What is Inventory?
Inventory is an important process in a business. It is defined as the full amount of goods or materials housed in a factory, store or warehouse at any particular time. Inventory plays a vital role in helping a business monitor their stock levels. It helps business owners to determine if there is a need to place new orders or control discovered losses. It is necessary, especially for factories to determine if their stock can cover the orders of customers. Businesses heavily rely on inventory count as to have a continuous flow of operation.
Inventory may interchangeably used in the actual counting of goods/stocks and the aggregate amount of stocks/goods. Depending on the company, schedule of inventory varies. There are companies that perform regular inventory count. Some do the counting at random and some schedules specific time of the year. There are companies performing annual, semi-annual, quarterly count or all for inventory schedule.
Inventory will not always be accurate. There will be times that a company may experience shortages or overages. Such discrepancies are often associated with theft. However, at some point such discrepancies are often cause by erroneous practices in accounting. Sometimes, errors in data input are causing such discrepancies, so it is very important that stock keepers must be accurate in entering or providing transaction data.
There are common practices used by companies to help them with their inventory count. Tally sheets are used when performing actual inventory. However, to maintain real-time record, some companies use bin cards or stock cards. Such cards are regularly updated in real-time. This means that each transaction must be immediately recorded to the bin or stock cards. The advantage of using such cards is that the stock keeper will have an immediate reference for the stock count. The cards also help the stock keeper to readily have a reference when performing spot-checking.
On the other hand, some large companies do not use bin or stock cards as newer technologies are being offered in the market. Large companies use inventory systems to keep track of their daily transactions. Computers are now being used as a tool for inventory. Inventory systems updates all transactions in real-time without the old-fashioned bin cards. The advantage of using such inventory system is that there will be no numerous bin cards to maintain and update.
Some larger companies also utilize the bar code technology. This helps inventory count more accurate and quick. A bar code reader is used during the inventory period. Moreover, bar code readers are also used real-time at each transaction. Issuance and receiving of stocks are recorded in real-time using the bar code reader. With the bar code reader, stock keeper will no longer input transaction data in the inventory system manually.
Inventory is a process, which every company, big or small, cannot operate without. Maybe a company may operate without this inventory thing. However, in the long run, that company may end up in loss. Depending on what type of business you are in, it is always important to study which inventory techniques and processes will adapt well with your company.