What is Inventory Tracking and Its Benefits for Business?

In today’s competitive market, whether you’re running a large corporation or a small business, efficient inventory tracking is crucial for optimizing operations and reducing costs. Managing inventory can lead to significant inefficiencies without a proper system in place.

Without the right inventory tracking software, businesses face many challenges, such as discrepancies and loss of inventory visibility due to manual processes, overstocks, or stock-outs. Moreover, optimizing storage space and transportation resources may be difficult, resulting in higher operational costs.

Implementing advanced inventory tracking software is essential to overcoming these challenges. According to a survey, technology spending in Singapore is projected to rise by 4.6% in 2023, reaching US$16.7 billion.

This growth highlights the importance of leveraging technology to stay competitive and manage business operations efficiently. This article will explain inventory tracking and its benefits for businesses in Singapore.

What is Inventory Tracking?

Inventory tracking is a business process focused on continuously monitoring all inventory within a company. While inventory can be defined in various ways, it typically refers to raw materials, unfinished goods, and products ready for sale.

Inventory management software involves closely monitoring stock levels throughout a company’s operations, ensuring products are available when needed. This is achieved by regularly updating inventory data as sales are made and new stock is received, helping businesses maintain an optimal inventory balance.

The significance of inventory tracking lies in its ability to fulfil customer demand effectively while reducing unnecessary expenses. By accurately monitoring inventory, businesses can ensure they have the appropriate stock levels without overspending on surplus items.

Larger companies often allocate specific resources and departments to manage inventory, making it easier to maintain control. However, smaller businesses, even with fewer resources, can track inventory effectively by utilizing inventory tracking software, which streamlines warehousing and fulfilment processes.

Manual vs. Automated Tracking

Inventory tracking involves the ongoing monitoring of all the stock a business possesses. While inventory can refer to various things, it typically includes raw materials, partially finished products, and items ready for sale.

Manual tracking involves recording inventory data by hand, often using spreadsheets or paper logs. This method requires constant attention and is susceptible to human error, making it less reliable as your business scales.

Automated tracking, on the other hand, leverages software and technology to monitor inventory in real-time. This system automatically updates stock levels, locations, and movements, providing accurate data with minimal manual input.

While manual tracking can be time-consuming and error-prone, automated tracking offers a more efficient and accurate solution. Shifting to automated systems streamlines operations and saves valuable time for more strategic tasks.

Ultimately, choosing the proper tracking method depends on your business needs and growth plans. However, in today’s competitive market, automated tracking—like HashMicro’s Inventory Software—stands out as the more effective and scalable option for managing inventory.

What is Monitored in Inventory Management?

Understanding what is tracked in inventory management is essential for any business aiming to optimize its operations. By knowing precisely what needs to be monitored, you can make informed decisions that directly impact your bottom line.

The following section will explore the key elements crucial to tracking your inventory management process.

1. Updated stock levels

Keeping your stock levels updated is essential for maintaining a balanced inventory, ensuring you meet customer demand without overstocking. Accurate tracking minimizes the risk of stockouts, maintaining smooth operations. Consistently updated stock data is also a foundation for other critical inventory metrics.

2. Stock locations

Managing inventory across multiple locations can be challenging, but effective location tracking simplifies the process. It optimizes space, reduces retrieval times, and ensures efficient distribution while minimizing the risk of lost inventory. Tracking stock movement is also crucial to avoid slow-moving or dead stock and to provide quick access when needed.

3. Inventory accuracy

Maintaining inventory accuracy is crucial for effective business operations. Regular tracking and verification ensure that your records align with physical stock, minimizing discrepancies due to theft, damage, miscalculations, and supplier shortages. This accuracy is vital for informed decision-making, as it highlights any differences that directly impact the smooth functioning of your business.

4. Carrying costs

Carrying costs represent the total expenses of storing and maintaining your inventory, including rent, labour, storage fees, and security. These costs help determine how long you can hold inventory before it impacts profitability. Slow-moving items and dead stock are significant factors in high carrying costs, so reducing these through removal or sale is essential to lowering expenses.

5. Inventory valuation

Accurate inventory valuation is crucial for financial reporting and strategic decisions. It ensures your financial statements reflect actual asset value and aids in calculating inventory turnover, with unsold stock added to the balance sheet.

6. Inventory turnover

Tracking inventory turnover reveals how fast products sell, guiding restocking decisions. High turnover indicates strong sales, while low turnover suggests overstocking or declining demand. Monitoring turnover helps you refine strategies for better profitability.

7. Reorder levels

Setting and tracking reorder levels ensures you never run out of essential stock. Knowing when to reorder can avoid stockouts and maintain a consistent customer supply. This proactive approach helps maintain customer satisfaction and streamline your procurement processes.

The Benefits of Tracking Inventory

Understanding the benefits of inventory tracking can significantly elevate your business’s operations. Effective logistic management software drives success, from reducing costs to enhancing customer satisfaction. Let’s delve into the key advantages that make inventory tracking an essential tool for any thriving business.

1. Fewer missed sales

Effective inventory tracking ensures you always have the right products in stock, preventing missed sales due to stockouts and boosting customer satisfaction. Accurate inventory reports eliminate the guesswork, allowing you to reorder before running out. By comparing stock levels with sales trends, you can make informed decisions about restocking.

Many inventory software options allow you to set minimum stock levels, automatically alerting you when it’s time to reorder. This helps streamline the process and ensures timely replenishment of popular items. As a result, you maintain optimal inventory levels and keep your business running smoothly.

2. Reduced warehouse costs

Optimizing inventory levels reduces the need for excess stock, leading to lower warehouse costs in rent, utilities, and labour. Efficient inventory tracking ensures better use of space, saving money over time. When your inventory data is accurate, the pick-pack-ship process runs smoothly, allowing staff to process more orders efficiently without wasting time searching for products.

3. Better-invested cash

Accurate inventory tracking allows you to avoid overstocking on slow-moving items, freeing up cash for other business needs. This helps maintain a healthy financial position by ensuring your investments are more strategic. By identifying slow-moving products quickly, you can clear them out and reinvest in areas like marketing or new products to boost growth.

4. More accurate reports

Inventory tracking software delivers precise and detailed stock reports, which are essential for informed business decisions and strategic planning. Accurate data helps avoid costly errors and supports confident future planning. Precise stock reports are also crucial for financial accuracy, impacting critical reports like the Balance Sheet and Profit and Loss, which are vital for management decisions.

5. Stock take and end-of-year efficiency

Accurate inventory tracking simplifies stock-taking, making it faster and less labour-intensive, especially during crucial end-of-year counts. With up-to-date data, stock takes become quicker, as you’re merely confirming existing information rather than entering it manually. This efficiency minimizes disruptions to your business operations.

6. Early problem detection

You can quickly identify and resolve issues like discrepancies, slow-moving stock, or supply chain problems before they escalate by actively monitoring your inventory. This proactive approach helps prevent significant losses and keeps operations efficient. The key to achieving this is through continuous reconciliation of sales and purchases with a well-maintained inventory system.

7. Efficient reordering

Inventory tracking streamlines reordering by providing real-time stock data and setting automatic alerts for restocking. This process prevents stockouts and ensures a smooth supply chain. Advanced inventory systems also help you make informed purchasing decisions by showing current stock levels, pending orders, and supplier lead times.

8. Theft and loss reduction

An inventory tracking system helps reduce theft and loss by keeping accurate stock records. With real-time tracking and regular checks, you can quickly spot any issues. This keeps your assets safe and shows your staff that you monitor inventory closely, which helps prevent theft.

9. Trusted information systems

Inventory tracking software offers a reliable, centralized source for all your inventory data, ensuring everyone in your organization works with the same accurate information. This unified system reduces confusion, boosts efficiency, and promotes trust in the data. When staff know the system is up-to-date, they’ll rely on it more, leading to better reporting, collaboration, and overall business efficiency.

After learning these benefits, consider using the right inventory management system in Singapore to improve your business management. You can also start by considering the price calculation provided by HashMicro by clicking the banner below.

The Challenges of Inventory Tracking

Inventory tracking is critical to any business, but it’s challenging. From maintaining accurate records to managing stock across multiple locations, companies often face hurdles that can disrupt operations and impact profitability.

Understanding these challenges is the first step toward finding effective solutions that keep your inventory under control and your business running smoothly.

• Time-intensive inventory management: Inventory tracking can take significant time, especially without the right tools. Updating stock levels, locating items, and ensuring accuracy requires constant attention and effort. This time-consuming process can divert resources from critical business activities, impacting productivity.
• Difficulty in item tracking: Managing inventory involves keeping track of numerous items, which can be complicated without a robust system. Items can easily be misplaced, miscounted, or overlooked, leading to discrepancies in inventory records. These challenges can result in stockouts or overstocking, disrupting business operations and customer satisfaction.
• Significant inventories are complex to manage: As your inventory grows, so do the challenges of managing it effectively. More extensive inventories increase the complexity of tracking stock levels, locations, and movements across various channels. Managing a large inventory can quickly become overwhelming without an efficient tracking system, leading to inefficiencies and higher operational costs.

Although several challenges can hinder your business efficiency, you can utilize inventory management software solutions that can support business efficiency, such as those offered by HashMicro. You can also try the free demo provided by this vendor.

Why is Inventory Tracking Essential for Your Business?

Inventory tracking is more than just keeping tabs on your stock—it’s a powerful tool that can drive efficiency and profitability. Without it, businesses risk falling into costly pitfalls like stock discrepancies, lost sales, and wasted resources.

Below are the reasons why having a robust inventory tracking system is crucial to the success of your business:

• Faster error detection: Regularly monitoring your inventory levels allows you to detect anomalies early, whether they signal errors, fluctuations in sales, or unforeseen expenses. Catching these issues promptly enables you to address them before they lead to significant problems.
• Better stock visibility: With inventory tracking, you gain a clear and up-to-date view of your stock across all locations. This enhanced visibility helps you make informed decisions and ensures you always have the right products.
• Avoiding shortages: Tracking inventory helps you avoid running out of essential products. You can reorder items before they run low by monitoring stock levels in real-time, keeping your customers satisfied.
• Better inventory forecasting: Inventory tracking provides valuable data that improves your ability to forecast future demand. Accurate forecasting helps you maintain optimal stock levels, reducing the chances of overstocking or understocking.
• Multiple location tracking: If your business operates in various locations, inventory tracking ensures you control stock levels in each one. This capability allows you to efficiently manage distribution and avoid imbalances across your locations.

Optimize your Inventory Tracking Efficiency with HashMicro’s Inventory Management Solution

HashMicro’s Inventory Management Software is a top choice for businesses in Singapore. It offers a comprehensive solution for efficient inventory tracking and is designed to streamline operations, reduce errors, and enhance overall productivity for companies of all sizes.

To experience the benefits firsthand, you can try HashMicro’s free demo and explore how this software can transform your inventory management process. It’s easy to see the features and understand how this vendor can support your business needs.

In addition to its core capabilities, HashMicro offers advantages like customizable features and seamless integration with third-party systems or other systems such as supply chain management and other valuable tools. These benefits make it a flexible and powerful solution for businesses looking to optimize their inventory management.

HashMicro’s software includes comprehensive features that support business efficiency, such as:

• Stock Forecasting: This feature empowers you to predict future inventory needs, ensuring you always have the right stock levels. It enhances customer satisfaction by making sure products are available exactly when needed.
• Run Rate Reordering Rules: This tool helps you estimate product quantities based on market trends, keeping your warehouse well-prepared. It prevents both overstock and stockouts, ensuring your supply chain runs smoothly.
• Stock Reservations & Reporting: This function ensures that specific products are reserved and available when required, making inventory management more efficient. It helps you avoid delays by managing stock availability effectively.
• Stock Aging Report: This feature monitors the age of your inventory, helping you manage product life cycles wisely. It prevents obsolescence by allowing timely decisions on product sales or phase-outs.
• Integrated with Barcode & QR Code: This tool enhances accuracy in inventory tracking through quick barcode and QR code integration. It speeds up data updates while minimizing errors and keeping your inventory records precise.
• Lot & Serial Number Management: This feature provides detailed tracking using lot and serial numbers for each inventory item. It ensures precise traceability and accurate record-keeping down to the individual product level.
• Multi-UOM (Unit of Measure): This function offers flexibility by allowing you to track and manage inventory in multiple units of measure. It ensures accurate stock control and adapts seamlessly to your business needs.
• Stock Take and Inventory Adjustment Management: This feature makes physical inventory counts straightforward and aligns records with actual stock levels. It keeps your inventory data up-to-date with minimal hassle, ensuring smooth operations.

Conclusion

Inventory tracking is crucial for every company, especially as technology continues to advance, making it easier to manage and optimize stock levels. Leveraging modern tools is essential to stay competitive and ensure smooth operations.

One of the best solutions for inventory management is HashMicro’s Inventory Tracking Software, which offers various features designed to boost business efficiency. Its advanced capabilities make it an ideal choice for companies looking to streamline their inventory processes.

To discover how HashMicro can benefit your business, we invite you to try a free demo and consultation with our professional team. Let us help you find the perfect solution tailored to your business needs in Singapore.

FAQ about Inventory Tracking

• What are the three methods of tracking inventory?

  Various methods can be used for inventory tracking, including barcode tracking, RFID tags, and QR code tracking. Each approach offers its benefits and drawbacks, depending on your business’s specific needs, budget, type, size, and scale. It’s important to select the method that aligns best with your objectives and requirements.

• How to monitor your workplace inventory?

  1. Determine product sourcing and storage strategies
  2. Select a system for tracking inventory data
  3. Develop an internal SKU system
  4. Arrange inventory storage spaces
  5. Use forecasting to plan inventory orders
  6. Implement inventory-receiving procedures
  7. Monitor inventory levels continuously

• How do small businesses keep track of inventory?
  

  Many small businesses continue to use pen and paper for inventory tracking, but popular POS systems like Square, Vend, and Lightspeed provide far more advanced inventory management features. These systems allow businesses to monitor stock levels and streamline the entire inventory process efficiently.

• What is the best way to record inventory?

  1. Set up a simple inventory tracking system: Start by implementing a basic system to monitor your inventory.
  2. Keep records up-to-date: Regularly update your inventory records to ensure accuracy.
  3. Try using QR or barcode tracking: Experiment with QR codes or barcodes for more efficient inventory tracking.
  4. Plan for the future by moving to a cloud-based system: Consider transitioning to a cloud-based system for long-term inventory management.