Efficient inventory management is a crucial aspect of running a successful business, and the perpetual inventory system offers a comprehensive solution to keep track of stock levels. In this blog post, we delve into the concept of the perpetual inventory system and explore how Viindoo Software can revolutionize the way you manage your warehouse inventory.
Perpetual Inventory System: The Definition
The perpetual inventory system is a method of tracking inventory levels in real-time. It involves continuously updating inventory records for each transaction, whether it is a sale, purchase, or return. This system uses technology such as barcode scanners, RFID tags, and inventory management software to keep track of inventory levels. With the perpetual inventory system, businesses can have a more accurate view of their inventory levels, allowing them to make informed decisions about restocking, pricing, and sales strategies.
Perpetual inventory system in Viindoo
Pros and Cons of Perpetual Inventory System
Pros of Perpetual Inventory System
- Real-time Tracking: Gain real-time visibility of inventory levels, eliminating the need for physical counts and providing accurate stock information at any moment.
- Improved Inventory Accuracy: Continuously updated inventory records ensure accurate stock levels, preventing stockouts or overstocking and optimizing inventory management.
- Cost Savings: Avoid unnecessary expenses by maintaining optimal inventory levels, reducing storage costs, and minimizing the risk of spoilage or lost sales.
- Better Inventory Management: Make informed decisions based on real-time tracking and accurate data. Identify slow-moving items, take necessary actions, and optimize warehouse space for increased revenue.
- Enhanced Customer Service: Fulfill customer orders efficiently with an accurate view of stock levels, leading to faster delivery times and improved customer satisfaction.
- Preparation of Financial Statements: Streamline the preparation of financial reports with inventory value automatically recorded in the system, minimizing manual calculations and potential errors.
Cons of Perpetual Inventory System
- Cost: Implementation of a perpetual inventory system can be expensive, especially for small businesses, due to the need for technology such as barcode scanners, RFID tags, and inventory management software.
- Technology Dependence: The perpetual inventory system heavily relies on technology, making the system vulnerable to technical issues that can disrupt operations and lead to inaccurate inventory data.
- Loss of Stock: Damage, spoilage, theft, and other factors can result in discrepancies between estimated perpetual inventory and physical inventory, causing losses.
- Improper Inventory Tracking: Scanning errors, product misplacement, software malfunctions, and employee errors can decrease the efficiency of a perpetual inventory system, hindering accurate tracking of goods and inventory.
- Hacking: The reliance on computer systems exposes this system to cybersecurity risks, necessitating costly measures to safeguard data and information.
- Need for Physical Inventory: physical inventories are still necessary, typically on an annual basis, to ensure accuracy and reconcile any discrepancies.
Pros and Cons of Perpetual Inventory System
Key Differences Between Periodic and Perpetual Inventory System
The periodic inventory system is another method of tracking inventory levels, but it differs from the perpetual inventory system in several ways. Let's explore the key differences between these two systems.
Method of Tracking Inventory
The primary difference between the two systems is the method of tracking inventory. In the periodic inventory system, inventory levels are only updated at specific intervals, such as at the end of each month or quarter. This means that businesses do not have real-time visibility of their inventory levels. On the other hand, the perpetual inventory system continuously updates inventory records, providing businesses with real-time tracking of inventory levels.
Cost of Goods Sold (COGS) Calculation
In the periodic inventory system, the cost of goods sold is calculated at the end of each accounting period by taking into account the beginning inventory, purchases, and ending inventory. This means that businesses do not have an accurate view of COGS until the end of the period. In contrast, the perpetual inventory system calculates COGS for each transaction, providing businesses with a more accurate view of their profitability.
Inventory Counting
The periodic inventory system requires businesses to conduct physical inventory counts at specific intervals to update inventory records. This can be time-consuming and prone to human error. On the other hand, the perpetual inventory system eliminates the need for physical inventory counts as inventory levels are continuously updated in real-time.
Perpetual Inventory System with Viindoo: Streamlining Warehouse Management
Viindoo software is a comprehensive warehouse management solution that helps businesses optimize their warehouse management process. Viindoo allows businesses to operate a perpetual inventory system or a periodic inventory system in parallel or independently within the same overall solution.
Below, let's see how Viindoo meets the requirements of this system.
Creating a Simple Perpetual Inventory System with Just 1 Setup Step
With Viindoo software, to initiate perpetual inventory system, users can activate the Automated Inventory Valuation method on product category.
Activate system in one step
Subsequently, whenever a business engages in buying or selling with warehouse operations, the system will automatically update the quantities of incoming, outgoing, and on-hand inventory. You can access this information anytime, anywhere through the system.
Automated Receipts and delivery orders with Viindoo
>>>> Note:
When performing this process manually or using separate standalone software, each activity requires additional manual entries for inventory receipt or inventory delivery, which often result in frequent issues such as incorrect information, delayed information, and missing data.
Unlocking the Benefits of the Viindoo Solution for Your Business
Viindoo Software features allow integrating barcode scanners, automating the data entry process to help businesses save time, reduce the risk of human errors, and ensure more accurate inventory data. At the same time, it meets the real-time inventory tracking characteristics of this method.
Inventory Reporting and Analytics: Viindoo software offers reporting and analytics features that provide businesses with insights into their inventory levels, sales trends, and profitability. This allows businesses to make informed decisions about inventory management and pricing strategies.
Prepare Financial Reports: Streamline financial reporting by automatically recording inventory values in the system, minimizing manual calculations and potential errors. Reports can be provided at any time, without the limitations of a periodic inventory system.
Viindoo solution provides timely and accurate reports
Integration with Other Systems: Viindoo software can be integrated with other systems such as e-commerce platforms, and shipping solutions. This streamlines the warehouse management process and improves overall efficiency.
Data Security: Viindoo Software prioritizes data security and implements robust cybersecurity measures to protect sensitive inventory information from potential threats and hacking attempts. This ensures the integrity and confidentiality of inventory data within the perpetual inventory system.
Who Uses Viindoo Perpetual Inventory System?
- Retailers
- Manufacturing Companies
- Wholesale Distributors
- E-commerce Businesses
- Logistics and Supply Chain Companies
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Service-Based Businesses
Discover Viindoo Inventory Software
The All-in-one Inventory Software for SMEs. Automate your inventory process leading to increased efficiency, accuracy, and ultimately, cost savings.
The perpetual inventory system is a method of tracking inventory levels in real-time, continuously updating inventory records for each transaction. It offers businesses accurate and up-to-date visibility of their stock levels.
Viindoo Software offers a comprehensive warehouse management solution that supports the perpetual inventory system. It provides features such as real-time tracking, reporting, integration with other systems, and data security, helping businesses optimize their inventory management process.
Using the perpetual inventory system with Viindoo Software offers benefits such as real-time visibility of inventory levels, improved accuracy in stock management, cost savings through optimal inventory levels, better decision-making based on accurate data, enhanced customer service, and streamlined financial reporting.
The key differences between the perpetual and periodic inventory systems lie in the method of tracking inventory, calculation of cost of goods sold (COGS), and the need for physical inventory counting. The perpetual inventory system provides real-time tracking, calculates COGS for each transaction, and eliminates the need for physical inventory counts.
Retailers, manufacturing companies, wholesale distributors, e-commerce businesses, logistics and supply chain companies, as well as service-based businesses can benefit from using the perpetual inventory system with Viindoo Software. It is a versatile solution suitable for various industries.
Conclusion
Viindoo Software is a comprehensive warehouse management solution that supports the perpetual inventory system. It provides real-time tracking, reporting, integration, and data security, helping businesses enhance inventory control, improve customer service, and optimize profitability.
