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Inventory Tracking System: The What’s and Why’s covered in the Latest Guide of 2020


The flow of content:

What is Inventory Tracking System
What is Inventory Tracking and Example
Why is an Inventory Tracking System Important?
What are the Types of Inventory Tracking System?
Inventory Tracking System and its Use in the Supply Chain



Companies have a continuous inflow and outflow of inventories. The orders keep rolling in and the business cycle keeps working with inventories being stocked up in the warehouse, sold to customers, and again refill the inventory for future orders. While this cycle keeps repeating itself, imagine, completely and utterly forgetting about refilling your inventory.! Imagine, a customer has ordered a product with a promise of 2-day delivery, but, to your surprise, the inventory is not updated and the product is not in your warehouse.! What happens to your customer experience and customer satisfaction. What will you do if your customer is disappointed because you promised them 2-day delivery but cannot deliver because your inventories are not properly tracked? This is why inventory tracking systems are so crucial to the business and also to the supply chain management.


What is Inventory Tracking System

What is Inventory Tracking System

Inventory Tracking System is a tool that allows you to track your inventory and maintain inventory related discipline in your supply chain management system. It keeps a constant lookout at your inventory levels and alerts you when they drop below the threshold point. While using an Inventory Tracking System, you can be assured that the system will also always show real-time inventory levels, maintain transparency and accuracy while tracking the inventories. This way, you can have better control over your inventory and chances of mis-delivering or late deliveries reduces exponentially. 


What is Inventory Tracking and Example

So, while we have discussed the Inventory Tracking System, we need to know the Inventory Tracking and Inventory Tracking System are two different terms. You see, Inventory Tracking is when you have continuous inventory checks and data. In other words, knowing your inventory levels in real- time, the exact count of inventory, location, name of the warehouse, and other important information. While, Inventory Tracking System is the method or the software or the system which makes this entire process possible.

What is Inventory Tracking and Example

Let’s assume, Set Pants and GoOffice are in the business of selling formal attire clothing in town. They both have been two strong-headed competitors. Now,

Set Pants have their inventory of 182 formal pants, 224 formal shirts, and 200 office blazers sorted out, counted, and noted for future reference. Also, they are rightly aware which warehouse has got what stock. Thus, they know, their inventory levels to the point and this way they are always in tune with the sales, and shortage of any stock.

On the other hand, GoOffice has a rough idea of their blazers, format shirts, and format pants. They don’t have a specific count, but are aware they have some amount of stocks available. When they run out of stock, they will order more, which is what they believe in. 

So, I want to ask you. Who do you think is doing a better job? Who do you think is going to have trouble in future with their stock? GoOffice or Set Pants? 


Why is an Inventory Tracking System Important?

So, when we see the above example, it is clear that only one of the companies is going to survive in the long run. Well, that is an obvious conclusion as that company is very clear on their stock levels and inventory counts. Thus, to sum it up, an Inventory Tracking System is required to:

1. Store Inventory-Related Data Under One Interface

When you have a huge amount of inventory, you are bound to make mistakes. Well, that is human nature. That is why it is wise to involve technology. With all the data under one platform, viewing inventory levels across all your SKUs and locations becomes easier and hassle-free.

2. Keeps Accurate Records of Stocks

The data that is captured by an Inventory Tracking System consists of accuracy. That is the reason, many companies rely on it. It has been recorded that 46% of companies do not track their inventories or don’t have an automated inventory tracking system, which inadvertently affects the supply chain management. Also, nearly 18% of the SMBs make complete utilization of the inventory management system. Thus, again adversely affecting the supply chain management. This way, with the help of an Inventory Tracking System, stock count and stock accuracy is always maintained.

3. Provide Real-Time Inventory Level Count

Inventory Tracking System tracks inventory to the last available product. Also, it continuously tracks the inflow and outflow of inventory. This way, the inventory tracking system can provide you with real-time information and updates about the inventory levels. Also, it continuously registers the orders, sales, returns, and minimum or low stock of any SKU.

4. Notify When the Stock Levels are Running Low

Stock Levels are Running Low

As discussed above, the Inventory Tracking System provides real-time information about inventory, including low stocks. For eg.:

GoOffice is running low on stock. They hardly have 15 pieces of formal trousers left in their warehouse. But, as GoOffice does not use an Inventory Tracking System, they will not be aware once they are stocked out entirely. Furthermore, this will hinder with their customer experience and delay in delivering the orders. On the other hand,

Set Pants has been using an Inventory Tracking System, so when they are running low on stock, the system notifies them beforehand. Set Pants can set their desired minimum threshold value (for eng. Notify when the stock reaches 15 Pcs’ This way, they can order new stock well in advance and thus, never run out stock or spoil the customer experience.

5.Track Stock Levels of Multiple Warehouses and Locations 

With large companies keeping track of stock becomes all the more difficult. With multiple warehouses and multiple locations, the manual count of stocks is definitely difficult and mostly impossible to keep track. In such situations, an Inventory Tracking System makes the task easier and records every stock of every SKU of multiple warehouses and locations.

6. Saves you from Discrepancies in the Stock Levels

While doing manual stock counts, chances of discrepancies are bound to happen. It may also be a chance of repetitive calculations or miscalculations. Either way, mistakes are bound to happen resulting in discrepancies. Of course, the chances of discrepancies are less or next to nil in case of less inventory, but for large inventories, it is wise to use a proper Inventory Tracking System. It avoids miscalculation.


What are the Types of Inventory Tracking System?

Inventory Tracking System can be largely divided into two types:

1. Manual Inventory Tracking System

Manual Inventory Tracking System


A manual inventory system is as simple as the name suggests. In this case, the company calculates the inventory physically without the use of technology. This kind of system is generally used by small size companies where the inventory levels are limited or the inventory is easier to calculate. This kind of inventory system is used by small to medium retail stores, grocery stores, or clothing stores or any such shop where the inflow and outflow of inventory is traceable. 

2. Automated Inventory Tracking System

Automated Inventory Tracking System


An automated inventory system is when the inventory is traced with the help of technology. With the vast improvement in technology, the tracking system has also improved. From paper and pen, companies have reached to computerized inventory tracking systems. In this case, all the incoming and outgoing inventory is recorded through scanners and automatically updates the inventory tracking system. Each transaction is recorded immediately and thus, avoids any human error that is caused by using the manual inventory system.

While talking about the automated Inventory Tracking System, companies mainly use:

a. Barcodes



Barcodes are really popular in the retail industry. Many grocery stores, supermarkets, mobile stores, or any other retail store is using barcode scanners to their advantage. The barcode scans the products and can retrieve the entire information about that particular product. This information includes number of items sold, number of items kept in stock, information on low stock (if any), price, and description. This way, the retailer is able to make future decisions in a timely manner.




Another popular method of tracking inventory is via RFID tags. RFID tags are mainly used in the shipping and logistics industry. With the help of RFID tags, the company can keep track of the goods through the entire supply chain. RFID tags are very firm and the quality is too strong. It is hard to wash away even in adverse weather conditions. That is one of the reasons, shipping industries and logistics use the RFID tags. On the other hand, if Barcodes get erased even a little, scanning the product becomes difficult. 


Inventory Tracking System and its Use in the Supply Chain

As we previously mentioned, the inventory tracking system has a lot of benefits. We also said it is useful in supply chain management. Now as a company, what are your main worries? 

  1. Keeping your customer happy
  2. Knowing your supplier sends stock within time
  3. Track your damaged or returned goods

Inventory Tracking System takes care of all your problems.! Let us understand how an inventory tracking system helps the supply chain.

1. Tracks the Goods while Delivering to the Customer

Tracks the Goods while Delivering to the Customer


The entire supply chain management system is about receiving goods on time and ensuring that they reach the customers on time. The customer is the final destination in the supply chain management circle. Thus, when a company receives an order from a customer, they rush towards making timely deliveries and so they need to track the order as well. For eg.:

GoOffice received an order for 2 formal pants and 2 shirts. They quickly dispatched the goods from the warehouse but they also need to make sure the customer receives them in time. During the supply chain process, the company can track the goods with the help of a tracking number and easily view each and every step of the process until the product delivery. 

2. Track the Goods from their Supplier

Track the Goods from their Supplier


When a company receives an order, it is the most important and rejoicing part of the company’s success. But imagine the disappointment, when you realize that particular order is not in stock. The supplier has not delivered it yet.! It is a huge setback for the company. Inventory Tracking System helps keep track of the goods ordered from the supplier. During the supply chain, when the company places an order with the supplier, the company can track the goods on every step of the process. This way, they can alter the delivery dates of that particular product for their customers. Well, it is always better to keep your customer informed regarding the delivery schedule. It builds trust.!

3. Track the Returned or Damaged Goods

The Ecommerce industry has the highest return rate due to any given reason. It may be because the customer did not receive the product as expected, or the quality was not that great, or it was a damaged good. But the good thing is, the inventory tracking system tracks every product that is returned and you can feed the reason of return. This way, the company warehouse knows exactly why the product is returned and thus, they won’t resend the same to any other customer. Also, they can send this product back to the supplier for an exchange or to run diagnostics.

Either way, an Inventory Tracking System sure can help the supply chain management by keeping a constant watch over the inventory and knowing every detail in the step-by-step process.



An Inventory Tracking System is a small part in the Inventory Management Process. But, it surely is an integral part of the process. It covers and tracks everything from the manufacturing of product to the doorstep delivery of the product. This way, the company is able to make further improvements and future decisions based on the performance of every product, well, again by tracking the product’s movement. Orderhive is one such solution to your inventory problems. With the right knowledge and multiple enhancements, Orderhive has helped many companies achieve their inventory goals.



Learn more about Inventory Tracking
Know about Inventory Management and how to control inventory
Statistics about Supply Chain and Inventory Tracking a part of it

Ankita Bora

Ankita Bora

I write to express and believe that words are powerful. Long drives and traveling are my weekend goals. I write poems when I am happy and enjoy a solo outing. My mind works best when I am by myself at a cafe with a tall glass of cold coffee and sandwiches. I dance in the rain and heat never bothers me. For me, winters are the worst! I laugh when I cry and bring a smile to everyone close to me. Content Writer at Orderhive, I present knowledge on technical aspects on weekdays and on weekends I write for myself.

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