What is Inventory?
What is inventory?
Inventory is generally made up of some combination of items you have purchased to sell and resources you have purchased to convert into finished goods. Inventory represents one of the largest costs for your business – most businesses spend between 45 and 80% of their total expenses on inventory and storage costs. Because inventory is such a large part of the expenses for most businesses, many cost saving measures are focused on this part of the business. An inventory management system is one common way to cut costs and save employee labor for more important tasks.
How does inventory tracking work, and what are the benefits?
An inventory management system allows you to keep a record of incoming and outgoing inventory quickly and easily, to ensure that you know how much of each item you have available. With a well-designed inventory management system, you will have the advantage of being able to automatically re-order product, get notifications when stock is low, and easily track how much inventory goes missing each year. Without a solid inventory management system, you risk losing large quantities of inventory every year, building up expenses without seeing any revenue to offset the costs.
What are the parts of an inventory system?
The most basic inventory management system consists of software which tracks incoming and outgoing inventory, a barcode printer to label inventory, and scanners to read the barcodes and labels and automatically update the inventory management system.