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Mastering Inventory Management: How to Keep Track of Inventory
Written By: Cheyenne Kolosky
- October 30, 2023
Mastering the art of inventory management is about more than just knowing what you have in stock. To get the most out of your inventory management system, you must strategically synchronize your supply chain to meet customer demands efficiently.
In this article, we’ll discuss some of the best practices for inventory tracking, how technology plays a pivotal role in modern inventory management, and how platforms like Knack’s no-code solutions can help elevate your inventory management game. Read on to learn more.
Understanding Inventory Tracking and Management
Inventory management is the systematic approach to sourcing, storing, and selling inventory (both raw materials and finished goods). It is a crucial component of supply chain management that helps businesses maintain optimal inventory levels to meet customer demand. The goal is to have the right products in the right quantities available for sale at the right time to reduce holding costs and maximize revenue.
Inventory generally falls into three categories, each with its unique management needs:
- Big-Ticket Items: Big-ticket items are high-value products that generally have a longer shelf life. Managing these items requires precise forecasting and careful tracking due to their significant impact on the bottom line.
- In-Between Items: These products have moderate costs and are often the backbone of a business. They typically require a balanced inventory management strategy that minimizes holding costs and ensures availability.
- Least Expensive Items: Often considered as fast-moving, these items may have lower profit margins but are sold in high volumes. Efficient turnover is the key to managing these products.
Essential Strategies for Keeping Track of Inventory
Keeping a keen eye on your inventory is not just a good business practice; it’s crucial for the profitability of your company. Efficient inventory management can drastically reduce holding costs, prevent stockouts, and optimize order processes. In an increasingly competitive and fast-paced industry, these techniques provide a strategic edge:
Real-time tracking allows you to monitor inventory levels as transactions happen. This technology-enabled approach provides immediate insights into stock availability, sales trends, and replenishment needs.
Real-time data can significantly enhance business operations by preventing stock-outs and overstocking, and with no-code platforms like Knack, you can effortlessly set up real-time tracking tailored to your specific needs.
Calculate the Annual Consumption Value
The Annual Consumption Value (ACV) is an essential metric in inventory management. It’s determined by multiplying an item’s cost by its annual demand. ACV helps prioritize items, allowing you to focus on high-value goods that significantly impact your bottom line. Knowing the ACV can guide your inventory strategy, from storage to ordering policies.
Monitor Shrink Percentages
Shrinkage is an unfortunate reality in the retail industry, representing the difference between recorded and actual inventory. The four primary sources of shrinkage are shoplifting, employee theft, paperwork errors, and supplier/vendor fraud. Understanding and monitoring your shrink percentages can help you identify problem areas and take preventive measures.
The Role of Technology in Inventory Tracking
Technology is changing the way companies approach inventory management. Today’s cutting-edge software and apps offer several new benefits, the most significant being real-time inventory updates.
Traditional methods, such as spreadsheets, may have been the go-to solution in the past, but they have notable limitations when managing inventory. For one, spreadsheets cannot provide real-time updates, making supply chains more prone to costly errors like stockouts or overstocking.
Additionally, they are prone to human error, lack robust analytics features, and don’t readily integrate with other business systems like CRM or eCommerce platforms.
Cloud-based systems ensure that inventory data is up-to-date and accessible anywhere, providing unparalleled flexibility and efficiency. Similarly, no-code inventory management apps take this a step further by enabling businesses to customize and deploy solutions without the need for specialized programming skills, making technology adoption easier and quicker.
How to Effectively Track Inventory: Step-by-Step
For businesses seeking to optimize their inventory tracking, a systematic approach can be a game-changer. Here’s a step-by-step guide to ensure you’re covering all the essentials:
- Conduct an Initial Inventory Count: Before you begin tracking anything, you need a clear picture of what you have on hand. Start by performing a physical count of all items. You’ll want to be exhaustive here and ensure you leave no stone unturned.
- Categorize Your Inventory: Next, divide your inventory into categories like big-ticket items, in-between items, and least expensive items. Organizing your products will help you prioritize tracking efforts. For example, you may want to allocate more resources to keep an eye on big-ticket items than your least expensive items.
- Choose the Right Tracking Method: Whether it’s real-time tracking or periodic audits, decide on the method that best suits your business model. Real-time tracking, enabled by cloud-based no-code platforms, is more accurate as it offers real-time updates
- Calculate Annual Consumption Value: Determine the annual consumption value of each item by multiplying its cost by its annual demand. Knowing the annual consumption value will help you find and focus on your high-value items.
- Identify Shrink Percentages: Monitor inventory shrinkage due to shoplifting, employee theft, paperwork errors, and vendor fraud. Implement safeguards such as security cameras and restricted access to inventory rooms to minimize shrinkage.
- Set Reorder Points: Use inventory management software to analyze data, identify trends, and gain actionable insights to further refine your inventory practices. With advanced analytics features, you can easily identify and set reorder points for each product. This will help ensure you never run out of stock or overstock items.
- Perform Quality Checks: Periodically audit your inventory to ensure the items meet your quality standards.
- Regularly Update Records: Make it a habit to regularly update inventory records. Use technology to automate this where possible.
- Review and Adapt: Inventory management is a dynamic process, meaning there will always be room for improvement. Be sure to constantly review your practices, adapt to market changes, and tweak your approaches for continual improvement.
How to Improve Inventory Tracking with Knack
Streamlining inventory management has never been easier, thanks to Knack’s no-code app-building platform. With a user-friendly interface and numerous customizable features, you can create an inventory management system tailored to your unique business needs without writing a single line of code.
Knack offers a variety of pre-built modules and real-time tracking features designed to simplify your inventory processes. For instance, you can easily set up automated alerts for low stock levels, implement barcode scanning for quick item look-up, and even create data-driven workflows that automatically re-order items when they run low.
Knack’s versatility means you can incorporate complex business logic into your app, from automated calculations to sophisticated reporting features, ensuring a holistic approach to inventory management.
If you’re unsure where to start, we also offer a range of specialized inventory management templates that you can customize to fit your needs.
These templates provide a solid foundation and include features like item categorization, order management, and sales tracking. They can also provide in-depth analytics that can help you better understand your stock levels, sales trends, and even customer behavior.
With Knack’s no-code capabilities, you can benefit from a high level of customization and rapid development cycles, allowing you to implement changes or new features in real-time.
Understanding inventory management is the cornerstone of a successful business operation. Effective techniques like real-time tracking, annual consumption value calculations, and monitoring shrink percentages help you stay ahead in a competitive market.
In today’s technology-driven landscape, the role of modern software solutions and cloud-based systems can give your business an extra edge. These platforms provide real-time updates and offer a range of functionalities that traditional methods can’t match. These tech-driven methods will help your business optimize stock levels, reduce holding costs, and boost profitability.
Elevate your inventory management practices by taking advantage of Knack’s no-code platform. From user-friendly templates to real-time tracking features, Knack is a holistic solution that you can shape to fit your unique business needs.
Ready to take your inventory management to the next level? Start building for free today to see how Knack can streamline your inventory processes.