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The Definitive Guide to Inventory Tracking

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Meet Canary7
The Definitive Guide to Inventory Tracking

Reliable, Robust 3PL Solutions; Now at your service.

Almost all businesses know that inventory management is an important part of the supply chain: by focusing on the management of your inventory and stock, you can ensure that the other processes integrated into your business don’t suffer either. Which is why, in order to succeed and ensure that your business is on track throughout, it is important to pay attention to inventory management.

If you’re new to the market, you may be thinking: “how hard can it possibly be?” Well, you’d be surprised to know that it is actually quite challenging! At times, even well-established corporations and large businesses can’t manage their inventory properly, and have to deal with a range of issues.

One such issue that is linked to inventory management is inventory tracking. It might sound easy, but keeping all your stock in check, knowing where your goods are at any given moment, as well as ensuring that all of your inventory passes all the relevant quality checks is hard. Yet, the only way to create a successful procedure of inventory management is to track your inventory.

Using this guide, you can deepen your understanding of what inventory tracking is, how it is a part of your overall inventory management system, and what steps you can take to ensure that your inventory tracking remains top-notch throughout.

Contents:

What is Inventory Tracking?
Best way to track your inventory
Inventory Tracking System
Summary

What is Inventory Tracking?

Let’s start off with the main question: what is inventory tracking? At a very basic level, inventory tracking is an important part of a wider process called inventory management. In order to understand the relationship between the two of these, it is important to take a look at them separately.

Inventory Management Explained

Inventory management is the process that streamlines your entire stock and inventory. It is responsible for your orders, storage, and delivery – if the inventory management mechanisms you have in place are not up to the mark, all of these very important aspects will suffer to a great extent.

Not only that, but inventory management is also ultimately connected to other areas of your business. For example, the lack of an adequate inventory management procedure will also take a toll on your warehouse management. If you don’t pay attention to inventory management, things will very quickly get out of hand, which might even lead to stunted productivity and a decrease in employee retention and satisfaction. These seemingly trivial issues have the full potential to manifest into bigger problems, and can therefore become problematic for order management, as well as order fulfilment as a whole.

For more information, have a look at our super in-depth and comprehensive guide on inventory management in general.

Inventory Tracking Definition and Meaning

But where does inventory tracking stand in all this? Well, as already mentioned, inventory tracking makes up an important part of inventory management as a whole. Think of it this way: if inventory management is all about taking care of ALL your stock: from tiny spare parts to best-selling complete goods, then wouldn’t it make sense to first establish a process that helps you be aware of where your stock is at all times?

Let’s simplify. Inventory tracking is a process that helps you track all your assets simultaneously. Whether they are in your possession and stored away at the warehouse or in transit to and from your distribution centre, inventory tracking enables you to track them throughout their journey.

Not only is this process implemented in order to ensure that inventory levels are fully replenished at all times, but it is also important in terms of making sure that the quality of all your goods is at par with what you need it to be.

As one can easily grasp, inventory tracking is very important and if implemented correctly, any business can benefit from it! However, unfortunately, the opposite is also true. If you fail to create an inventory management experience adequate enough to help you effectively track your products, your business will indubitably suffer. It can lead to very pressing issues, such as an increase in overhead expenses, slow delivery times, and less customer satisfaction. In fact, it can even cause a bullwhip effect and harm your supply chain on other levels as well.

Benefits of Tracking Inventory

On the contrary, if you have successfully implemented a inventory tracking process at your warehouse, you will be opening your business to a plethora of benefits that will help it grow and also enable you to finally overtake your competitors.

Some benefits of tracking inventory include:

Less Missed Sales

We surely don’t need to emphasise on the impact of missed sales, since anyone working in the business field would know how grave of a problem it can be. Sadly, if you fail to track your inventory properly, you will be missing out on a lot of sales. If you don’t track your inventory, you wouldn’t know when you have run out of a product, which will obviously cause you to miss a sale when you get an order for the said product.

On the other hand, if you focus on inventory tracking, then you would know what products you are running low on and orchestrate your replenishment procedures accordingly! Not only that, but close inventory tracking will also allow you to compare products, see which ones are selling faster, and then stock up on those; a practice that will also ultimately lead to less missed sales.

Better Cash Flow

If you want to actually work towards the success of your business, your ultimate priority should be to establish a stable cash flow. This doesn’t only include how many sales you get – it is also intimately connected to your investments. Luckily, inventory tracking can lead to better investments and even help you cut down on costs ultimately.

When you have an accurate inventory tracking system in place, it becomes so much easier to identify slow-moving products. These are essentially the products that are not sold as fast as you need them to, and detecting these problems earlier can help you get them off your hands as soon as possible. This means that your resources, time, and energy will not be spent on these any longer, and you can invest the cash in other items that actually have a good impact on your ROI.

Early Problem Detection

As much as any business-owner hopes and prays that there are absolutely no problems that they have to encounter as a business, this is simply not possible and the issues you face as a business are sometimes out of your hands. However, what is in your hands, is the ability to minimise the loss you face because of these problems, and this can only be done with the help of early problem detection.

If you are tracking your inventory regularly, you can easily detect problems right away, before they turn into bigger complications that cannot be fixed. With early detection, you can combat the problems with considerably less resources, which means that you will be saving money on this end as well.

Increased Customer Satisfaction

What any business wants is to impress their customers. After all, your customers and clientele are the backbone of your business and without them, there would really be no point pouring your hard work and sweat into whatever you do. Therefore, customer satisfaction is the top goal for many businesses, and if you want to succeed in your industry, it should be yours as well!

However, it is not always easy to know what your customer wants. After all, in the 21st century, your target market is not only demographically diverse but also different in terms of behaviour. Yet, the one thing that ALL customers want is fast delivery and good customer services, and both of these are not impossible to achieve if you are tracking your inventory properly and have a strong inventory management system in place.

So, for example, your customer has ordered something, and due to circumstances beyond your control, the delivery is going to be later than you promised them. Now, this situation can go two ways. If you haven’t been tracking your inventory properly, you wouldn’t know that the product they ordered is out of stock. The first time you discover will be when its already too late and the customer is on call, clearly upset at the late delivery times.

The other way this situation could go obviously involves properly done inventory management and tracking. If you have been tracking your stock properly, you would know beforehand that there is going to be a delay, and you can give the customer a call and mitigate the situation by offering them a discount or a compensation of some sort.

The way vigilant inventory tracking impacts your customer satisfaction may seem small, but it makes all the difference between a happy customer who plans on bringing their business to you in the future, and an upset customer who vows on having nothing to do with you going forward.

Reduced Possibilities of Theft and Loss

Theft and other shrinkage problems such as loss and spoilage are not only a damage to your inventory, but also to your overall operations. Inventory tracking gives you a holistic view of everything that is going on in your inventory, and this way, you can keep an eye on the activity and make sure that there are no shady practices going on.

It can also help you increase quality control, which means that your customers get nothing but the best! We have already talked about how important it is for you to provide your customers the best of everything, and this point just proves that inventory tracking will help you send out only the best of your products.

Easier and More Efficient Reordering

Whether you are a retailer or a manufacturer, you will have to interact with suppliers regularly in order to ensure that you are making your re-orders on time, and that they are receiving your purchase orders on time. With the help of inventory tracking, you can not only make your communication with your suppliers more productive, but you can also ensure that the reordering process is efficient and up to the mark.

So, basically, with the help of good inventory management and tracking, you won’t have to waste time on physically entering and maintaining records and writing up orders to send to your suppliers. The whole thing will be automated, and with the help of good inventory tracking you will know exactly when to stock up!

These were some benefits that you can expect with the proper implementation of inventory tracking. The actual list of these would be much longer, since inventory management and tracking can help you maximise the efficiency of your operations to a great extent!

A good thing to remember is that inventory tracking is merely a part of inventory management. There are many other aspects to the process – yet, with the help of an inventory management system software, you can actually tie up all these elements together and ensure that you are receiving as many benefits of tracking inventory as possible!

Inventory Tracking Best Practices

In order to make sure that your inventory management efforts are actually in the right place, you need to make sure that you are implementing certain tactics into your management techniques. But before we dive into these, it would be good to have a look at the different methods of inventory tracking, and the different ways one can achieve these. This will allow you to better understand which form of inventory tracking and control aligns better with the needs of your business.

Inventory Tracking Methods

In this section, we will look at the ten most prominent methods of inventory tracking. If you don’t already have an inventory tracking method in place, you can read the list and see which of these aligns the best with your business, and then base the rest of your inventory tracking procedures on the basis of this.

1. Manual Tracking

As the name suggests, manual tracking is all about actually, physically tracking your inventory. It involves regularly updating a master data sheet and maintaining it in accordance with any transactions that place. Although this can now be considered a dated method of inventory tracking, there are still many businesses out there that manually track their inventory – either with the help of simple computer programs like Excel and Sheets, or even simply with pen and paper in some cases. So, if you are not ready to invest in an inventory management system or an inventory tracking software, you can resort to this method.

2. Card System

Another method of inventory management and tracking is Kanban, which is also known as the card method. In this method, you track your stock, production, and inventory throughout and the system notifies you when ever more is needed. This is essentially associated with a wider inventory management technique called the JIT method, and used to ensure that you are only producing or purchasing the amount of products demanded by the customers.

3. Spreadsheets

Using spreadsheets as a way of keeping track of stock and inventory is a practice that has been around for ages. This mainly because not only are spreadsheets easy to use, but they can also help you organise a lot of data for free. Businesses that can’t invest a lot of money may want to use spreadsheets to streamline their inventory management and tracking processes. However, keep in mind that spreadsheets are not an efficient or stable way of properly tracking your stock and inventory. Even if you are a small business, spreadsheets should only be your last resort if you are planning to upscale your operations sooner or later.

4. Accounting Systems

Believe it or not, inventory tracking is closely linked to your accounting. Therefore, many businesses decide to integrate accounting with inventory management, and invest in software that can help manage both of these together. In turn, you get a robust mechanism that helps you gain a detailed, insightful outlook of your stock and how it makes an impact on your overall finances.

5. Inventory Management and Inventory Tracking Systems

We’ve been raving about the importance of inventory management and inventory tracking systems for quite some time now. Admittedly, it’s because an inventory management system is the most common way of tracking your inventory and stock. It equips you with just the right tools that not only help you track your stock, but also organise it in a way that turns out to be profitable. We will get into the details of this later on, but remember that inventory management is more or less synonymous with inventory tracking, which makes inventory tracking an absolute must.

6. Open Source Software

Another common method of staying in touch with your inventory is open source software. Open source platforms provide basic features and interfaces that can be used by anyone! So small businesses can rely on these solutions without having to learn a whole new interface and understand how to navigate a complex software. However, since these platforms are usually very basic, you must keep in mind that this method is not the best option if you want to refine your inventory tracking and management mechanisms with advanced features. Also, these solutions come with very mediocre customer support, and once you commit, you are more or less on your own.

7. Software-as-a-Service (SaaS)

Many businesses opt for SaaS solutions for real time inventory tracking. It is one of the most popular options on the list. Just like open source software, SaaS is also a good option for businesses that don’t want to invest in a comprehensive enterprise inventory management solution. At considerably less costs, you get pretty decent features with most SaaS, which can be quite refreshing for a small business to hear.

8. Cloud-Based Software

This is not entirely a different solution from SaaS – cloud-based software is simply software that uses the cloud to store your information, and hence can be utilised remotely. These solutions are mostly mobile-friendly, and that’s great when it comes to tracking your inventory because it basically means that you can stay in touch with your inventory throughout. Cloud-based software can also be integrated with other kinds of software, which means that you can maximise your potential and reap the benefits of more than one program. As such, you can find an Amazon inventory tracker that helps you manage your inventory on Amazon with a cloud-based solution.

9. In-House Solution

Some businesses, especially the bigger ones, would want to opt for an in-house solution. For this to work out, a company needs a plethora of resources, lots of money as well as time to develop an on-premise software that caters to their particular needs. With the right brainstorming, you can develop just the right real time inventory tracking software that will help you stay on top of all your work without having to worry. Since these solutions are designed keeping your specific requirements in mind, the advantage you get from these is that they can tackle your problems quite efficiently. It also means that the tech support will be in house as well, and hence, regularly available for you to fix any possible issues.

10. Third-Party Providers

Third-party logistics (3PLs) providers are also another way of tracking your inventory. This method involves outsourcing your inventory management and logistics to a third party, which can be beneficial if you are looking to save up on money, time, space, and energy. Basically, what 3PL companies do is receive, store, move, and track inventory for you. This means that you don’t have to get caught up in the whole mess of real time inventory tracking yourself, since the company will be responsible for it. However, even with a 3PL involved, we wouldn’t suggest you to not stay in touch with your inventory yourself – it’s just that 3PL providers make the whole thing a little easier. One drawback, however, is communication; you have to constantly communicate with your providers which can prove quite hard to do at times.

These are the most important inventory tracking methods. Now, your job is to decide which one is the right option for you!

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Best way to track your inventory

So, we’re sure that your next question is how to track inventory. Luckily for you, if you have a good inventory tracker in place, it shouldn’t be hard. Once you perfect the best practices we are just about to discuss, tracking inventory becomes a breeze and not just you but your warehouse operatives, salespeople, and managers can all benefit from it.

1. Choose the right inventory tracking method

As mentioned earlier, tracking inventory is an aspect of your inventory management and supply chain that should not be rushed. Instead, you should take your time in organising the whole thing.

It starts with researching all the available inventory management and tracking methods available, and then deciding which one can help you make tracking inventory an easier task for you.

The list we have provided above can be a good place to start. Whichever methods mentioned on the list seem like they could help your business, do your research of those methods and try to integrate them into your business wherever possible.

Choosing the right inventory tracking method is perhaps the most important part of your inventory tracking procedure. It is based on your choice of method that you will then be able to pick the right inventory tracking, a reliable software to track inventory, as well as any other tools that are needed to fully facilitate your journey.

2. Perform regular cycle counts

Once you have picked the right inventory tracking program for your business, it comes down to how well you orchestrate your cycle counts. Regularly cycle counting will enable you to keep a proper record of your activity, but it will also help you identify and fix any discrepancies in your procedure.

This is important because even if you automate everything, you still need to stay vigilant and on top of things on your own if you want to ensure that your inventory tracking system is doing the right job. Cycle counts will help you do that, and while you’re at it, they will also help you understand your performance and gauge how you can improve your performance across these platforms.

3. Track everything

The purpose of your inventory tracking program or inventory tracking system is not just to track movement of your stock. Instead, it is linked to tracking all the important inventory management related processes. This includes but is not limited to staffing decisions, purchasing decisions, and seasonal demand. Your job is to track all these, so you can identify problems beforehand, save money where it can be saved, and ensure that there are no discrepancies.

4. Stay in touch with latest industry trends

Want to know which batch tracking inventory management system to invest in? Or want to find the most reliable yet simple inventory tracking software for your business? Perhaps you want a software to track inventory that can also help you with warehouse inventory tracking. The best way to get to the bottom of any of these queries is to stay in touch with industry trends.

Staying in touch with the latest industry trends will not only provide you with an idea of how to track inventory in a way that uplift your business, but it will also help you look at what your competitors are doing in order to track their inventory. Then, you can do better and outshine them!

5. Automate manual tasks

Well, it’s the 21st century. We are amidst something that can only be described as a technological revolution. Why would you want to make your work more complicated by NOT automating manual tasks?

Even if you don’t have a big enough budget for end-to-end automation for warehouse inventory tracking and don’t want to complicate things by relying on automated yet complex and complicated software to track inventory, you can always opt for simple solutions like a spreadsheet, simple inventory tracking software, and other solutions that don’t require a lot of brain power on your end.

6. Start focusing on digital data

Again, technology is your friend, so you might as well utilise it in a way that minimises problems and instead, allows your business to grow and succeed! In this regard, it’s time for you to start relying on methods of acquiring, storing, and using digital data.

With the rise of RFID technology and barcode scanning which has been around for a long time, it is not hard to do this. Using barcode scanning, for example, can help you reduce human error and avoid duplicated data. RFID, on the other hand, massively improves financial updates and makes real-time inventory tracking a lot easier to achieve.

Needless to say, not all of these will be aligned with the overall goals of your business. However, a lot of these can be implemented to help you achieve a considerably better and more evolved inventory tracking setup, that can eventually also contribute towards the needs of your business in a much more efficient and effective manner.

Inventory Tracking System

An inventory tracking system can help you easily implement all the best practices we have mentioned above. What’s even better is that no matter what inventory tracking and management method you pick, you can find an inventory tracking software that will help you implement the method easily.

The search for the best inventory tracking software, however, can often be a tiring job because after all, you must find a solution that checks all the boxes. Not only should it do seemingly trivial tasks like implementing inventory tracking labels, it should also help you integrate warehouse inventory tracking with aspects such as employee retention and customer satisfaction.

Canary7 is one such inventory tracking system – not only does it help you track, store, and manage your stock more effectively, but it also helps you bring efficiency to other areas of your business such as warehouse management, control, and organisation.

At the end of the day, you have to look for a an inventory tracking program that is a long-term solution to the problem of inventory tracking. Your software solution should offer you scalability and adaptability, to the point that it actually grows with you as your company grows. And that’s exactly what Canary7!

For more information, visit our website or book a free 30-minute demo for our inventory management software.

Summed Up

So, inventory tracking is an important part of inventory management, and inventory management is the key to success. Both of these can be streamlined with the help of an inventory management and inventory tracking system, which will help you not just tackle the problem of inventory tracking but also ensure that other aspects of your business such as warehouse management and order management are also up to the mark.

Meet Canary7
The Definitive Guide to Inventory Tracking

Meet Canary7
The Definitive Guide to Inventory Tracking