Shipping And Inventory Management Software

Shipping and inventory management can be a real challenge for small businesses and online retailers. Lucky, there are plenty of cloud-based shipping and inventory software options to help you keep track of things like orders, shipments, rates, tax rates and more. You can even integrate it with major carriers like FedEx®, UPS®, USPS® and Amazon FBA™ to ensure that packages are sent out on time and arrive at their destinations in one piece.\

In this guide, we review the aspects of Shipping And Inventory Management Software, inventory management software small business, best inventory management software for small businesses, and What are the 4 types of inventory management?

Shipping And Inventory Management Software

If you’re a small business or an online retailer, shipping and inventory management can be a real challenge. Thanks to the right software, however, you can eliminate some of that stress and make your business more efficient. Not only does shipping software help streamline your process by automating tedious tasks, it also integrates with major carriers like FedEx®, UPS®, USPS® and Amazon FBA™ to ensure that packages are sent out on time and arrive at their destinations in one piece.

Shipping and Inventory Management Software

Shipping and inventory management software can help you automate the process of tracking, organizing and managing inventory. This includes automatically adding products to your inventory, generating a shipping label for each order, creating tracking numbers for each shipment, communicating with customers about orders through email notifications and more.

Inventory management systems can also be integrated with other business systems such as CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), accounting software or ecommerce platforms like Shopify or Magento. For example, if you are using Magento as your ecommerce platform then this means that all orders will be imported directly into your warehouse management system when they’re placed on the website which makes it easy to see what has been ordered by customers without having to manually enter in any information yourself!

Solutions to manage your shipping and inventory.

Solutions to manage your shipping and inventory.

  • Shipments: integrate with popular shipping carriers, automate shipment process, track order status and more.
  • Inventory management: track stock levels, manage orders & returns, create reports and more.

Automate shipment process by integrating with popular shipping carriers such as FedEx, UPS, USPS, Amazon FBA, Shopify and more.#

If you are looking for a shipping and inventory management software, there are some great options available. Here are some of the best ones:

  • ShipStation is a cloud-based software that helps companies manage their shipping needs. With ShipStation, you can import and export data from different shipping carriers such as FedEx, UPS, USPS and Amazon FBA. You can also track shipments automatically with their built-in tracking feature. This feature will automatically update customers on their package status so they know when to expect delivery or if there have been any delays in transit.
  • InventoryLab is another cloud-based logistics management system that integrates with popular shipping carriers such as Fedex and UPS among others to automate shipment process tracking through either API integration or direct API access (DAP). It also has an inventory management module which allows users to set up orders for purchases based on customer demand or product availability levels by updating stock levels on each item in real time.

inventory management software small business

Inventory management software is the backbone of the most powerful inventory management systems. And there are thousands of options out there for you to choose from.

So how do you know which software is best for your business today?

Inventory management software is usually made with specific niches in mind. This means the best software for your business depends on your unique business needs.

The right software will streamline everyday operations and give you valuable insight. It’ll do this while ensuring you’re not paying extra for functionality your business doesn’t need.

To help you choose the right software, we’ll introduce you to the 8 best inventory management software along with a detailed analysis.

1. FreshBooks

Although known for being an accounting system and software, FreshBooks also offers simple inventory tracking for freelancers and small businesses with very basic needs.

Whether you sell only a handful of different items or are looking to start selling physical items on top of your service business, managing even small amounts of inventory takes effort. Especially if you sell across 2+ sales channels.

FreshBooks is the perfect solution for tracking inventory if you also use it for accounting purposes.

FreshBooks seamlessly integrates with 2ship and Barcloud to bring together your inventory tracking, accounting, shipping, and asset management needs. And if you’re already tracking inventory on Squarespace or Shopify, you can automatically pull in data from those sites into FreshBooks for an even better inventory management experience.

FreshBooks is the best solution for those looking to experience the power of inventory tracking software for the first time. It’s also a good solution for those still wondering if inventory software is for them.

2. Zoho Inventory

Zoho Inventory is a popular small business pick for businesses with multi-channel selling needs. It supports integration with popular platforms, including Shopify and Amazon. This allows you to sync data across sales channels for easier management of stock levels and inventory costs.

The platform also has most of the basic inventory management software features. This makes it a great pick for small businesses with simple inventory needs.

Basic inventory management software features include :

Another notable Zoho Inventory feature includes end-to-end inventory tracking. This functionality allows you to track inventory items through features like serial numbers.

Although Zoho Inventory is an affordable option, it doesn’t offer the most customizable inventory management solution. Its forecasting and reporting capabilities are also limited compared to many of the other options.

Zoho Inventory Price:

Zoho inventory offers a free, robust option for those looking to get started. It also offers a 14-day free trial for their other plans, which start at $59 per month when billed annually.

Verdict:

Suitable for small businesses, but businesses looking to scale will eventually outgrow it.

3. Veeqo

Veeqo is another popular inventory management solution for retail or wholesale businesses with multi-channel selling needs. The software advertises itself as an inventory and shipping platform.

Like Zoho Inventory, it has a simple and intuitive platform that brings together each sales channel into a centralized place so that you can easily keep track and manage everything. It also provides features for order management, inventory control, analytics and reporting, and warehouse inventory management.

A unique feature about Veeqo is that they have their own barcode scanner, which accelerates the processing of high volumes of orders. It also speeds up the process of stock counts.

The platform has a reputation for providing an amazing shipping experience. Its shipping integrations include over 15 major shipping couriers like UPS and FedEx. The platform also offers shipping features like discounted shipping rates and live tracking.

Although the onboarding process can be time-consuming, everything works very smoothly once you’re all set. This makes the software a good pick if you’re looking for something scalable and customizable, but not if you’re looking to get started quickly.

Veeqo Price:

Veeqo doesn’t offer a free account but does offer a 14-day free trial. Pricing for their cheapest plan, which processes less than 500 monthly orders, starts at $156 per month when billed annually.

The Veeqo scanner hardware is sold separately for a one-off payment of $495.

Verdict:

Veeqo is great for a small retail business looking for a scalable but budget-friendly inventory solution to get started.

4. Sortly

Sortly is one of the best inventory management software for small non-retail businesses. It’s a good pick for businesses looking for a quick and easy solution for their inventory and asset management needs. Its visual nature appeals to those who dislike reading words on spreadsheets.

Its super intuitive functionality allows your team to learn how to track important details about your items quickly. This means you won’t need extensive training on the product either. Sortly has most of the basic inventory management software features like warehouse management, inventory control, barcode scanning abilities, and basic inventory reports.

The platform allows you to scan QR codes through the app, receive stock alerts to keep track of stock levels and returns, and group items easily.

With Sortly, there are a few things you’ll have to be mindful of. You can’t integrate with other apps and software unless you’re on the ultra plan. Also, it doesn’t yet integrate with eCommerce nor accounting software. Lastly, you’ll need to contact support to execute integrations via API, even if you’re on the ultra plan.

Sortly Price:

Sortly offers a free version, or you can get started with a free trial of their advanced or ultra version.

Verdict:

Sortly is a great budget option with very simple to use features for non-retail small businesses in various industries.

5. Brightpearl

Brightpearl is a retail management system and inventory system built specifically for multi-channel retail businesses or wholesalers. The platform helps businesses streamline their inventory system operations. It has all the basic inventory management features in its more expensive plan. However, the cheaper plan for businesses with less than 1500 orders per month is a lot more limited.

One great thing about Brightpearl is that it’s built specifically for higher transaction volumes. Brightpearl is a great alternative for users migrating away from Stitch Labs. Stitch Labs was recently bought by Square and will end operations in Spring 2022.

Although it’s a good thing that Brightpearl is constantly updating the software, this often comes at the price of having to deal with software bugs.

Brightpearl Price:

Brightpearl doesn’t offer a free option or trial. You need to contact them for a pricing quote.

Verdict:

Brightpearl is a popular option for merchants trading over $1 million or planning to within the next year. Not a good choice for retail businesses just starting out.

best inventory management software for small businesses

Today, small business inventory software is available as never before. While store owners can do this all by themselves, there’s a lot of inventory management software solutions for small businesses that can automate this process and help with creating new strategies. However, finding the one to pick may become an unnecessary challenge for constantly busy business people. So, I tried to do the job for you and gathered a list of top-7 small business inventory software solutions that fit small businesses. Just decide which features are crucial for you, calculate your budget, and choose the most suitable option.

Contents:

What is inventory control in business?

When your business grows rapidly, managing inventory tracking correctly requires more effort. Sticking to a pen and paper, in that case, will only mess up the operational routine, which will restrain businesses from healthy development or kill it eventually. 

It’s a problem many businesses face: too much inventory. But what if you could have the best of both worlds – the right inventory planning, and never running out of it? All of this is possible with a small business inventory software solution designed to manage your inventory. 

In this article, we will explore some of the benefits that come from using an automation inventory system for managing your products as well as how to find the right one for your business.

Why is inventory management so important?

Automating your business inventory planning can be an advantage in a constant struggle with your competitors. But the reason for making friends with specialized software is not only the digitalization trend around the SMB community but also a vital necessity already. Here are the most obvious pros of getting rid of manual inventory management:

Key inventory management software features to look for 

When it comes to inventory management software for your business, there are a lot of different features and functions that you need to keep in mind. When you think about it, inventory management is all about tracking the quantity and location of your goods. And that’s precisely what a good inventory system does. It keeps track of everything in your business and tells you where to find it when you need it.

Understanding how important inventory management system is for your retail business will help you choose the right inventory management software. So let’s take a closer look at some key inventory management features of an effective inventory management system!

🔗 Instant syncing of inventory management system

When you have many products, keeping track of both their inventory and business is a Herculean task. You need to record each and every unit of product, its selling price, current stock, and so on. This can be a time-consuming process when you’re dealing with hundreds or even thousands of products. Good inventory software will do the calculation for the businesses  automatically, providing you with up-to-date information about what’s going on in your stock by deducting the sold amounts. 

🔮 Forecasting and reports of small business performance 

Having the right amount of inventory at the right time is critical for any business, as it can directly impact its gross profit, working capital and overall financial health. The inability to forecast when to produce and sell products can lead to excess inventory, which is costly. The cost of excess inventory isn’t just in the overproduction – it’s also in what you could have done with that cash instead. Forecasting helps businesses understand how much they  need to produce, when they need to produce it and where they should store it so that they never run out. On the other hand, proper business reporting about the inventory on hand provides you with insightful data. This data plays a crucial role in the long run since you can create special business strategies based on the top-selling products, purchase frequency and so on. 

📯 Stock notifications from inventory management software

When you have multiple locations, it’s important to stay on top of your inventory. You need to know when your business is running low on stock so that you can reorder in time to avoid running out and inconveniencing customers. Some inventory management software provides its users with special notifications and alerts to signify when a business product has hit its pre-defined reorder point and needs replenishing.

🤝 Integrations with the platforms in use and order management

To get the most detailed information about where your business is standing right now, you need all your platforms to communicate with each other. Integrating them with a proper order management software is the best solution since you don’t need to check every small detail of each product manually – the connected software solution will do this automatically. 

For instance, you can use Synder Sync and take advantage of its automated categorization feature. Imagine the connection between the Shopify business store and QuickBooks Online. By creating a categorization rule, you can create an action that’ll deduct the purchased amount from the receipt from the existent amount in your QuickBooks account. Now you’ll be updated right inside your accounting system as soon as the transaction is synced!

📦 Bundles tracking from inventory management software 

When selling products, one of the most effective ways to create sales and drive revenue is by bundling products together. Here’s what you need:

If the second point is clear, you just need to choose the inventory management software thoughtfully, there are still a lot of questions about the first one. Calculating and analyzing the products for the selling in bundles strategy may take a lot of time and nerve cells. 

But that’s not how it should be. 

Synder Insights can provide you with all the necessary information about your business’s performance. Based on the activity of the connected store, Synder Insights gives you an accurate report about the products most likely to be purchased together, and you’ve already got your bundle!

Finally you can get rid of your selling-in-bundles nightmare.

📊 Accounting and inventory tracking

If you’re lucky enough to find the software for your business that’ll do both: take care of the inventory and the accounting, consider yourself Fortuna’s favorite.

Note: Keep in mind that accounting software won’t replace a professional accountant when you have a big business – the software will simplify the workflow a lot, but it’s recommended to contact a professional to check the results and figure out some issues that might be revealed thanks to the software but can’t be resolved with its capabilities. 

Accounting is the backbone of each strategy and future business planning because it shows the real numbers. You can play a bit with how you’re placing the products, how you’re selling them and even change the marketing strategy – all these actions affect the final accounting reports. Having this powerful tool in hand, you can create a better inventory strategy while controlling the one in use right now. 

Top-7 warehouse inventory management software solutions

A business is only as good as its inventory. And while it may be tempting to buy more stock when your inventory starts to run low, it’s important to keep an eye on what you do (or don’t) sell each day and have an accurate inventory system control.  Lack of proper data can make it difficult for companies to determine the goods that are popular and the ones that aren’t performing well, which can lead to overstocking some items and a shortage of the others.

To make the list, I used the following criteria: affordability, ability to integrate with accounting software, and the overall positive feedback from the business owners who have been using these solutions.

1. Fishbowl inventory

Fishbowl inventory is a complete small businesses inventory management software solution. Its core audiences are wholesalers, retailers, and producers who want to stay in touch with their accounting solutions. But if you think that Fishbowl is a niche tool for QBO fans, you might be wrong! Xero, Shopify, WooCommerce, Salesforce, these are the loudest names from the list of the supported integrations.

Fishbowl’s inventory platform comprises two sub-products: Fishbowl Manufacturing and Fishbowl Warehouse. Plus, the company offers additional services and hardware.

Customers appreciate its user-friendly interface and client-centric support. But some users don’t like the reporting system, as it’s not always applicable to some businesses.

2. Synder

Having accurate and precise inventory together with accurate accounting will provide you with peace of mind and a plan of action for upcoming seasons. Synder software will fetch correct inventory data from the platforms you’re using into your books, so you’ll never run out of stock.

This software imports the data from the sales platforms and assigns the correct product to sales, which makes sure your inventory in the accounting software is accurate and up to date. With Synder, you have more freedom to customize your bookkeeping based on the secure if-then conditions.

You can also track and categorize your product inventory, locations, shipping, and discounts to have more accurate reports.

2. Booqable

Booqable is a simple inventory control software that allows you to know what product is on your shelves, where it’s located, and how much there is. While many inventory planning systems are complicated enterprise solutions that are rarely used, Booqable offers an affordable, easy-to-use small businesses inventory management software tool. 

Booqable is a turnkey management software solution for inventory control of businesses. It can be used to track and manage everything from the initial purchase to the end customer. It also integrates with hundreds of popular e-commerce platforms such as Shopify, WooCommerce, and Magento to make it even easier to manage your online store.

Everything from sourcing and procurement to sending and receiving, Booqable can help you get better business insight into your inventory, enabling you to make smarter decisions.

4. Odoo inventory management

Odoo is open-source software that primarily focuses on small businesses needs but allows for tailoring to any size on demand. So, it’s highly customizable. Until you start using it with other products of the company, it will cost you nothing (the trial period is provided).

The module for inventory control is designed to help you keep track of your business stock levels in real-time. It allows you to create an unlimited number of different products with their own inventory planning.

The app allows you to add third party integrations from their app store in case you need a ready for use solution. In the meantime, Odoo provides its client with a bunch of integrated solutions which help to unfold the whole digital infrastructure management for businesses: from marketing to inventory planning.

5. Zoho Inventory

You might know Zoho as an almighty octopus of business automation. So I couldn’t walk past this niche solution, as I like Zoho products myself. Besides being integrated into its ecosystem, Zoho Inventory has a variety of useful connections with other services: from payment systems to shipping providers. Having entered inventory info once,, you can update it in all the channels you use on Zoho Inventory.

This software service provides businesses with a tool for inventory control, purchase orders, and other important features. It helps companies track their products, store information about vendors and suppliers, and generate reports for their business.

It’s easy to use and deploy: it’s a small businesses inventory management software solution requiring no download or installation that you access through your browser. And you can have your inventory control access anywhere. Free trial included.

What are the 4 types of inventory management?

Inventory management is a crucial asset for businesses as it enables them to minimize the cost of inventory on a company’s balance sheet when they receive these goods. Inventory can be classified in three ways, including materials, work-in-progress, and finished goods.

What Is Inventory?

Inventory is the accounting of items, component parts and raw materials that a company either uses in production or sells. As a business leader, you practice inventory management in order to ensure that you have enough stock on hand and to identify when there’s a shortage.

The verb “inventory” refers to the act of counting or listing items. As an accounting term, inventory is a current asset and refers to all stock in the various production stages. By keeping stock, both retailers and manufacturers can continue to sell or build items. Inventory is a major asset on the balance sheet for most companies, however, too much inventory can become a practical liability.

Video: What Is Inventory?

Inventory Explained

An organization’s inventory, which is often described as the step between manufacturing and order fulfillment, is central to all its business operations as it often serves as a primary source of revenue generation. Although inventory can be described and classified in numerous ways, it’s ultimately its management that directly affects an organization’s order fulfillment capabilities.

For example, in keeping track of raw materials, safety stock, finished goods or even packing materials, businesses are collecting crucial data that influences their future purchasing and fulfillment operations. Understanding purchasing trends and the rates at which items sell determines how often companies need to restock inventory and which items are prioritized for re-purchase. Having this information on hand can improve customer relations, cash flow and profitability while also decreasing the amount of money lost to wasted inventory, stockouts and re-stocking delays.

13 Types of Inventory

Raw Materials: Raw materials are the materials a company uses to create and finish products. When the product is completed, the raw materials are typically unrecognizable from their original form, such as oil used to create shampoo.

Components: Components are like raw materials in that they are the materials a company uses to create and finish products, except that they remain recognizable when the product is completed, such as a screw.

Work In Progress (WIP): WIP inventory refers to items in production and includes raw materials or components, labor, overhead and even packing materials.

Finished Goods: Finished goods are items that are ready to sell.

Maintenance, Repair and Operations (MRO) Goods: MRO is inventory — often in the form of supplies — that supports making a product or the maintenance of a business.

Packing and Packaging Materials: There are three types of packing materials. Primary packing protects the product and makes it usable. Secondary packing is the packaging of the finished good and can include labels or SKU information. Tertiary packing is bulk packaging for transport.

Safety Stock and Anticipation Stock: Safety stock is the extra inventory a company buys and stores to cover unexpected events. Safety stock has carrying costs, but it supports customer satisfaction. Similarly, anticipation stock comprises of raw materials or finished items that a business purchases based on sales and production trends. If a raw material’s price is rising or peak sales time is approaching, a business may purchase safety stock.

Decoupling Inventory: Decoupling inventory is the term used for extra items or WIP kept at each production line station to prevent work stoppages. Whereas all companies may have safety stock, decoupling inventory is useful if parts of the line work at different speeds and only applies to companies that manufacture goods.

Cycle Inventory: Companies order cycle inventory in lots to get the right amount of stock for the lowest storage cost. Learn more about cycle inventory formulas in the “Essential Guide to Inventory Planning.”

Service Inventory: Service inventory is a management accounting concept that refers to how much service a business can provide in a given period. A hotel with 10 rooms, for example, has a service inventory of 70 one-night stays in each week.

Transit Inventory: Also known as pipeline inventory, transit inventory is stock that’s moving between the manufacturer, warehouses and distribution centers. Transit inventory may take weeks to move between facilities.

Theoretical Inventory: Also called book inventory, theoretical inventory is the least amount of stock a company needs to complete a process without waiting. Theoretical inventory is used mostly in production and the food industry. It’s measured using the actual versus theoretical formula.

Excess Inventory: Also known as obsolete inventory, excess inventory is unsold or unused goods or raw materials that a company doesn’t expect to use or sell but must still pay to store.

Inventory is known as being a company’s goods and products that can be sold. It is labeled as being the current asset on a company’s balance sheet. The intermediary between manufacturing and order fulfillment.

Inventory Examples

Real-world examples can make inventory models easier to understand. The following examples demonstrate how the different types of inventory work in retail and manufacturing businesses.

Raw Materials/Components: A company that makes T-shirts has components that include fabric, thread, dyes and print designs.

Finished Goods: A jewelry manufacturer makes charm necklaces. Staff attaches a necklace to a preprinted card and slips it into cellophane envelopes to create a finished good ready for sale. The cost of goods sold (COGS) of the finished good includes both its packaging and the labor exerted to make the item.

Work In Progress: A cell phone consists of a case, a printed circuit board, and components. The process of assembling the pieces at a dedicated workstation is WIP.

MRO Goods: Maintenance, repair and operating supplies for a condominium community include copy paper, folders, printer toner, gloves, glass cleaner and brooms for sweeping up the grounds.

Packing Materials: At a seed company, the primary packing material is the sealed bag that contains, for example, flax seeds. Placing the flax seed bags into a box for transportation and storage is the secondary packing. Tertiary packing is the shrink wrap required to ship pallets of product cases.

Safety Stock: A veterinarian in an isolated community stocks up on disinfectant and dog and cat treats to meet customer demand in case the highway floods during spring thaw and delays delivery trucks.

Anticipated/Smoothing Inventory: An event planner buys discounted spools of ribbon and floral tablecloths in anticipation of the June wedding season.

Decoupled Inventory: In a bakery, the decorators keep a store of sugar roses with which to adorn wedding cakes – so even when the ornament team’s supply of frosting mix is late, the decorators can keep working. Because the flowers are part of the cake’s design, if the baker ran out of them, they couldn’t deliver a finished cake.

Cycle Inventory: As a restaurant uses its last 500 paper napkins, the new refill order arrives. The napkins fit easily in the dedicated storage space.

Service Inventory: A café is open for 12 hours per day, with 10 tables at which diners spend an average of one hour eating a meal. Its service inventory, therefore, is 120 meals per day.

Theoretical Inventory Cost: A restaurant aims to spend 30% of its budget on food but discovers the actual spend is 34%. The “theoretical inventory” is the 4% of food that was lost or wasted.

Book Inventory: The theoretical inventory of stock in the inventory record or system, which may differ from the actual inventory when you perform a count.

Transit Inventory: An art store orders and pays for 40 tins of a popular pencil set. The tins are en route from the supplier and, therefore, in transit.

Excess Inventory: A shampoo company produces 50,000 special shampoo bottles that are branded for the summer Olympics, but it only sells 45,000 and the Olympics are over — no one wants to buy them, so they’re forced to discount or discard them.

What Is Manufacturing Inventory?

In manufacturing, inventory consists of in-stock items, raw materials and the components used to make goods. Manufacturers closely track inventory levels to ensure there isn’t a shortage that could stop work.

Accounting divides manufacturing stock into raw materials, WIP and finished goods because each type of inventory bears a different cost. Raw materials typically cost less per unit than do finished items.

What Does Inventory Mean in the Service Industry?

Every company has stock that supports its regular business. For service companies, this inventory is intangible. A law firm’s inventory, for example, includes its files, while paper on which to print legal documents is the firm’s MRO.

The Importance of Inventory Control

Inventory control helps companies buy the right amount of inventory at the right time. Also known as stock control, this process helps optimize inventory levels, reduces storage costs and prevents stockouts.

Inventory control empowers companies to collect the maximum amount of profit. It enables them to minimize the investment made in stock, allowing companies to best evaluate their ongoing assets, account balances, and financial reports. It is important because it prevents exuberant costs because of purchasing too much or inessential inventory, rather prioritizing the obligatory inventory.

With the appropriate internal and production controls, the practice ensures the company can meet customer demand and delivers financial elasticity. Inventory control enables the maximum amount of profit from the least amount of investment in stock without affecting customer satisfaction. Done right, it allows companies to assess their current state concerning assets, account balances and financial reports.

Inventory Best Practices

The business saying “if you can’t measure it, you can’t manage it” applies to inventory management and best practices. While the first best practice is keeping track of your inventory, others include:

Carry Safety Stock: Also known as buffer stock, these products help keep companies from running out of materials or high-demand items. Once companies deplete their calculated supply, safety stock serves as a backup should the level of demand increase unexpectedly.

Invest in a Cloud-based Inventory Management Program: Cloud-based inventory management systems let companies know in real-time where every product and SKU are located globally. This data helps an organization be more responsive, up-to-date, and flexible.

Start a Cycle Count Program: Cycle counting benefits extend well past the warehouse by keeping stock reconciled and customers happy while also saving businesses time and money.

Use Batch/Lot Tracking: Record information associated with each batch or lot of a product. While some businesses log precise details, such as expiration dates that provide information about their products’ sellable dates, companies that do not have perishable goods use batch/lot tracking to understand their products’ landing costs or shelf lives.

Inventory management is critical in strengthening companies supply chain because it helps to stabilize the dynamics between customer demand, storage space, and cash restraints.

What Is Inventory Process?

An inventory process tracks inventory as companies receive, store, manage and withdraw or consume it as work in progress. Essentially, the inventory process is the lifecycle of goods and raw materials.

See a diagram of the inventory process flow and learn more by reading “The Essential Guide to Inventory Planning.”

What Is Inventory Count?

An inventory count is the physical act of counting and checking the condition of items in storage or a warehouse. An inventory count also checks the condition of items. For accounting purposes, inventory counts help assess assets and debts.

Inventory counts help you understand which stock is moving well and inventory managers often use this information to forecast stock needs and manage budgets. To learn more about inventory counting, read the articles “Taking Physical Inventory” and “Cycle Counting 101.”

Methods of Recording of Inventory

The two methods of recording inventory are periodic and perpetual. In periodic inventory, you count stock at specific times and add the totals to the general ledger. In the perpetual method, you record changes in stock as they occur.

Although any type of business can use periodic inventory, small organizations frequently use it, especially when there are no plans to scale the business. The periodic method requires no special software or equipment. Organizations that use perpetual inventory recording methods and require real-time counting often use scanners and point-of-sale (POS).

What Is Inventory Turnover?

Inventory turnover is the number of times a company sells or uses an item in a specific timeframe, which can reveal whether a company has too much inventory on hand. To determine inventory turnover, use the following equations:

Average inventory = (Beginning Inventory + Ending Inventory) / 2

Inventory turnover = Sales + Average Inventory

To learn more about inventory turnover, read “Inventory Turnover Primer: Calculations, Rates and Analyses.”

What Is Inventory Analysis?

Inventory analysis is the study of how product demand changes over time and it helps businesses stock the right amount of goods and project how much customers will want in the future.

A well-known method for performing inventory analysis is ABC analysis. To perform an ABC analysis, group goods into three categories:

A inventory: A inventory includes the best-selling products that require the least space and cost to store. Many experts say this represents about 20% of your inventory.

B inventory: B items move at a similar rate to A items but cost more to store. Generally, this represents about 40% of your inventory.

C inventory: The remainder of your stock costs the most to store and returns the lowest profits. C inventory represents the other 40% of your inventory.

ABC analysis leverages the Pareto, or 80/20, principle and should reveal the 20% of your inventory that garners 80% of your profits. A company will want to focus on these items to increase sales and net profit margins. Inventory analysis may influence the choice of inventory control methods, whether just-in-time or just-in-case.

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