What is Inventory Tracking? Definition, Usage, Need Zoho Inventory

Inventory tracking refers to the processes involved in accounting for every piece of inventory being held in a storage space for the entire time that it is there. Inventory tracking gives you better visibility of your products, helps you forecast your future demand, and can even help you weed out errors before they become potentially bigger issues. It’s safe to say inventory tracking would be a lot easier if your products simply stayed put within a single warehouse; unfortunately, that scenario doesn’t make for a very successful ecommerce business. The reality is, multichannel selling and distribution is the optimal path toward profitability and sustained growth for any type of brand or industry. When you partner with a 3PL, you can automate your entire ecommerce fulfillment process.

• Software that scales as needed via plan upgrades or feature add-ons is key to uninterrupted growth.
• Each method has its advantages and disadvantages, depending on the needs, budget, type, size, and scale of your business.
• Katana provides 24/7 phone support via chat and email with a one- to two-hour average response time, plus complete online knowledge base.
• The best way to track inventory is with inventory software tools that help you effectively manage inventory levels, orders, sales, and deliveries.

This method involves using a computer program like Microsoft Excel to record and update inventory data. Today’s consumers expect personalised services and fast, accurate delivery of products from businesses. Another option for those who don’t enjoy tedious spreadsheets is using inventory apps. There may be some limitations since they’re more of a boilerplate product than a tailored solution. Just because a product leaves the warehouse, there’s no guarantee that it’s gone for good. As such, it’s crucial that you account for any returned products, whether they’re immediately put back into your warehouse or sent elsewhere for examination.

Why Is Inventory Management Important?

If you continue to manually track inventory or complete inventory counts by hand, know that this practice inevitably eats up critical time and resources you could be devoting somewhere else. Even after a customer has completed checkout and their order has left your warehouse, there’s no guarantee that product is gone for good. Although returns are an unavoidable part of the ecommerce landscape, that doesn’t make them any less difficult to deal with. And yet, it’s crucial you take care of returns in a timely, thoughtful manner that translates to customer satisfaction and accuracy among your inventory counts. Keeping a close eye on your inventory also deters loss and theft, which can easily add up if you’re not in control of your inventory management.

You’ll need to periodically enter and adjust information in all the tabs for optimal inventory tracking. But the formulas will pull data between tabs, helping to automate the actual tracking process as much as possible. Putting a system in place to track inventory (whether manual or automated) is therefore imperative for ecommerce brands wanting to scale successfully. But it becomes more and more complex as further sales channels and/or warehouses get added to a retail operation.

A Detailed Guide to eCommerce Accounting

Zoho offers feature-packed inventory management software at pricing that’s hard to beat for startups and growing businesses. Zoho’s end-to-end order management, inventory tracking and shipping tools support all types of shipping-based businesses. Even product bundling and kitting functions, which Zoho calls “composite items,” are available in the free version. This is a key feature for any business selling custom, made-per-order or subscription box items. By adding inventory data to items within FreshBooks, you automate the process when going to create an invoice. This is really helpful if your business has multiple locations or sales channels, where one location may have sold the last of an item.

• Many small businesses start out by manually tracking inventory using spreadsheets.
• With time, collecting data about your stock, inventory movements, and sales at different times in a year will gather enough information for your system to be able to predict your demand.
• Instead, you’re better off using an inventory management system that can simplify this process and make sure customers are refunded (and items are re-accounted for) within the shortest window.
• Card systems are one of the older methods of inventory tracking that consisted of manually writing down every transaction from the point of sale on what was known as a cardex.
• If the packaging or container is a part of the manufactured product, then you should include your packaging as part of your inventory costs.

Yet a lot of smaller firms and business owners still neglect inventory control, and this can cause major problems. This leads to inventory shrinkage, which according to a study cost US retailers $61.7bn in 2020. Some companies deploy barcode scanners so that orders are tracked as they go, whether they’re what is inventory tracking being paid for at a checkout or dispatched directly to customers from a warehouse. As you scale your business and add more stock-keeping units, managing inventory may consume more time, money, and resources. In that case, businesses may have to spend a greater part of their time managing inventories.