The current state of inventory management is nothing short of remarkable. Elegant Software-as-a-Service solutions offer real-time inventory control and reporting. For complex businesses, inventory control allows centralisation by allowing management to keep track of stock across multiple warehouses, in multiple locations, anywhere in the world. Companies such as Toyota have designed the fundamentals of their business models around leveraging inventory management to reduce waste and add unprecedented value.
Although the current state and the future of inventory management are both exciting, the industry’s past has a lot to offer. Let’s take a quick look back at the development of inventory management – from the broadest conception of counting ‘things’ to modern, real-time inventory management software.
Ancient Origins of Control
We do not know precisely when inventory management arose. At its simplest, inventory management is about counting and keeping track of ‘things’. The earliest evidence archaeologists have found of humans counting ‘things’ are ancient tally sticks dating back approximately 50,000 years. Clay tokens found in Iran dating back over 4,000 years offer an interesting take on agricultural inventory; for example, to create a record representing two sheep, ancient ‘inventory managers’ would select two round clay tokens with + signs baked into them. Of course, using large numbers of tokens for very large flocks would be impractical, so different clay tokens were used to represent various numbers of different commodities.
Although we can draw a line between ancient counting systems and modern inventory management, that line is very long indeed. Ultimately, ancient inventory management was very basic and entirely manual. In many cases, the difficulty in counting items manually would mean that people would have to make inventory decisions based on a guess or a gut feeling.
A Slow Development
Inventory management would develop steadily but slowly over many thousands of years. The development of accounting systems in ancient Greece and Rome had wide ranging implications for commerce as well as for civil society. Robust record keeping enabled ancient societies such as those in present-day Greece and Egypt to achieve feats of engineering that stand even today. Successful inventory management contributed to military victory as well as civic advancement; Roman strategy in the Second Punic War involved an epic logistics effort to ensure security of supply for Rome no matter how many battles the Carthaginians won.
At the end of the 1880s, Herman Hollerith, an American inventor, developed an electromechanical punch card tabulator. The punch card allowed people to record many types of data, including inventory, by creating very small holes in pieces of cardboard. This invention was leveraged by later inventors to develop the very first ordering system. Customers in a store could fill out a punch card; the system would then read the punch card, send the information to the storeroom and someone from the storeroom would then bring the item to the customer. The system looked up items from a catalogue and was able to manage the financial and inventory recording aspects of a transaction.
From Punch Cards to Barcodes
Retailers in the 1960s, inspired by earlier work with UV sensitive markings, developed a new way of managing inventory, the barcode. There were a number of competing barcode technologies until the industry adopted the now ubiquitous Universal Product Code barcode symbology in the mid 1970s. The first UPC barcode ever to be scanned was a 10 pack of Wrigley’s Juicy Fruit chewing gum at a supermarket in small town Ohio.
Goodbye, Paper and Clipboard
Although many businesses are only now implementing inventory management software, technological advancements in the 1980s and 1990s spurred larger businesses to implement computerised systems. Because computing power was still very expensive, most small to medium sized business were left out in the cold.
Around the turn of the century, the same kinds of advanced inventory tracking software became available to smaller businesses. Many early adopters also embraced spreadsheet applications and built their own bespoke inventory control systems.
During the dotcom boom, ‘Application Service Providers’ (ASPs) made the first attempt at delivering software (including inventory management applications) online. The ASPs were broadly inefficient and failed to scale, and most did not make good on the promises they made to customers. Perhaps the time simply wasn’t right – ASP applications were very slow due to the technical constraints at the time. Fortunately, the technology and thinking around cloud computing has improved, and businesses can now rely on highly scalable Software-as-a-Service applications which are intuitive and easy to use.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.