Inventory tracking is essentially a process for monitoring inventory levels, orders, sales and inventory movements. In any business, particularly in stock based businesses, there are a lot of moving parts. Keeping track of every aspect of the production process can be difficult, so businesses turn to inventory tracking to understand where each item is at any point in time.
How do inventory tracking systems work?
Each stock keeping unit (SKU) and, in some cases, each individual item or batch will have a unique identifier. A barcode or RFID tag will be assigned to each unique identifier. A barcode represents the unique identifier graphically while an RFID tag stores it digitally. Scanning the barcode or RFID tag reveals the unique identifier.
Each unique identifier is entered into the inventory management software. A range of inventory information for each product and batch is stored within the system. For each particular product, the software can be set up to track stock numbers, stock locations, production costs, materials required, sales performance among others – essentially any piece of information can be recorded at minimal effort and cost. Batches can be tracked from creation right through to the point of sale, taking the administrative legwork out of meeting traceability requirements.
When a barcode or RFID tag is scanned, the inventory record is updated to reflect the change. For example, if a barcode is scanned at a checkout, the product’s unique identifier is provided to the inventory management system, which records a sale and reduces the stock count. Business owners and staff can view stock levels and sales, often in real time.
Inventory tracking can be implemented manually, although the administrative burden is much higher; more data needs to be entered and the frequency of errors increases. Many businesses start out with a manual tracking system but find that the time savings and ease of use of an automated system outweigh the minor cost to implement barcodes and a scanner.
What are some of the advantages of inventory tracking?
One of the most significant advantages of inventory tracking is the ability to monitor inventory movements and stock levels remotely in real time. Staff and managers can often access this data in the cloud, allowing the business to identify inventory issues at an early stage.
Inventory tracking also makes it possible for businesses to be fully aware of where products are stocked, which suppliers they come from and how those products are selling. Making this data available for reference allows businesses to make better use of limited resources such as warehouse or shelf space, and allows businesses to plan for supply shocks or spikes in demand.
Finally, inventory tracking improves productivity. Using barcodes and RFID tags streamlines the process to move inventory within a warehouse or between locations. Automating manual processes reduces handling, reducing labour costs freeing up staff to focus on growing other areas of the business.