In order to implement inventory control and to manage your inventory in one way or the other, you need to have some sort of an inventory tracking system in place. An inventory tracking system helps you keep track of what has been sold, how much merchandise is in stock and how much you need to order and when.
And inventory tracking system comes in various sizes, forms and expense. But at the end of the day a good inventory tracking system helps you manage your stock and inventory effectively and lets you know several key driving factors for effective inventory management such as recognizing the fast-moving items, how much to reorder, when to reorder, amount of backup stock required, sales trends and more.
By using any one of the popular inventory software or by by devising a manual method such as tagging you can set up your own inventory checking system to keep track of your stock. However, it is most common for inventory tracking system to be set up with the guidance of an account.
An inventory tracking system can be simple manual system that uses a tag which is removed from the product at the time of sale, to the moderately sophisticated tracking system which uses a desktop tracking software such as Inflow, or a more sophisticated point-of-sale POS tracking system plugged other processes like with barcode tracking, credit card processing, cash register etc.
The kind of inventory system that you use for your business will largely depend on the scope and size of your business. Business of all shapes and sizes use entry tracking. From a one-man business to multinational businesses all use or rather should use some form of inventory tracking. A home-based business can devise a simple method of inventory tracking using tags, stickers and labels. The midrange business can implement automated tracking systems by using various software and even a POS point-of-sale system in integration with credit card machines, cash registers, a good tracking etc. A larger scale business can go in for technologies like magnetic tagging.
The scope of inventory tracking software is also very diverse. You get simple desktop software is which can be used on any personal computer to high-tech and complicated software that do a lot more like analyzing sales data, maintaining sales history, calculating taxes, generating special reports for sales per hour, creating multiple formats for invoices, accounting statements and generating the end gas reconciliation worksheets and inventory management reports.
The simplest example of of inventory tracking can be taken where a business uses the tag system to produce a monthly chart showing sales according to product line, brand and style. At the top of the chart the various products line are listed and from the left margin of various brand names and different styles. At the intersecting space in the table the number of items of each category are listed, that is, in what style and color the product was sold and whether there was any discount or a volume sale consideration given, along with any other relevant information.
Dollar control tracking systems show the cost and gross profit margin on individual inventory items. The basic method of the control begins at the cash register with the sales receipts listing the product, quantity sold and the price. You can compare sales receipts with margin on each item. Once again you can use software programs to track inventory by type, cost, volume and profit such as Inflow, www.Inflowinventory.com, AdvancePro, www.advanceware.net and Inventory Tracker for Manufacturing/Distribution, www.trackersystems.com.
Unit control systems use methods ranging from physically examining shelves to using sophisticated bin tickets and stickers get with each type of product that lists a stock number, a description, maximum and minimum quantity stopped, cost [in code], selling price and any other information that needs to be included. Bin tickets respond to an office file cards that list the stock number, selling price, cost, number of items to a case, supply source and alternative source, order dates, quantities and delivery time.
Retailers make physical inventory checks daily, weekly or as often as required by the business. Sometimes businesses assign one employee the responsibility for keeping track of a group of items. Bigger businesses hire stock personnel to organize and count stock.
Why Inventory Keeping Is Very Important
You will be surprised to learn how important inventory control is actually in the running of the business. Many entrepreneurs make the mistake of undermining the importance of maintaining and taking complete control of the inventory.
One simple way to look at it is this. What is a business without inventory? The answer is quite simply nothing. Without inventory you have nothing to sell and nothing to earn a profit on.
By analyzing, controlling, managing and understanding elementary, you can understand which are the fast-moving products and which ones on your maximum profit.
It would be a grievous mistake to treat called categories of product that your business is as similar. They are always fast-moving products which generate a lot of profits as compared to other slower moving ones.
In fact the majority of the businesses realize that 80% of their revenue comes from 20% of the products.
This is to say that you are in a business that deals with a variety of goods, products in different shapes and sizes, designs or any other kind of variation.
The products that generate the maximum profit do not necessarily have to be the ones that are the most highly priced. Sometimes also hotselling that smaller products with a less profit margin they overtake the more expensive business products.
Some experts go as far as to say that the business can typically increase their profits by 20% to 50% are implementing good inventory control.
Inventory control does not simply mean counting breathtaking physical control, managing it, keeping track of what is selling and what needs to be added and even locking it up quizzically, restricting access and treating it as one of the most valuable assets of a business. After all the inventory of your business product is the real cash value of your business sales.
Many entrepreneurs are hesitant to implement inventory control on their business because they lack the proper knowledge about how to do it.
In order to track their inventory you need a system in place which is either manual, automated and software driven.
Mostly, your business accountant can help you in doing this. A manual system or one that uses software and other more technological approaches such as barcode tagging, magnetic tagging all serve the purpose equally well as long as it meets your business scale and need and allows you to control your stock and inventory effectively.
Remember if your business hinges on, purchasing and reselling products, not having good management on your stock and inventory could mean that you end up purchasing larger quantities of items that you should not.
It may also mean that you end up maintaining a higher or lower amount of inventory either of which can cost you business money and profit.