{"id":10711,"date":"2026-10-19T12:13:04","date_gmt":"2026-10-19T12:13:04","guid":{"rendered":"https:\/\/margbooks.com\/blogs\/?p=10711"},"modified":"2026-10-19T12:19:38","modified_gmt":"2026-10-19T12:19:38","slug":"what-is-inventory-tracking","status":"publish","type":"post","link":"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/","title":{"rendered":"What Is Inventory Tracking and How Does It Work?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_69_1 ez-toc-wrap-left counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #1c6e70;color:#1c6e70\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #1c6e70;color:#1c6e70\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#What_is_Inventory_tracking\" title=\"What is Inventory tracking?\">What is Inventory tracking?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Why_it_matters_more_than_most_people_think\" title=\"Why it matters more than most people think\">Why it matters more than most people think<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Cash_flow\" title=\"Cash flow\">Cash flow<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Fewer_surprises\" title=\"Fewer surprises\">Fewer surprises<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Better_decisions\" title=\"Better decisions\">Better decisions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Better_accuracy\" title=\"Better accuracy\">Better accuracy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Happy_customers\" title=\"Happy customers\">Happy customers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Ready_to_stop_guessing_whats_in_stock\" title=\"Ready to stop guessing what\u2019s in stock?\">Ready to stop guessing what\u2019s in stock?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#How_inventory_tracking_actually_works\" title=\"How inventory tracking actually works\">How inventory tracking actually works<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Inventory_Tracking_Methods_and_Technologies\" title=\"Inventory Tracking Methods and Technologies&nbsp;\">Inventory Tracking Methods and Technologies&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Using_pen_and_paper_or_spreadsheets\" title=\"Using pen and paper or spreadsheets.\">Using pen and paper or spreadsheets.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Barcoding\" title=\"Barcoding\">Barcoding<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#QR_codes\" title=\"QR codes\">QR codes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#RFID\" title=\"RFID\">RFID<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#GPS_Tracking_and_IoT_Sensors\" title=\"GPS Tracking and IoT Sensors.\">GPS Tracking and IoT Sensors.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Inventory_Management_Software\" title=\"Inventory Management Software\">Inventory Management Software<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Common_Inventory_Valuation_and_Tracking_Systems\" title=\"Common Inventory Valuation and Tracking Systems&nbsp;\">Common Inventory Valuation and Tracking Systems&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Perpetual_vs_periodic\" title=\"Perpetual vs. periodic\">Perpetual vs. periodic<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#FIFO_LIFO_and_weighted_average\" title=\"FIFO, LIFO, and weighted average\">FIFO, LIFO, and weighted average<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Batch_lot_and_serial_tracking\" title=\"Batch, lot, and serial tracking\">Batch, lot, and serial tracking<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#ABC_analysis\" title=\"ABC analysis\">ABC analysis<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#See_it_work_with_your_own_products\" title=\"See it work with your own products\">See it work with your own products<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Key_Inventory_Metrics_to_Track\" title=\"Key Inventory Metrics to Track&nbsp;\">Key Inventory Metrics to Track&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Key_Features_to_Look_for_in_Inventory_Tracking_Software\" title=\"Key Features to Look for in Inventory Tracking Software&nbsp;\">Key Features to Look for in Inventory Tracking Software&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Common_Challenges_and_How_to_Solve_Them\" title=\"Common Challenges and How to Solve Them&nbsp;\">Common Challenges and How to Solve Them&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Data_entry_errors\" title=\"Data entry errors\">Data entry errors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#No_visibility_across_channels\" title=\"No visibility across channels\">No visibility across channels<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-28\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Bad_forecasting\" title=\"Bad forecasting\">Bad forecasting<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-29\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Dead_stock\" title=\"Dead stock&nbsp;\">Dead stock&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-30\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Outgrowing_your_spreadsheet\" title=\"Outgrowing your spreadsheet\">Outgrowing your spreadsheet<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-31\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#Best_Practices_for_Effective_Inventory_Tracking\" title=\"Best Practices for Effective Inventory Tracking\">Best Practices for Effective Inventory Tracking<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-32\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#_Conclusion\" title=\"&nbsp;Conclusion\">&nbsp;Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-33\" href=\"https:\/\/margbooks.com\/blogs\/what-is-inventory-tracking\/#FAQs\" title=\"FAQs\">FAQs<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>A friend of mine sells handmade candles online. Last winter, one of her scents went viral. She had 40 jars in stock, took 112 orders over a weekend, and spent the next two weeks writing apology emails and issuing refunds. The demand was great. The tracking was the problem.<\/p>\n\n\n\n<p>That&#8217;s the short version of why inventory tracking matters. Too little stock and you lose sales. Too much and your cash is sitting on a shelf, gathering dust. Tracking is how you stay between those two. In this article, we are going to explore this part of business in detail.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Inventory_tracking\"><\/span><strong>What is Inventory tracking?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Inventory tracking is the process of keeping tabs on what you have, where it is, and how it moves in and out of your business. That&#8217;s it. Every sale, return, transfer, and delivery changes your numbers, and tracking is how those changes get recorded.<\/p>\n\n\n\n<p>Three important terms are often confused by many people, namely inventory tracking, management, and control:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Inventory tracking refers to knowing what items you have in stock and where those items are located.<\/li>\n\n\n\n<li>Inventory management refers to taking decisions regarding what should be done with the available information, meaning what items need to be ordered, when, and how many items should be ordered.<\/li>\n\n\n\n<li>Inventory control is the set of rules and actions that help in ensuring that inventory numbers are accurate and items are being kept safe.<\/li>\n\n\n\n<li>Therefore, monitoring is the first step in using inventory management because one cannot manage what is not visible.<\/li>\n\n\n\n<li>All business companies with physical products should know about inventory \u2013 companies that sell online, retail stores, restaurants, and manufacturers. It is clear for any person who has ever said, &#8220;I think we have some in the back&#8221;&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_it_matters_more_than_most_people_think\"><\/span><strong>Why it matters more than most people think<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The clear advantage is the elimination of stockouts and excessive sales. Nevertheless, the subtler advantages are usually more valuable in the long run. Here are some reasons that contribute to the importance of inventory management.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cash_flow\"><\/span><strong>Cash flow<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Stock represents already spent money. Each item sitting idly for six months is cash not available for bills or advertising. Knowing what is being sold allows elimination of orders for unsold items.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fewer_surprises\"><\/span><strong>Fewer surprises<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Theft, damage, and mistakes lead to shrinkage, which has a worse impact than expected. You will not be able to see the leak without constant measurements of the water level.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Better_decisions\"><\/span><strong>Better decisions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>With a collection of months of accurate information, you will begin to see seasonality, find the slowest sellers, and provide forecasts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Better_accuracy\"><\/span><strong>Better accuracy<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is necessary for financial reports and taxation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Happy_customers\"><\/span><strong>Happy customers<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Deliveries will be faster and more complete as long as you know your stock and location of each item.<\/p>\n\n\n\n<div class=\"banner-container\">\n    <div class=\"inner-container\">\n\n        <div class=\"banner-img-second\">\n            <img decoding=\"async\" data-src=\"https:\/\/margBooks.com\/blogs\/wp-content\/uploads\/2026\/07\/Invoice.webp\" alt=\"Growth Image\" title=\"\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\"><noscript><img decoding=\"async\" data-src=\"https:\/\/margBooks.com\/blogs\/wp-content\/uploads\/2026\/07\/Invoice.webp\" alt=\"Growth Image\" title=\"\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\"><noscript><img decoding=\"async\" src=\"https:\/\/margBooks.com\/blogs\/wp-content\/uploads\/2026\/07\/Invoice.webp\" alt=\"Growth Image\" title=\"\"><\/noscript><\/noscript>\n        <\/div>\n\n        <div class=\"banner-content\">\n            <h3><span class=\"ez-toc-section\" id=\"Ready_to_stop_guessing_whats_in_stock\"><\/span>Ready to stop guessing what\u2019s in stock?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n        <\/div>\n\n        <div class=\"banner-btn-second\">\n            <a href=\"https:\/\/me9.in\/MBB\" target=\"_blank\" rel=\"noopener\">\n                 Book Free Demo!\n            <\/a>\n        <\/div>\n\n    <\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_inventory_tracking_actually_works\"><\/span><strong>How inventory tracking actually works<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The workings of inventory control: Although the specifics differ among companies, the basic process is as follows:<\/p>\n\n\n\n<p><strong>1. Receipt<\/strong><\/p>\n\n\n\n<p>When shipments are delivered, they must be matched with the purchase order so that an actual record of what came is entered. Not what was expected to come at first. Suppliers sometimes make mistakes, and it is better to catch them when accepting the deliveries, rather than having to detect them months later.<\/p>\n\n\n\n<p><strong>2. Identifying products<\/strong><\/p>\n\n\n\n<p>Products have to get some kind of unique code that is usually a SKU (stock-keeping unit). This code can be either a barcode, QR code, or an RFID tag. The crucial thing is that a person or a machine can distinguish one product from another.<\/p>\n\n\n\n<p><strong>3. Storing products<\/strong><\/p>\n\n\n\n<p>Products are always put somewhere: in the warehouse, on the shelf, or into the box. For example, even if you have to state &#8220;somewhere in the garage,&#8221; it will still be better than not indicating where products are stored at all.&nbsp;<\/p>\n\n\n\n<p><strong>4. Recording all movements<\/strong><\/p>\n\n\n\n<p>Sales transactions, product returns, internal transfers of stock, damaged products, and giveaways \u2013 all movements will be captured. This is also where the majority of systems go wrong because the unimportant details are often missed by people.<\/p>\n\n\n\n<p><strong>5. Updating inventory levels<\/strong>&nbsp;<\/p>\n\n\n\n<p>In a manual system, an individual&#8217;s hands are used to record a change in stock level. In a software program, stock levels will change automatically right after the sale is made, or a barcode is scanned.<\/p>\n\n\n\n<p><strong>6. Checking stock level<\/strong><\/p>\n\n\n\n<p>Good systems will always tell you when particular goods do not seem to be enough. The moment is also known as a reorder point, which depends on the rate of sale and time required for delivery.<\/p>\n\n\n\n<p><strong>7. Conducting audits<\/strong><\/p>\n\n\n\n<p>Even the best systems make mistakes from time to time. Cycle counting\/counting a small area of stock on a regular basis or full physical inventory could help bring stock records in line with stock levels at the warehouse.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Inventory_Tracking_Methods_and_Technologies\"><\/span><strong>Inventory Tracking Methods and Technologies&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There is no need for investment in high-tech equipment on the first day. Below are the alternatives and their ranks.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Using_pen_and_paper_or_spreadsheets\"><\/span>Using pen and paper or spreadsheets.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is cost-free and allows flexibility. It is useful if you have a small inventory and just one location because it becomes unreliable when you add more locations, workforce or quantity; some people will forget to make updates, so you will never know if everything has been updated correctly or not.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Barcoding\"><\/span>Barcoding<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is a workhorse of inventory tracking. You scan a code using either a scanner or a camera, and that&#8217;s it! This method is cheap, fast, and accurate compared to the manual input method.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"QR_codes\"><\/span>QR codes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>They are similar to barcodes but offer even more possibilities. Anyone can scan those codes with a smartphone. They are widely used by small teams.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"RFID\"><\/span>RFID<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>These are tags that can be read from a distance, so you won&#8217;t need to see them. Just scan your pallet in seconds! It is rather expensive and is mostly utilized by big companies like huge retailers or warehouses.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"GPS_Tracking_and_IoT_Sensors\"><\/span>GPS Tracking and IoT Sensors.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>These are useful when transporting products or when it comes to expensive items because it is important to not only know what you have but also where it is at the given moment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Inventory_Management_Software\"><\/span>Inventory Management Software<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is a conjunction of all things. <a href=\"https:\/\/margbooks.com\/inventory-management-software.html\"><strong>Cloud-based inventory management software<\/strong><\/a> are connected to your e-store, point-of-sale system, as well as to the accounting software in order for one sale at one location to update everything everywhere.<\/p>\n\n\n\n<p>A general principle is that spreadsheets are for initiation, barcodes plus software are those which are being used when growing, and RFID is for scaling.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Common_Inventory_Valuation_and_Tracking_Systems\"><\/span><strong>Common Inventory Valuation and Tracking Systems&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Some terms come up constantly once you start looking into this.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Perpetual_vs_periodic\"><\/span>Perpetual vs. periodic<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A perpetual system updates your counts continuously as things happen. A periodic system only updates when you do a physical count, say once a month or once a year. Perpetual is better for almost everyone, if you can manage it.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FIFO_LIFO_and_weighted_average\"><\/span>FIFO, LIFO, and weighted average<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>These are methods for assigning a cost to the stock you sell. FIFO (first in, first out) assumes your oldest items sell first. LIFO (last in, first out) assumes the newest items sell first. Weighted average blends the cost of everything. Which one you use affects your reported profit, so it&#8217;s worth asking your accountant. Also note that LIFO isn&#8217;t permitted under some accounting standards outside the US.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Batch_lot_and_serial_tracking\"><\/span>Batch, lot, and serial tracking<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If you sell food, cosmetics, or supplements, you may need to track by batch so you can handle a recall. If you sell electronics, serial numbers let you trace individual units for warranty claims.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"ABC_analysis\"><\/span>ABC analysis<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A way of sorting your inventory by value. Your A items are the small number of products that drive most of your revenue, and they deserve the closest attention. C items are the long tail that you can check less often.<\/p>\n\n\n\n<div class=\"banner-container\">\n    <div class=\"inner-container\">\n\n        <div class=\"banner-img-second\">\n            <img decoding=\"async\" data-src=\"https:\/\/margBooks.com\/blogs\/wp-content\/uploads\/2026\/07\/Invoice.webp\" alt=\"Growth Image\" title=\"\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\"><noscript><img decoding=\"async\" data-src=\"https:\/\/margBooks.com\/blogs\/wp-content\/uploads\/2026\/07\/Invoice.webp\" alt=\"Growth Image\" title=\"\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\"><noscript><img decoding=\"async\" src=\"https:\/\/margBooks.com\/blogs\/wp-content\/uploads\/2026\/07\/Invoice.webp\" alt=\"Growth Image\" title=\"\"><\/noscript><\/noscript>\n        <\/div>\n\n        <div class=\"banner-content\">\n            <h3><span class=\"ez-toc-section\" id=\"See_it_work_with_your_own_products\"><\/span>See it work with your own products<span class=\"ez-toc-section-end\"><\/span><\/h3>\n        <\/div>\n\n        <div class=\"banner-btn-second\">\n            <a href=\"https:\/\/me9.in\/MBB\" target=\"_blank\" rel=\"noopener\">\n                 Start your free trial!\n            <\/a>\n        <\/div>\n\n    <\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Inventory_Metrics_to_Track\"><\/span><strong>Key Inventory Metrics to Track&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>You don&#8217;t need to track twenty metrics. A handful will tell you most of what you need.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Stock on hand and available to sell.<\/strong> These aren&#8217;t the same. Stock on hand includes items already reserved for orders.<\/li>\n\n\n\n<li><strong>Inventory turnover.<\/strong> How many times you sell through your stock in a year. Cost of goods sold divided by average inventory.<\/li>\n\n\n\n<li><strong>Days of inventory outstanding.<\/strong> How long, on average, stock sits before it sells.<\/li>\n\n\n\n<li><strong>Reorder point.<\/strong> Roughly, daily sales multiplied by supplier lead time, plus a buffer called safety stock.<\/li>\n\n\n\n<li><strong>Sell-through rate.<\/strong> The share of what you received that you&#8217;ve actually sold in a given period.<\/li>\n\n\n\n<li><strong>Shrinkage rate.<\/strong> The gap between what your records say you should have and what you really have.<\/li>\n\n\n\n<li><strong>Fill rate.<\/strong> The share of customer orders you can complete from stock without delay.<\/li>\n<\/ul>\n\n\n\n<p>If you only pick two to start, pick turnover and reorder point.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Features_to_Look_for_in_Inventory_Tracking_Software\"><\/span><strong>Key Features to Look for in Inventory Tracking Software&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If you&#8217;re shopping for a tool, don&#8217;t get distracted by long feature lists. These are the things that actually matter:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Real-time syncing<\/strong> across every place you sell, so you don&#8217;t oversell.<\/li>\n\n\n\n<li><strong>Barcode scanning<\/strong>, ideally through a phone so you don&#8217;t need special hardware.<\/li>\n\n\n\n<li><strong>Low-stock alerts<\/strong> that you can customize per product.<\/li>\n\n\n\n<li><strong>Integrations<\/strong> with your store platform, point-of-sale, accounting software, and shipping tools.<\/li>\n\n\n\n<li><strong>Multi-location support<\/strong>, even if you only have one location now.<\/li>\n\n\n\n<li><strong>Useful reports<\/strong> that don&#8217;t require a data analyst.<\/li>\n\n\n\n<li><strong>User permissions<\/strong>, so a part-time employee can&#8217;t accidentally edit your costs.<\/li>\n\n\n\n<li><strong>Pricing that scales<\/strong> with you, not one that jumps sharply the moment you add a second warehouse.<\/li>\n<\/ul>\n\n\n\n<p>Always take the free trial of the <a href=\"https:\/\/margbooks.com\/billing-software.html\"><strong>Billing software<\/strong><\/a>. Load in real products, not demo data.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Common_Challenges_and_How_to_Solve_Them\"><\/span><strong>Common Challenges and How to Solve Them&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here are common challenges and how to solve them-&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Data_entry_errors\"><\/span><strong>Data entry errors<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Humans mistype. Scanning cuts this down dramatically, and regular cycle counts catch what&#8217;s left.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"No_visibility_across_channels\"><\/span><strong>No visibility across channels<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If you sell on your own site, Amazon, and in person, each with its own count, you will eventually sell something you don&#8217;t have. A single, central system fixes this.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Bad_forecasting\"><\/span><strong>Bad forecasting<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Ordering based on last month&#8217;s gut feeling leads to both stockouts and overstock. Even a simple look at the last 12 months of sales data will improve your guesses.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Dead_stock\"><\/span><strong>Dead stock<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Items that haven&#8217;t sold in six months or more. Discount them, bundle them, or donate them, and then don&#8217;t reorder them.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Outgrowing_your_spreadsheet\"><\/span><strong>Outgrowing your spreadsheet<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If you&#8217;re spending more time fixing the spreadsheet than using it, it&#8217;s time to move on.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Best_Practices_for_Effective_Inventory_Tracking\"><\/span><strong>Best Practices for Effective Inventory Tracking<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Tools are useful, but good habits do the majority of the work. Check out some of the key inventory management practices:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Assign every item a different SKU and follow a naming convention.<\/li>\n\n\n\n<li>Perform weekly counts instead of lump summing everything at the year\u2019s end.<\/li>\n\n\n\n<li>Establish reorder levels and update them as per seasons.<\/li>\n\n\n\n<li>Automate repetitive tasks, particularly inventory updates.<\/li>\n\n\n\n<li>Train everyone who interacts with stock, such as employees who work only on weekends.<\/li>\n\n\n\n<li>Keep a regular check on your reporting system.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"_Conclusion\"><\/span><strong>&nbsp;Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Inventory tracking is really just a way of answering three questions: what do I have, where is it, and what should I do next? You can answer them with a notebook or with a warehouse full of RFID readers. What matters is that the answers are accurate and that you check them regularly.<\/p>\n\n\n\n<p>If you&#8217;re just getting started, don&#8217;t overthink it. Pick a simple system such as <a href=\"https:\/\/margbooks.com\/\">MargBooks Software<\/a>, assign SKUs, count what you have, and build the habit. You can upgrade the tools later. My candle-making friend now uses barcode scanning and a basic inventory app, and she hasn&#8217;t had to send an apology email since.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><strong><strong>FAQs<\/strong><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h6 class=\"wp-block-heading\"><strong>Q1. How does inventory tracking differ from inventory management?<\/strong><\/h6>\n\n\n\n<p>Tracking refers to the monitoring of the items available in your inventory as well as their exact location. Management, on the other hand, uses that information strategically to make vital decisions regarding ordering, pricing, and storage.<\/p>\n\n\n\n<h6 class=\"wp-block-heading\"><strong>Q2. What would be the best approach for inventory tracking in small businesses?<\/strong><\/h6>\n\n\n\n<p>If your range of products is very limited, the simplest solution would be to start tracking inventory with the help of a spreadsheet. However, if your business has grown to the extent of selling through multiple sales channels or managing at least several hundred SKUs, then it might become necessary to utilize special inventory management software with barcode scanning capabilities.<\/p>\n\n\n\n<h6 class=\"wp-block-heading\"><strong>Q3. Is it possible to monitor inventory with Excel or Google Sheets?<\/strong><\/h6>\n\n\n\n<p>Yes, businesses frequently begin monitoring inventory in either of these two applications. However, the possibility of human errors and the absence of automatic synchronization with sales channels, as well as difficulties in scaling up, are major disadvantages of this method.<\/p>\n\n\n\n<h6 class=\"wp-block-heading\"><strong>Q4. When should I check our inventory?<\/strong><\/h6>\n\n\n\n<p>Businesses should implement cycle counts of a certain section of stock on a weekly or monthly basis and conduct complete inventory checks at least once a year. Nevertheless, high value and fast-moving items require more frequent checking.<\/p>\n\n\n\n<h6 class=\"wp-block-heading\"><strong>Q5. What does real-time inventory management imply?<\/strong><\/h6>\n\n\n\n<p>Real-time inventory management is keeping track of inventory whenever events occur, like sales, returns, and scans.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A friend of mine sells handmade candles online. Last winter, one of her scents went viral. She had 40 jars in stock, took 112 orders over a weekend, and spent the next two weeks writing apology emails and issuing refunds. The demand was great. The tracking was the problem. That&#8217;s the short version of why [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":10712,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[2599],"tags":[],"class_list":["post-10711","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-inventory-management"],"blocksy_meta":[],"blog_post_layout_featured_media_urls":{"thumbnail":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2026\/10\/Inventory-150x150.webp",150,150,true],"full":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2026\/10\/Inventory.webp",1200,628,false]},"categories_names":{"2599":{"name":"Inventory Management","link":"https:\/\/margbooks.com\/blogs\/category\/inventory-management\/"}},"tags_names":[],"comments_number":"0","wpmagazine_modules_lite_featured_media_urls":{"thumbnail":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2026\/10\/Inventory-150x150.webp",150,150,true],"cvmm-medium":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2026\/10\/Inventory-300x300.webp",300,300,true],"cvmm-medium-plus":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2026\/10\/Inventory-305x207.webp",305,207,true],"cvmm-portrait":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2026\/10\/Inventory-400x600.webp",400,600,true],"cvmm-medium-square":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2026\/10\/Inventory-600x600.webp",600,600,true],"cvmm-large":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2026\/10\/Inventory-1024x628.webp",1024,628,true],"cvmm-small":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2026\/10\/Inventory-130x95.webp",130,95,true],"full":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2026\/10\/Inventory.webp",1200,628,false]},"_links":{"self":[{"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/posts\/10711","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/comments?post=10711"}],"version-history":[{"count":4,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/posts\/10711\/revisions"}],"predecessor-version":[{"id":10717,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/posts\/10711\/revisions\/10717"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/media\/10712"}],"wp:attachment":[{"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/media?parent=10711"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/categories?post=10711"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/tags?post=10711"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}