Inventory tracking plays a pivotal role in every business. With ever-changing customer demands, stock levels, and the cost of goods, it’s essential to have an efficient system in place that can accurately track inventory. Well, as a business owner, how do you manage and track your inventory?
Do you want to explore some better and more efficient ways of inventory tracking? In this blog post, we’ll explore what inventory tracking is, different methods for tracking it, the associated benefits, and how to properly track your inventory. So, let’s get started!
Inventory Tracking: What Is It?
Inventory tracking is a process that allows companies to keep track of their items and supplies as they move through the supply chain. It also involves monitoring stock levels, scheduling manufacturing runs, and reducing instances of running out of stock.
Let’s use an example to better understand this. Imagine you are a restaurant owner and need to ensure you have enough food for the menu for the next week. Knowing how much of each ingredient you have on hand will help you place quick orders for more when necessary.
Inventory tracking can help with that. It can also help you keep track of stock levels in order to avoid running out of a necessary item at a critical moment.
Benefits of Inventory Tracking
Inventory tracking enables businesses to keep up with current market trends, allowing them to adjust their inventory levels accordingly. It can provide visibility into inventory levels at different points in the supply chain. Inventory tracking helps businesses in many other ways.
Let’s take a close look at the benefits of inventory tracking.
- Improved business relationships: Businesses with stronger relationships with suppliers, customers, and other members have the advantage of scalability. By tracking inventory, businesses can ensure they are always on top of stock levels and promptly meet customer demands. This helps build trust with customers, suppliers, and other stakeholders.
- Increased productivity: Automated inventory tracking frees up time for business owners to focus on other areas of the business rather than manually entering and tracking data. This helps improve overall efficiency and productivity.
- Greater automation: Businesses use Inventory tracking software to execute the task of inventory tracking. Automation of the inventory tracking process will result in fewer manual efforts and improved efficiency. Businesses can easily access real-time data and use it to make informed decisions. Incorporation of Automation is easy in Inventory management and can be upgradeable with time.
- Easy scalability: Inventory tracking systems are designed to be easily scaled up or down as needed. Businesses can quickly adjust to changing market demand and handle increased orders with minimal effort.
- Reduced costs: A business’s core planning always discusses costs and expenditures. Inventory tracking helps businesses save money by eliminating wasteful spending. Inventory tracking helps businesses to keep accurate data on inventory demands. Proper inventory records help to reduce transportation cost and space costs as they can predict the accurate need.
- Real-time information: An inventory tracking system provides real-time insights into product levels and availability, so businesses can make better-informed decisions about their stock levels and customer needs.
Various Methods of Inventory Tracking
Here are the various methods of inventory tracking.
A. Manual Tracking Methods
The manual method of inventory tracking, as the name implies, is the process of physically tracking inventory without the use of technology. Businesses must manually update and monitor their inventory details. It’s perfect for small businesses with restricted inventory.
Businesses can manually track their inventory in a variety of methods. Let’s look into them.
- Pen and Paper Method
It’s one of the most basic ways of tracking inventory manually. In the pen and paper method, businesses need to count each item of their inventory and maintain its record on paper. Besides the item count, they also need to track orders, stock quantity, and other variables that will affect inventory levels.
The main disadvantage of this method is that as it requires intense human labor, it’s subject to human error. Not just this, but it’s also time-consuming and tiring for businesses.
- Card system
Also known as the Cardex system, this manual method of inventory tracking involves assigning cards to the same type of products and storing them together. The card contains all the details of the specific item in the inventory, such as its description, serial number, quantity, etc. Moreover, the card needs to be updated timely.
Although the margin for human error is reduced in this method, it’s still labor-intensive, time-consuming, and prone to errors for large-scale businesses.
- Spreadsheets
Using spreadsheets to track inventory is a popular approach for businesses wishing to track larger inventories. Businesses can track their inventory by item name, ID number, total quantity, unit price, description, etc. They also allow for easy analysis and comparison of data.
However, they are again time-consuming and require manual input of all the inventory data and statistics. Moreover, spreadsheets are hard to scale and prone to errors too.
B. Computerized Inventory Tracking Methods / Inventory Management Tracking Systems
Computerized inventory tracking systems are inventory management software or other software solutions which help businesses automate their inventory tracking process. They streamline the complete process from ordering, storing, and using inventory to producing, managing business requirements, forecasting demand, and automating tasks.
Furthermore, these systems provide real-time inventory visibility, allowing businesses to monitor orders and sales as they occur and accurately estimate project costs. Computerized inventory management systems enable accurate stock monitoring and real-time data entry, reducing the risk of human error.
- Barcodes
Barcode inventory tracking systems are a bit like having an extra pair of eyes in your store or warehouse. In this method, each item’s unique barcode is scanned and recorded in a database so you know exactly what needs to be ordered or re-stocked and when.
This method speeds up the transactions, thus helping save time when checking out customers. Besides this, they also help with replenishing stock quickly and efficiently, thus ensuring your inventory remains accurate and up-to-date at all times.
- RFID
Radio Frequency Identification (RFID) inventory tracking methods involve the use of Radio Frequency Identification tags for inventory management. Radio Frequency Identification (RFID) tags are tiny chips containing unique identification numbers for the inventory data stored in them. These tags can only be read by RFID readers.
Imagine RFID tags as the unique identification number of inventory items, just like people have unique identification numbers tied to their passports, driver’s licenses, or other documents. Using these RFID tags, businesses can keep a real-time record of all the details of the inventory.
However, unlike barcodes, workers don’t need to manually scan each item when it comes in and out of the warehouse. Instead, RFID readers will pick up the signal automatically and alert personnel about any discrepancies or errors.
- Open Source Software
An open-source software inventory tracking method is a way to keep track of the programs, applications, and other services that you use in your business or on your personal computer.
It’s like having an accountant manage your finances – they keep track of everything that enters and leaves your system and make sure nothing goes missing. With open-source software, you have access to the source code, which allows you to customize it and tailor it to your needs.
- Software as a service (SaaS)
Software as a service (SaaS) inventory tracking method involves keeping track of your inventory items by assigning them labels or tags for easy identification. For example: You are going grocery shopping and want to ensure you don’t forget anything important. So, before you head out the door, you take a look at your list and check off each item that you would like to buy.
This method is particularly helpful for businesses that need to keep close tabs on their stock to ensure they always have the right amount of supplies when needed.
Tracking Inventory with Barcodes
Inventory tracking has been made easier by the use of barcodes. It is an efficient and cost-effective way to manage the inventory levels of a firm. Barcodes are far more effective as compared to manual counting. The best part is that it increases accuracy and faster processing time. You can say barcodes are less likely to be misread or incorrectly recorded than manually counted items.
Benefits of Tracking Inventory with Barcodes
Here are some of the key benefits that you can expect to gain from using barcodes for inventory tracking:
- Improved accuracy and fewer mistakes: Barcode scanning reduces the labor and time which is otherwise wasted in manual data entry. This reduces the chance of human-made errors. In addition, barcode scanners are much more accurate than manual counts, ensuring that your inventory is accurately tracked and recorded.
- Reduced costs: By reducing manual data entry and increasing accuracy, barcodes help to reduce costs associated with inaccurate counts or lost items. With barcodes, you can process your inventory much faster than traditional methods, allowing you to cut labor costs.
- Increased visibility into stock levels: Barcode scanners can quickly and accurately track stock levels, giving you real-time visibility into your inventory. This helps to identify problems such as overstock or out-of-stock items quickly and easily, allowing you to take corrective action when needed.
- Improved customer satisfaction: Barcodes allow for quick, accurate order fulfillment and delivery, leading to improved customer satisfaction. This helps to increase customer loyalty and trust in your products and services, leading to increased sales.
How to Track Inventory with Barcodes?
Tracking inventory with barcodes involves setting up a barcode inventory management system. It involves selecting and installing the required hardware and software components and efficiently monitoring the process. The basic requirement is a barcode scanner to scan a barcode label attached to each item in your inventory. The barcode contains information about the item, such as its SKU number, description, and price.
Here are the steps you can follow to track inventory with barcodes:
- Settle on a Barcode Technology: Research, try, and choose the best barcode technology that resonates and meets your business and/or inventory needs. We have two possible options– linear (1D) and 2D (2-dimensional). Each of them has its own advantages and disadvantages. Hence, choose wisely.
- Install barcode scanner: Now, it’s time to purchase the appropriate scanners to read them. Depending on your budget and needs, you can choose a handheld scanner or an automated scanner. Don’t worry, you can upgrade any time.
- Get your ideal software: Choosing the right software for tracking your inventory with barcodes is important. Research to find the best software that can match the cap size of your industry. Keep an eye on your competitors, their software, and their preferred tools.
- Set up a barcode system: Now, it is your turn to set up a barcode system. This involves creating unique barcodes for each item in your inventory and assigning them to specific locations or bins.
- Print barcode labels: Once you’ve chosen the software, it’s time to print the relevant barcodes on your products. This can be done manually or by using a professional printing service.
- Track inventory: Once everything is in place, it’s time to start tracking! You can now scan barcodes when items enter and leave the warehouse to track inventory levels and movements accurately.
FAQ: Inventory Tracking
What is inventory tracking?
Inventory tracking is a process that lets businesses keep track of their products and materials as they are distributed throughout the supply chain.
What are the various ways of tracking inventory?
There are two ways of tracking inventory: manual (which includes pen and paper method, card method, etc.) and computerized inventory tracking methods (which use barcodes, RFID, SaaS, etc.)
What is the barcode inventory tracking method?
In the barcode inventory tracking method, each item’s unique barcode is scanned and recorded in a database which is further used for inventory tracking.
What are the advantages of using the barcode inventory tracking method?
Barcode inventory tracking helps in improving accuracy, reduces costs, increases visibility into stock levels, and all of these results improves customer satisfaction.
Conclusion
Inventory tracking is an essential part of any business, as it helps ensure that stock levels are accurate and products are managed efficiently. With the help of barcodes and QR codes, businesses can easily track their inventory in real-time and stay on top of their stocks.
By choosing the right software for inventory tracking, businesses can get the maximum benefits of barcode inventory tracking and ensure optimum efficiency in their operations. Ultimately, it is important to do proper research and select the right software that meets your business needs. Businesses can also turn to QodeNext , a leading provider for innovative solutions to get a jumpstart on this process.
