perpetual inventory system

Inventory management means different things to different people. However, there is one thing most retail operations can agree on, a need to track and maintain inventory.

Tracking and maintaining inventory is becoming ever more important as products become more numerous and the realization that proper inventory management can save a retailer thousands of dollars by reducing the risk of overstocking, shrink and shortages.

Inventory tracking software and inventory management software can make inventory much easier and cost effective for the retailer. After all, retailers want to spend more time engaging their customers and less time performing or paying for manual inventory processes. There are 3 main things to consider when choosing the right inventory software for your operation: the type of inventory to be performed, integration with your point of sale and back office, and compatibility with mobile inventory scanners or hand-held devices.

1) Perpetual or periodic?

There are two types of inventory management software, perpetual inventory system software and periodic inventory system software. Perpetual inventory is a system that when items are sold and purchased, the inventory quantities and availabilities are updated on a continuous basis. This gives you very accurate and up-to-date records of item quantities and allows you to easily reorder and maintain the appropriate amount of product, analyze product movement and identify possible shrink. Maintaining perpetual inventory on all items is the ultimate objective of today’s retailer; however, with the large quantity of ever changing items in a retail store, this becomes a real challenge.

This is where periodic inventory becomes an option. Periodic inventory does not keep an up-to-date record but instead is updated as a retailer sees fit, usually at the end of an accounting period. This option is reliant upon a physical count and is used to get a cost of goods sold for the period. This method is good for retailers with a large quantity of changing products such as produce. The type of inventory tracking software you choose should be based on your business’s individual needs and abilities.

2) Integration to your point of sale and back office

Point of Sale SystemsInventory software integration is very important in minimizing the time and costs associated with inventory tracking. POS integration allows transaction data to automatically flow to your inventory management system. This eliminates the time you would have normally spent transferring transaction data manually from the POS to the inventory software or book and manual data entry into the software or spreadsheet.

Back office integration is also important. Like POS data shows the items you have sold, back office integration will provide you with purchasing and receiving data.

Although most point of sale software now comes with some sort of inventory management features, there are some that are better than others. Look for integrated software that can perform both periodic and perpetual to give you the option of either as business grows and changes. Also look for software that can manage or track inventory across multiple stores and locations, if you have a chain or think you will one day expand.

Some additional features to consider:

  • View sales and inventory information reports
  • Search for items using UPC, vendor code or multiple alternate codes
  • Scan same item in multiple location in the store (multi-count)
  • Do inventory counts in the middle of the day with up to the second inventory updates
  • Do inventory by section (department or vendor)
  • Count inventory using multiple formats (unit, case, weight)
  • Reset all items not counted
  • Adjust inventory for known wastes and shrinks
  • Count inventory over multiple days
  • Re-align inventory on period end (carry over)
  • Quickly flag item as out-of-stock and calculate lost revenue
  • Ability to count back store inventory separately
  • Automatically subtract items available from the back-store from the purchase order
  • Generate a packing slip for back store inventory transfers
  • Put away stock to the back store inventory
  • Pick up stock from the back store inventory


3) Compatibility with mobile devices and hand-helds

inventory scanner Datalogic Falcon X3Mobile and handheld devices can greatly reduce the time spent performing your first or periodic physical count. Scanning can reduce the amount of time and labor required to perform inventory tracking and significantly reduce human error.

Consider a shipment of 10 cases or units; it can take approximately 2 minutes or more to write down the product codes and serial numbers compared to about 10 to 20 seconds to scan the bar codes using a handheld scanner. This can provide drastic savings in time and labor needed to perform inventory, purchasing and receiving. What used to take a large team of people, can be done in less time with a smaller group.

Additional resources:

Recommended Software:

LOC Store Management Suite
Microsoft Dynamics Retail Management System

Recommended Mobile Devices and Handhelds:

Datalogic Memor and Falcon-x3