What Is A Perpetual Inventory System, And How Does It Help Your Business Grow

Inventory Management
Supply Chain Optimization
Data Analytics
Cost Reduction
Customer Experience

Table of Contents

Are you hearing the term perpetual inventory for the first time and feeling perplexed? Well, let's get straight into that topic.

What Is A Perpetual Inventory System?

A perpetual inventory system simply means keeping track of your inventory in real-time. But what does this mean for your business?

To meet customer demand, you must have inventory in stock when receiving the order. Only then would you be able to dispatch it on time and ensure customer satisfaction.

However, stocking up on inventory just because you anticipate an order will only get your account charged with more overtime storage. With a perpetual inventory system, you will have real-time access to whatever is in your warehouses, and you can manage customer expectations accordingly. No overpromising, just you being transparent with your customer about how long the process will take. It is much better than giving them false hopes.

The perpetual inventory system tracks the stock and sale of every product (or whatever you have managed to bring under the system's radar). So, the transaction is immediately noted whenever an order or a sale happens.

How Does Perpetual Inventory System Help Your Business Grow?

  1. It helps you get an idea of the actual status of your inventory

    The perpetual inventory system gives you accurate readings of whatever is in stock. You can also track all the products and their raw-materials-to-sales-time and accurately let the customer know the processing time duration.

    Further, as the system is updated as soon as any stock entry or sales are made, your readings will always be on-point, and this helps you arrange stock or even produce which products are having a good movement among the customers.

  2. It helps you maintain a reliable digital paper trail

    Every transaction that happens is automatically recorded in the system. The benefit? It leaves a clear paper trail so that you don't have to search for breadcrumbs to see where your product goes and what items are restocked at any given moment.

  3. Decrease your inventory management cost

    With real-time updates, you can decrease inventory stocking and replenishment costs. And what are these?

    Inventory stocking cost refers to the storage cost you pay for stocking your inventory. If the warehouse is your own, that cost is the space you sacrifice to keep certain inventory stocks.

    As for the replenishment costs, it's the entire cost incurred for restocking an item and includes the logistics cost involved in procuring the same.

    When you have real-time inventory data, you get an idea of which products are on the move and which aren't. This way, you get an idea of what to replenish and what not to. When the product leaves the storage facility as soon as it arrives, the demand is at an all-time high, and it's time for you to restock it asap. You could also contact multiple suppliers to ensure your products always stay in stock.

  4. Calculate your end-of-year inventory with ease

    Every year-end is a dreadful time for e-commerce businesses as the inventory estimation takes many hours to complete and requires many rectifications to ensure you are right to the T. But with a perpetual inventory management system, every inventory detail and transaction is updated on time, allowing you to calculate the end-of-year inventory easily.


To Sum Up

Switching to a perpetual inventory system will help you upscale your business. Not only is every transaction recorded with accuracy, but you can always know what happens at your storage facility and how well your business is running. With this automation, you get a lot of time to strategize and expand. It's a win-win for you as well as your business.


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