Inventory tracking: tips on getting it right
What is inventory tracking?
Inventory tracking is the process of monitoring how much inventory you have across your warehouses. This is a critical step in the broader inventory management process and ensures you have enough stock to fulfil orders and meet growing demands. It also helps you identify products that aren’t getting sold so you can reduce costs.
What are the main types of inventory?
Inventory refers to more than just physical products. Companies store and track different kinds of inventory depending on their industry, products and customers. Here are some of the most common types of inventory to track:
Finished products: Ready-to-ship products in their finished form.
Raw materials: Components or materials you use to make your products.
Unfinished products: Products that have begun the manufacturing process but aren’t yet ready for sale.
Maintenance, repair and operating supplies: Equipment and items that support your operations and production processes.
In-transit goods: Shipped goods that have not yet reached their final destination.
Anticipation inventory: Extra products ordered before a busy season, such as Black Friday or Christmas.
Buffer inventory: Items you can use in case of stock shortages.
Inventory tracking benefits
Tracking exactly how much stock you have will help you enhance your warehouse operations. Using inventory tracking software to automatically account for different types of inventory makes it easier to optimise your warehouse management processes, costs and layout for quicker picking and packing.
Tracking your inventory helps you reduce inventory costs. Calculating how much stock you need based on orders and anticipated demand means you’ll never have too much or too little. The result is a reduction in unnecessary carrying and storage costs.
Optimised inventory management
Inventory tracking software uses historical data and powerful algorithms to forecast future demand and needs. You’ll be able to buy the right amount of stock throughout the year so there’s less risk of overstocking or stocking out.
Storage costs increase with excess inventory, not to mention the money lost from not selling the inventory. Tracking your inventory minimises these losses by ensuring you have the right stock to meet demand.
Staying on top of your inventory benefits every aspect of your business, from managing vendors to satisfying customers. As a result, you’ll build brand loyalty and happy relationships with the people you rely on to make your business work.
Inventory tracking methods
Some businesses use pen and paper to track their inventory, which can be time-consuming and open to human error.
Manual spreadsheet tracking is a great way to organise large amounts of data, but is also prone to mistakes and isn’t particularly scalable.
Using a third-party logistics provider can save time, but it can be expensive and may reduce your level of control.
Inventory management systems
Dedicated inventory tracking software has all the features to automatically monitor, track and optimise your inventory and, while costly, are often set up to help you scale.
How to track inventory accurately and efficiently
Invest in the right inventory tracking tools
Inventory tracking tools can be helpful, but choosing the right fit for your business can be tricky. Consider your unique needs and use inventory management software with features complementing your processes and operations. The process can save you time and money while providing detailed, scalable inventory information.
Perform regular inventory counts
Regardless of whether you use an inventory tracking tool, it’s wise to regularly check your inventory counts and stock levels for accuracy. You can use this to gain a deeper understanding of your operations and identify possible problems before they arise. Depending on your industry, business and inventory levels, you’ll generally want to do an inventory count at least once a year.
It can help to set Key Performance Indicators (KPIs) or goals for your inventory tracking to help you consistently optimise the process. Some common KPIs include inventory turnover ratio, stock-to-sales ratio and economic order quantity.
Forecast your inventory needs
Forecasting your inventory needs ensures you have enough stock to always meet demand. Do this by analysing past sales figures and predicted growth to determine how much inventory you’ll need at different points throughout the year. For example, you might find that demand shoots up during peak seasons.
Automate your inventory tracking with MYOB
Tracking inventory manually can be tedious and time-consuming. Instead, choose a tool that'll automate much of the process so you can focus on other parts of your business.
With MYOB’s inventory management software, you can:
track inventory levels with automatic stock updates as items sell
gain visibility into what’s selling — and what’s not selling
end data entry errors with automated re-ordering
benefit from powerful analytics into inventory, sales and future projections
Get more out of your inventory with MYOB. Check out our plans and pricing today.