Choosing the Right Inventory Tracking Process

Inventory Tracking Process Overview

The right inventory tracking process can help make your business more profitable and makes things easier on you and your employees. A good inventory tracking process can feed your inventory tracking system and show which merchandise is in stock, what is on order, when it will arrive and what you've sold. You will be able to plan purchases intelligently and quickly recognize the fast-moving items you need to reorder and the slow-moving items you should mark down or specially promote. Even with the best inventory tracking system in world, it is only as good as the quality of the information that is put into it. This is accomplished by mastering the inventory tracking process.

You can create your own inventory tracking process or get a professional to set one up for you. Processes vary according to the amount of inventory displayed, the amount of backup stock required, the diversity of merchandise and the number of items that are routinely reordered as well as new items or one-time purchases

Many retailers are inventory tracking using a manual tagging system, which can be updated daily, weekly or even monthly. In a manual tag system, you remove price tags from the product at the point of purchase. Then you cross-check the tags against physical inventory to figure out what you have sold.

For instance, a hardware store retailer could use a tag system for inventory tracking to produce a monthly chart showing sales according to product line, brand name and department. On the top of the chart, he would list the various product lines (hammers, power tools, fasteners), and down the left margin, the various brand names and different styles. At the crossing squares down the column, he would mark how many of each brand were sold, in what style and color, whether the shoes were on sale or discounted, and any other relevant information. This would provide the basic information needed for inventory tracking.

The Dollar Control Process

This shows the cost and gross profit margin on individual inventory items. A basic method of dollar control inventory tracking begins at the cash register with sales receipts listing the product, quantity sold and price. You can compare sales receipts with delivery receipts to determine your gross profit margin on a given item. You can also use software programs to do inventory tracking by type, cost, volume and profit.

The Unit Control Process

These use methods ranging from simply eyeballing shelves to using sophisticated bin tickets-tiny cards kept with each type of product that list a stock number, description, maximum and minimum quantities stocked, cost (in code), selling price and any other information you want to include in your inventory tracking. Bin tickets correspond to office file cards that list a 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 practical-once a year at the minimum. Sometimes a store owner will assign each employee responsibility for doing inventory tracking of a certain group of items or, if the store is large enough, hire stock personnel just to organize and count stock.