-effectively, while still providing the best service to customers, he said. Organizations should identify underperforming distribution locations inventory tracking methods that could be eliminated or consolidated, as long as there’s an acceptable impact on service and costs, Lord said. While shrinkage is something that you need to factor into your bottom line, you don’t have to simply absorb it as a cost of doing business.

The future of inventory tracking

The ability to track inventory levels in real-time is an important part of the supply chain and critical for ecommerce brands that wish to truly scale successfully. The best way to fend off shortages, delays, discrepancies, or unnecessary inventory costs is with an innovative tracking system. Fortunately, Skubana is a leader in inventory management solutions, having designed comprehensive software with built-in tools to keep track of inventory. With that said, manually handling returned goods is rarely your best option. Instead, you’re better off using an inventory management system that can simplify this process and make sure customers are refunded (and items are re-accounted for) within the shortest window.

inventory tracking methods

If done correctly and accurately, this is an adequate and cost-efficient (albeit time-consuming) way to keep an eye on your inventory. While manual tracking is still used today, technology has given us a lot of other options to use as well. These methods may not all be applicable for every business however; what may work for one business may not work for another. Factors like the type and size of the business, as well as the products being tracked, determine what method may work best.

Tips for businesses who make their own products

In this article we discuss basic inventory management techniques, explain what to look for in good inventory management software, and go over some best practices for managing inventory. Zoho Inventory combines multi-channel selling and powerful inventory controls so you can manage orders and inventory with ease.

  • They can also provide detailed, real-time inventory reports, and keep tabs on exact inventory levels.
  • Inventory tracking is one of the most important inventory control methods.
  • Things move fast in a warehouse, and it’s important that you can move with it and get accurate inventory counts no matter where you are.
  • If you sell a complex array of items, it makes inventory tracking more complicated.
  • When a store makes a sale, instead of picking the item from their own inventory, they purchase the item from a third party and have it shipped to the consumer.

This is when raw materials and subcomponents for manufacturers or finished goods for consumers first enter your warehouse. But the three most common types used in almost all manufacturing operations are raw materials , Work in Process , and finished goods. Inventory apps and tools are a game-changer for businesses who have inventory coming and going. Often a customer may be willing to wait for the out-of-stock item if they are alerted directly of the date it is expected, rather than an automated message. The speed at which your stock sells, or turns over, is vitally important to understand. This will help you avoid stocking items that don’t sell quickly in an online marketplace or elsewhere. This analysis will give you insight into the value of your inventory.

Sales, inventory and operations planning

In many cases, these sheets will contain information about who has what items when. Let us show you how topShelf Cloud-Based Inventory Management Software can help you streamline processes, increase inventory visibility and accuracy while increasing your revenue. A 3PL software like that can integrate with other platforms you use like Shopify or Netsuite that you use for incoming orders and outgoing shipments. Inventory levels influence all decisions you make and can quickly increase or decrease your revenue. Beyond ensuring that you meet customer expectations, ShipBob helps turn logistics from a cost center to a revenue-driver.

inventory tracking methods

For instance, global fashion retail chain H&M found that introducing a centralized inventory management system helped to cut average lead times by between 15 and 20 per cent. Adopting an effective inventory management system has numerous potential advantages. Manual tracking is also a time-consuming process, since you have to evaluate your entire inventory one item at a time.