What is a perpetual inventory system?
Using a perpetual inventory system means keeping track of both the cost of goods sold and tools and equipment present in the itinerary. Inventory can be balanced in real time using this method, thus the accounting department has consistent access to accurate stock. For the most part, a perpetual stock framework is based around:
- Received inventory goods
- Sold out inventory stock
- Items relocated within the warehouse
- Goods picked up from inventory for the production process
- Scrapped goods
Apart from keeping track of newly purchased items, the perpetual inventory framework also records checkout tools for various tasks. In some specific cases, the records may begin to vary from real stock records because of undocumented exchanges or burglary. Therefore, it is essential to occasionally compare book records and physical stock and that is where automated inventory software comes into play.
Thanks to automated recordkeeping, perpetual inventory systems produce dependable results if utilized alongside a computer database for recording inventory and bin locations. Employees will find it a lot easier to make changes to a central database which is accessible from anywhere. For example, warehouse workers using barcode scanners to update the movement of stocks can easily update storage points. Similarly, sales representatives at point of sale terminals can also update stock. Then again, this inventory framework loses its efficiency when utilized with manual tracking methods which can be tedious and error-prone.
Advantages of a perpetual inventory system
Equipped with a wide variety of intuitive features, the perpetual inventory system offers the following benefits to users:
- Accurate restocking: Instant reports on stock levels enable you to order replacements ahead of time. It additionally decreases the odds of stockouts and postponements in day by day business activities.
- Records for inconsistencies: Unlike yearly stock balances, perpetual inventory system allows you to complete stock tallies at regular intervals. This assumes a vital role in recognizing deceitful activities. Real-time updates means you can clear up discrepancies in due time.
- Precise financial statements: As stock values are continually changing, an inventory management system which does not update regularly brings about inaccurate profit and loss statements. A perpetual inventory system continually updates your stock and provides you with real time data so your financial statements are always free of discrepancies.
- Generate usage reports: For stock oriented organizations, it is important to oversee stock efficiently as stock build up ties up resources. Utilizing a perpetual inventory system, you can easily identify trends and make sales and reorder plans accordingly.
While this framework can be a worthy inclusion in your business, it still demands some effort towards maintenance for recording stock movements. For this reason, you have to allocate resources towards tracking bin locations throughout all the company sites and warehouses.
Best practices and tips to streamline your inventory
The way to accomplishing a higher ROI on capital speculations is to set up a list of best practices to pursue. Dependent upon business objectives and goals, implementing a set of standards can boost performance as well as productivity. Here are a few hints to help optimize your perpetual inventory system:
Categorize your inventory
With regards to business management, it is essential to sort capital investments according to their value. There are things which get sold out more often than others though some have a higher rate of return. To guarantee streamlined work activities, you can sort your stock as such:
- Bestselling stock which requires consistent reordering and quality surveys.
- Medium worth products which for the most part need reordering once per month.
- Low demand stock with negligible renewal being conveyed in high volumes.
Optimize warehouse placement process
Easy access to the warehouse can accelerate check -in and checkout activities, possibly even leading to increased number of orders. For this, you can sort out your inventory by setting the bestselling inventory nearer to the packing station. Moreover, a mess-free packing station makes for effective and precise conveyances so make sure to return tools to the storage when you are finished working with them. Approve stock tallies by double checking using a barcode or RFID tracking system.
Establish key metrics
The most ideal approach to support business development is to follow a set of KPI’s. This gives you a chance to expand on your qualities and make revisions to your weaknesses. For optimized inventory management, here are the some tips you ought to consistently follow:
- Carrying costs
- Write off and write down
- Rate of turnover
- Cycle duration
- Procurement status and tracking
A perpetual inventory system lets you accumulate information on all of the aforementioned. Such data can be used to create an organized productivity program.
Determine a reorder point formula
Keeping a harmony between stock overload and stock shortage is maybe one of the most significant choices for any organization. Ideally you would use usage statistics to estimate a time allotment for reordering. A few firms do this by setting a minimum threshold for specific stocks so at whatever point this cutoff is reached, purchase requests are made for new stock. Top to bottom examination of your usage trends can be utilized to figure out the threshold.
Reinvigorate turnover rates
Boosting sales isn’t the only way to boost income. Almost certainly, some current stock is pulling down revenue. Neglecting to take into account changing demands can lead organizations to hold out of date stock which ties up assets. To refine your accounts, trying different things with pricing and selling old stock can be good strategies to employ. A perpetual inventory system likewise allows you to estimate client demand to meet variations in patterns. Redistributing merchandise over the stockroom as indicated by where they are required more often can help revive your business processes.
Conclusion: Focused growth for optimal results
Choosing the correct software is the important initial step toward business improvement. Focused growth means setting up vigorous practices and figuring out how to utilize the suitable software. The way to progress lies in efficient capital allocation and HR management. Giving sufficient training to employees and checking work processes is fundamental to accomplishing set goals. Therefore, all software programs let you monitor every day advancement as per allocated assignments. By doing this, you can screen which practices take additional time and what can be done to make them progressively more productive. Pick a cloud-based framework to enable you to reach targets with supercharged features intended to take into account your particular inventory requirements.
Syncoria is a full-service digital agency based in Toronto. Since 2004, our team of local and offshore technology integrators has consistently delivered integrated digital solutions to small and medium B2B businesses across Canada. Odoo is our ready partner, and we have provided custom solutions and system integration services to customers across a wide range of industries including telecommunication, construction, real estate, healthcare, manufacturing, wholesale, e-commerce, and service sectors.
We have the experience of working with large enterprises and small businesses alike. We tailor our solutions to your specific needs and help you achieve your business goals. With the use of the Odoo ERP modules, we provide customized solutions to transform and optimize your business process. Our local team consists of business analysts, solutions architects, project managers, delivery managers, and quality assurance engineers, all of whom are trained experts in Odoo. We ensure we reach successful implementation every time through an iterative and transparent process. For a free assessment, call us at +1 (416) 628-5522, or email us at [email protected]