what inventory system should your company use and why? course hero

What is involved in inventory management and why is it important?

Inventory systems are important because they help companies manage and track their goods accurately, which can prevent them from being overstocked or understocked. Using an inventory system can benefit you by:

What is an inventory system?

(Definition, Types and Benefits) Many companies carry inventory that they have to track and maintain to conduct business. Implementing an inventory system can help these businesses improve their organization, reduce costs and increase accuracy.

What is a perpetual inventory system?

Perpetual inventory systems allow companies to track everything related to their inventory and supply chain in real-time. With this method, the company updates stock levels and relevant reports after every sale, delivery or breakage. This provides companies with a higher level of accuracy and the information they need to plan for future orders.

Why invest in a dedicated inventory management system?

Investing in a dedicated inventory management software system can help you save time, improve workflow processes and achieve a higher level of accuracy. Related: What is Inventory Management?

How does a perpetual inventory system differ from a periodic system?

Unlike the automatically driven perpetual systems, periodic systems rely on occasional physical inventory counts to keep track of stock and COGS. Periodic systems require significantly more manual involvement in inventory tracking and data updates. There are a few key advantages to consider for automatic perpetual systems:

How does a perpetual inventory system work?

Perpetual inventory systems work by tracking inventory directly through your point of sale software and inventory management software. By leveraging things such as barcode scanners and transaction data, the system automatically tracks stock and inventory items as they are acquired in the warehouse or sold. You can still hold inventory counts, but only to account for potential damages to inventory or theft, not to track your entire inventory system.

What is a perpetual system?

Perpetual systems use technology to update inventory data immediately as items are sold and transferred. Instant inventory updates mean that your teams can perform up-to-date analytics at any time while having faith that their inventory numbers are close to accurate. Real-time updates also empower your team to create more consistent, accurate reporting to keep an eye on product and sales performance.

What is the barrier to entry for perpetual inventory systems?

The barrier to entry for perpetual inventory systems is their initial cost. Purchasing all the needed items such as the perpetual inventory software, RFID or barcode scanners, and other additional hardware has a high average cost for companies.

What is perpetual inventory accounting?

A system that has gained popularity as technology has advanced is called perpetual inventory accounting. Perpetual systems are technology-driven solutions that allow for your different software platforms to share information with each other. Companies that take advantage of this new, interconnected system can benefit from things like real-time data, point of sale (POS) integration, more accurate inventory balances, and significant amounts of saved time for employees.

What are the advantages of a perpetual system?

Through real-time database updates, accounts payable and accounts receivable can instantly and accurately report and analyze inventory and sale data. Perpetual systems also leave a paper trail for all received shipments and purchases, helping with audits and fraud prevention.

Why is tracking inventory important?

Due to tracking all inventory movements through digital software, you leave a reliable trail of data. Paper trails allow for easier audit compliance, fraud detection, and more accurate insights. Tracking can also help you get an overall view of your supply chain, helping you find areas where you can improve your practices.

What is an inventory system?

An inventory system is a process used to track stock, supplies and sales through an entire supply chain. Companies use inventory systems to ensure they know exactly what items they have available and where they are located.

Why are inventory systems important?

Inventory systems are important because they help companies manage and track their goods accurately, which can prevent them from being overstocked or understocked. Using an inventory system can benefit you by:

8 Types of inventory systems

The way companies manage their inventory systems may vary based on the industry they are in, the size of their business and the resources they have available. Here are eight types of inventory systems you can choose from:

How to choose the right inventory system

Here are some tips to help you choose the right inventory system for your organization:

Types of ERP Systems

ERP systems are typically differentiated on the market according to their particular deployment model. An ERP system can either be installed locally on the company’s servers or hosted in the cloud. Increasingly, certain ERP systems can be deployed in a hybrid setup where certain components are installed on-premises while others are cloud-based.

Choosing the Right ERP for Your Business

In general, it’s good for companies to take a strategic approach when deciding what kind of ERP to use and which software providers to get it from. Instead of simply checking off a list of features, organizations must consider the needs of their business as a whole and how their chosen system should help them address those needs.