Late deliveries. Failed audits. A surplus of stock you’ll never sell, or worse — orders you can’t fulfill.
These are all issues that cost your company, both financially and reputationally. And they’re all issues you can address with a strong inventory database.
Inventory database management explained
An inventory database is a central digital repository for all things inventory — everything from SKUs and product descriptions to transaction details and reorder points.
It’s not uncommon for startups or small businesses to use a manually updated spreadsheet as their inventory database. Some wholesalers and manufacturers even track their inventory on paper. Although these options are cheaper than investing in an inventory management software platform that does most of the work for you, managing data manually is time-consuming and error-prone. Plus, papers go missing and spreadsheets have limited functionality.
No matter where your data lives, you need a well-structured database design to organize, maintain, and control the data related to your stock. You’ll also need a strong inventory management system — ideally as software, not a spreadsheet — to ensure the information you’re recording is accurate and up to date to prevent common inventory issues.
Key components of an inventory database
An inventory database consolidates a lot of valuable information, but only if you have a solid database schema to dictate how to organize the data. Think of your database as a warehouse for all your inventory-related information and your schema as the blueprint for building it.
Here are some of the most common elements you’ll want to consider including in your database schema:
- Tables: Store data in a structured format, with each table representing a specific category of data like products, purchase orders, suppliers, or transactions.
- Records: Individual entries within a table can represent a single item or transaction, like a record containing all the details about a particular SKU.
- Fields: Note the individual pieces of data that make up a record, with each field corresponding to a specific attribute like a product’s name, price, or category.
- Primary key: Add a unique identifier (like a product ID or SKU number) for each record in a table that ensures every entry can be distinctly identified.
- Relationships: Define how data connects across tables, like a link between products and their suppliers.
- Queries: Choose tools that allow you to filter, sort, and analyze your inventory data based on various criteria, like finding all products below a certain stock level.
- Forms: User-friendly interfaces allow you to enter and modify data within your database, simplifying data entry by providing a structured format for adding information.
- Reports: Format outputs to present data from your database in a readable, organized manner so you can generate insights and make informed decisions.
9 inventory database management best practices
With a good inventory management system and a database to help you make sense of it, you’ll be managing inventory much more efficiently in no time. Here are nine best practices to make your inventory database the best it can be.
1. Decide on a costing method
Before creating your inventory database, you need to determine the costing method your company will use to calculate the cost of goods sold (COGS), which will impact how you record and track inventory costs. A comprehensive solution like Fishbowl Advanced will offer several options, like LIFO (Last In, First Out), FIFO (First In, First Out), Average, and Standard costing methods. Choosing the right method will maintain accurate financial records and let you make data-driven pricing decisions.
We recommend consulting with an accountant or other financial expert to help you with this crucial choice.
2. Regularly update inventory records
The data in your database won’t do you much good if it’s not kept up to date. Make sure you consistently update your inventory records (either manually or with automation tools) to avoid discrepancies that lead to costly issues like stockouts and overstocking.
3. Implement barcode scanning
One of the most effective tools for collecting accurate data is barcode scanning technology, which makes tracking inventory much faster and more reliable. Using a barcode scanner allows you to automate data entry so you can keep your database records updated without the risk of human error. Barcode scanning is especially helpful in settings like warehouses that handle large volumes of stock on a day-to-day basis.
4. Categorize inventory items
Using clearly defined categories to organize inventory will make it easier to locate and manage products within your database. Whether you categorize by product type, supplier, or location, establishing these categories when you create your database schema will make it easier to manage your inventory and generate reports.
5. Conduct regular audits
An inventory audit involves physically counting your products and other inventory items, then comparing the results against the inventory recorded in your database. That doesn’t mean you have to frequently shut your operations down to do a full physical inventory count — you can use spot checks to verify specific inventory items or locations or use a strategy like cycle counting, where you count inventory in smaller batches throughout the year.
Conducting these audits regularly maintains data integrity, ensures compliance with financial regulations, and prevents costly disruptions.
6. Set reorder points
Reorder points automatically trigger a restock when your inventory levels fall below a certain threshold. Within your inventory database, establish a reorder point for each and every item in your inventory to maintain optimal stock levels. This means you can meet customer demand without burning money on carrying costs.
7. Use inventory management software
Investing in reliable inventory management software that integrates with QuickBooks and other systems — like Fishbowl — keeps every aspect of your business aligned, from sales and storage to billing and bookkeeping. Information will flow seamlessly from one database to another, reducing the risk of errors created by multiple manual inputs and improving your whole team’s efficiency.
8. Track inventory turnover
Your inventory turnover ratio tells you how well you’re managing stock and selling products by measuring how many times you replace your inventory within a given period. Tracking and monitoring turnover ratios within your database identifies slow-moving items so you can adjust your purchasing strategies accordingly.
9. Train staff properly
No matter how great your systems are, they won’t do the job you put them in place to do unless you train your employees to use them. With proper training on your inventory management tools, you’ll reduce the likelihood of errors and ensure that everyone manages the database consistently so it remains an effective part of the inventory system.
Features to look for in an inventory database
Don’t worry if you don’t think you have what it takes to craft a usable database schema or the time and patience to keep an Excel inventory spreadsheet error-free and up to date. There are inventory database options on the market that take most of the work off your plate. Here are some of the key features to look for when choosing:
- A user-friendly interface: Minimize training time and reduce the risk of user error by choosing a system with intuitive navigation, clear labeling, and easy-to-access functions.
- Scalability: Choose a solution that can handle an increasing volume of data as you add more products, expand to new locations, or increase your transaction volume.
- Real-time data updates: To make informed decisions quickly and avoid stockouts or overstocking, you need metrics like inventory levels and sales data to be current.
- A customizable database schema: Prioritize flexibility so you can make changes like custom fields and specialized reports to adapt the database to your operational needs.
- Advanced reporting and analytics: Look for a database that helps you monitor key performance indicators (KPIs), track trends, and make data-driven decisions.
- Storage: To avoid running out of space or losing data, look for a database solution that allows you to perform data backups in the cloud or on an external hard drive.
Take control of your inventory data with Fishbowl
Good inventory database management makes operations more efficient and gives you the data you need to help your business grow. And Fishbowl makes it easy.
Fishbowl is the all-in-one inventory management solution designed to help you control stock, warehouse operations, manufacturing workflows, and more. The platform also integrates with QuickBooks to promote financial visibility and streamline accounting, along with dozens of other platforms, from eCommerce to shipping.
When you get started with Fishbowl, our implementation experts guide you through the entire database-creation process, step by step. They even help put your data into the right format for importing. You can be sure that once you go live with Fishbowl, you have the best inventory database possible.
Are you ready to take control of your inventory data and gain end-to-end visibility over your operations? Schedule a demo today.