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Companies commonly refer to inventory management and inventory tracking as the same things. Although they share similar roles, each serves a separate purpose in companies' operational processes.
It's essential to know the difference between these two processes, as knowledge will give you the opportunity to operate more efficiently, save money, and keep track of your inventory accurately.
If you own an online store, warehouse, factory, or a logistics company, it will be helpful to understand what is inventory management and what is inventory tracking.
Definition of Inventory Tracking
Inventory tracking is the practice of keeping track of movement, location, and inventory amounts.
The main purpose of this process is to ensure visibility.
This concept answers questions like:
What amount of products do we have on stock now?
Where does our inventory stay?
How old is our inventory?
Was the item delivered already?
Which storage facility holds that particular item?
Today's inventory tracking tools utilize:
Barcodes
QR Codes
RFID (Radio Frequency Identification)
GPS Tracking Technology
Portable Devices for Scanning
Internet-of-things Technologies
Your e-commerce company gets 500 items but The system provides real-time visibility into inventory movement.
Comparison by Diagrams
Tracking Inventory
Inventory –> Location –> Movement –> Status
Management of Inventory
Inventory –> Tracking –> Forecasting –> Planning –> Optimization –> Profitability
Inventory tracking is a task.
Inventory management is a strategy.
Technological Advances in Current Inventory Practices
Barcode Systems
It is one of the most popular and least expensive ways to manage inventories.
Features of barcode systems include:
Quick scanning
Less human errors
Easily implemented
RFID Technology
Through RFID, inventory can be automatically scanned even if there is no line of sight required.
Features of RFID include:
Quick inventory count
Increased efficiency of warehouse operations
Better inventory visibility
Warehouse Management Systems (WMS)
A WMS is a system that integrates tracking and operation control of the warehouse.
Features of a WMS include:
Receiving
Putaway
Picking
Packing
Shipping
Inventory Management Software
Current software offers:
Forecasting
Reports
Automated inventory re-ordering
Multi-warehouse inventory management
Inventory Tracking Works Fine When:
You have a small amount of inventory
Your inventory volume is small
Your operations are relatively uncomplicated
Your forecasting needs are minimal
It Is Time for Inventory Management When:
You run several locations
Your inventory volume is growing
Your losses due to stock-outs are impacting profits
Demand forecasting is needed
Your inventory costs are increasing
As companies scale up, inventory tracking is increasingly included within an inventory management plan.
Conclusion
Inventory tracking and inventory management are not at odds with each other; they complement one another.
Inventory tracking ensures that you always know which inventory you have and where your items are.
Inventory management uses this valuable knowledge to make more informed purchasing and other decisions.
Given the competitiveness of our times, it is insufficient to just track inventory. Companies that successfully implement inventory tracking along with effective inventory management can cut down their expenses, become more efficient and provide their customers with a better experience.
The best companies in today's business world are not only able to track their inventory but also use this information to optimize their operations.
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