![]() It is basically the difference between inventory you THINK you have on-hand and the inventory you ACTUALLY have on-hand. ![]() Now inventory shrinkage happens for a number of reasons like damage, theft, loss. Reduce inventory shrinkage- According to a study by National Retail Federation, inventory shrinkage cost about 1.33% of sales in 2017.Imagine how much capital and storage costs you can save by maintaining only the required amount of inventory! Saving inventory and storage costs- since you’ll always be up-to-date with inventory count, you won’t have to stock more than required assuming sales will be higher.This way, perpetual inventory system helps you avoid over-stocking as well stock-outs since you’ll be alert when products need restocking. Preventing stock-outs or overstocking– obviously, with greater inventory control, you’ll always be aware of the status of your inventory, helping you decide how much or how little you need.Tighter inventory control– continuous monitoring enables businesses to have a firm hold over their inventory, knowing exactly what comes in and what goes.Now let’s take a look at the pros and cons of perpetual inventory systems vs periodic inventory system. In the perpetual inventory system, purchases and returns are also recorded automatically in the inventory count.Ī differentiating factor of perpetual inventory system is that it utilizes digital technology, an inventory management software, to track inventory in real-time. In this approach, warehouse managers keep a continuous track of inventory balances, meaning inventory is updated automatically every time an item is received or sold through every point of sale. The perpetual inventory system, as the name suggests, tracks inventory ‘perpetually’ as it moves throughout the supply chain. While both inventory systems have their virtues and vices, before deciding which one to choose, you need to be armed with everything you can know about them. Remember, your inventory system will depend on certain criteria. And once they figure that out, they face a dilemma of whether they should adopt a perpetual inventory system vs periodic inventory system. Most businesses don’t exactly know whether they need an inventory system to manage their stock. ![]() In order to make the most out of your inventory, you need to make sure of adopting the right approach toward inventory management. ![]() Your inventory is your biggest asset and your biggest liability (if you can’t manage it properly). Around 46% of small businesses in the United States don’t track inventory or use a manual method. ![]()
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