Inventory tracking and control is a key element of operating a successful business. Carrying too much inventory ties up capital that otherwise could be used to invest in your business or to pay bills. Too little inventory can mean you do not have enough products to sell and you lose revenue. In order to keep just the right amount of inventory on hand, you need a system that will let you track your inventory.
Bar Codes
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In a bar code, or Universal Product Code (UPC) system, every item carries a label that gives information about the item, such as what it is, where it is located and what price it sells for. The code can be scanned with a hand-held bar code reader. Items are scanned at the cash register, as they are sold, and also in the warehouse. Computer programs then analyze the scans and tell you exactly how many items you have sold and how many you still have in the warehouse. This allows you to keep track of sales as well as the number of items you have on hand.
Stock Book
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Small businesses often use a stock book, or log book, to keep track of inventory. The number of inventory items is listed in one column in the book, and sales are written in another column. This allows managers to keep track of how many items have been sold. This can also be done on computer. This system may work well when the business involves only one person, or when there are only a few different types of items to sell, but as the business grows, the stock book method can become sloppy. If employees get busy and forget to note items that were sold, you could suddenly find yourself with very low inventory. This method also does not allow you to analyze sales patterns and forecast when you will need to order new items.
Radio Tags
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Radio frequency identification (RFID) tags each inventory item with a plastic tag containing a programmable microchip and a small antenna. The tags can contain a great deal of information about each item and can be read by hand-held readers. While radio tags are more expensive than bar codes, they also have several advantages over bar code systems. The tags can be read remotely, an entire pallet of tagged goods can be read at once and the information on the tags can be updated as the items are moved from one area to another. The tags can also be set to trigger an alarm when the item leaves the store -- preventing theft of tagged goods.
Kanban
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Kanban is a Japanese word meaning “billboard” or “sign." This system for inventory tracking is most commonly used by stores, such as grocery stores, where items for sale are placed on a display shelf in the store. When a customer or sales person removes the final item on the shelf, a card is uncovered. This card gives the location in the storeroom where more items can be found. When the items in the storeroom are down to a certain point, such as 10 items left, another card is uncovered indicating how to order more goods from the supplier. This is a simple system, but it may not be useful for analyzing sales patterns and works best when there is stable and even demand from customers.
