Methods and tips for inventory tracking

What is inventory tracking?

Inventory tracking is all about knowing what you have in stock, how much there is, and where it’s stored. It’s a critical part of inventory management that helps businesses optimize their stock levels to reduce losses and better meet customer demand.

A good inventory tracking system follows inventory every step of the way through the supply chain: from order to transit, receiving, storage, and order fulfillment all the way to returns, exchanges, and warranty processes.

What does inventory tracking include?

A robust inventory tracking system monitors several key elements.

• Stock levels: Your processes should provide real-time updates on how much of each item you have on hand.
• Inventory turnover: The rate at which inventory is sold or used is essential for understanding product demand and optimizing purchase orders.
• Reorder levels: The threshold at which you need to replenish a particular item to prevent stockouts should be clear, and your system should send an alert when you reach that level.
• Stock locations: Knowing exactly where each item is stored in your warehouse streamlines picking and packing processes.
• Carrying costs: Track the expenses associated with storing and maintaining inventory to better control costs.

Inventory tracking methods

There are many methods for tracking inventory, each with advantages and drawbacks. The best choice for your business depends on its size, complexity, resources, and budget. Here are some of the most common methods.

Manual tracking

This traditional method involves physically counting and recording inventory levels using pen and paper. While it can work for small businesses with limited inventory, manual tracking is prone to errors and quickly becomes inefficient as a company grows.

Spreadsheets

Spreadsheets are a step up from the pen-and-paper method, allowing for better organization and easier, more accurate calculations. But tracking your inventory with spreadsheets still relies on manual data entry, which increases the risk of human error.

Inventory management software

The simplest, most efficient way to manage inventory is with inventory management software, a program that automates inventory tracking to eliminate time-consuming manual processes and provide accurate data in real time. These systems often integrate with other business software, like CRMs and accounting, creating a seamless flow of information.

Modern inventory software like Fishbowl and Zoho Inventory often include features like barcode scanning for faster, more accurate data entry.

The challenges of inventory tracking

Inventory tracking ultimately reduces errors in operation — but it could still pose challenges of its own. Here are some of the things you might be up against.

• Multi-location logistics: Tracking inventory across multiple warehouses or stores requires a system that consolidates data and provides visibility into each location.
• Disconnected systems: An inventory tracking system that doesn’t integrate with other business tools can lead to inefficient and error-prone data silos or workarounds.
• Time and resource waste: Manual inventory tracking methods are time-consuming and labor-intensive, taking valuable resources away from other important tasks.
• Outdated inventory data: Inaccurate or outdated inventory data often leads to costly mistakes, like overselling, understocking, or misplacing items. Software that updates automatically saves you from frequently conducting audits to confirm what you have in stock.

11 benefits of using an inventory tracking system

Let’s take a look at how a good system can help solve your existing inventory problems and prevent new ones from popping up.

1. Track inventory levels in multiple locations:

When your inventory lives in multiple places, it’s hard to determine location-specific quantities or when to order more or reallocate stock. The right inventory tracking system alleviates these problems by putting all the data into a single interface. You can select something in your inventory to see where it’s stored. Then, if there’s a shortage in one warehouse, the click of a button generates a transfer order to replenish that stock from another.

2. Eliminate double data entry by integrating with QuickBooks:

If you have both an accounting solution and an inventory tracking solution, you know what a hassle it can be to add the same information twice. Integrating your inventory tracker with accounting software like QuickBooks eliminates the need for manual data entry, reducing human error and saving time. Your inventory and accounting records will match, and you’ll make double data entry a thing of the past.

3. Empower employees to do more with the right tools:

Tool limitations often hold warehouse employees back. A single worker might have to spend a lot of time performing a long list of individual picks that would be much easier with the right tools, like batch picks and barcode scanners. Providing your team with easy-to-use inventory software and tools helps streamline their work, empowering them to focus on more strategic activities.

4. Reduce carrying costs with auto reorder points:

Reorder point calculators are invaluable for estimating optimal inventory levels. Analyzing past sales figures and factoring in seasonal trends lets you calculate the minimum and maximum number of goods to keep on hand. After identifying a healthy range of stock levels for each good, you can set up auto reorder points, which indicate when it’s time to place another order to maintain stock levels. You may also want to add a default vendor to speed up the fulfillment process.

5. Set up stock alerts to stay ahead of low inventory:

You can configure many inventory management solutions to send stock alerts when inventory levels fall below a certain threshold, allowing you to reorder products quickly and avoid stockouts. This is particularly helpful for goods that sell less predictably and don’t suit the auto-reorder method.

6. Forecast demand more accurately to avoid stockouts:

By analyzing sales data and trends, inventory tracking systems help you forecast demand more accurately to ensure you have the right products in stock at the right time. These forecasts reduce the risk of stockouts, which can lead to lost sales and dissatisfied customers.

7. Make data-driven decisions to optimize your business:

Real-time inventory data shows you what’s moving in and out of storage facilities so you can make informed decisions about pricing, promotions, and product offerings. Plus, knowing your top-selling products helps you prioritize reordering them.

8. Improve customer satisfaction and loyalty:

Understanding your inventory levels ensures you almost always have the products customers seek. This prevents lost sales while building trust with your customers. They'll know they can rely on you for the items they need, increasing customer satisfaction and retention.

9. Streamline inventory counts and reduce discrepancies:

Accurate inventory counts ensure your records are current, minimizing the risk of discrepancies and stockouts. And automating inventory counts and incorporating barcode scanners reduces the time and effort required for your team to conduct an inventory audit.

10. Gain visibility into your supply chain and track supplier performance:

Inventory tracking systems provide insights into your suppliers' performance, including lead times and order fulfillment rates. This data enables you to identify reliable partners, negotiate better terms, and make better decisions about where to set reorder points. If you have one supplier that delivers top-quality product but is occasionally late on shipments, you know to order slightly ahead of schedule, just in case.

11. Enhance inventory control and minimize losses:

Robust inventory control measures like user permissions, audit trails, and cycle counting minimize losses due to theft, damage, or obsolescence. An inventory tracking system can help you implement these controls and track inventory moving throughout your warehouse. Then you’re always informed about what’s where.

Discover the best way to keep track of your inventory

Ready to simplify the way you track inventory? Fishbowl’s inventory management solution makes it easy to track inventory across locations, eliminates double data entry with QuickBooks and Xero integrations, and gives employees the tools they need to feel empowered in their roles.

Schedule a demo of Fishbowl, the intuitive, scalable, and user-friendly inventory management platform.