How Does an Inventory System Work?

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When we say “Inventory Sytem“, we meant an automated, computerized inventory management system. Who’s still doing it manually, anyway?

Manual inventory tracking

In its simplest terms, an inventory system puts everything into account. Large businesses usually has it, but it would be best if MSMEs have it, too. Why? Simply because an inventory system lets them see and forecast sales, the most important aspect of the business.

An old-school way of inventory tracking is writing down goods or services sold for every transaction, checking how many goods are left at the end of the day, and then listing these goods for re-order on the next day. That might have worked back in the days when the market behavior is not as dynamic as today.

Imagine how tedious the process would be in a coffee shop that is operating at present.

Let’s say they are using a PoS (Point-of-Sale) system to take orders but no system to track down every goods movement. A PoS system without inventory tracking is useless. At the end of the day, the owner still has to check the total number of sales recorded on the PoS system, count available stocks on display and in storage, and then pray that the stocks would be enough until the next replenishment.

When it’s time to restock, the owner has to check the sales record for a certain period, trust his/her intuition when deciding which stocks need additional ordering, and contact suppliers.

In business, what you need is numbers, not intuition. Intuition will only give you inaccurate demand predictions. Aside from inaccuracy, this manual inventory process takes a LOT of time, too. Instead of the owner concentrating on how to attract new customers in the coffee shop, valuable effort is lost manually checking sales record and counting stocks.

So what if the coffee shop gets an inventory system?

The process would be simpler — the PoS system takes every sales transactions and the inventory system will do the rest — record available stocks and forecast demand. A perfect inventory system that would suit the coffee shop, and any other business, can integrate any existing PoS system, and has an in-build procure-to-pay system would be NetSuite. It can track all sales and product movement, communicate with suppliers, and plan purchases based on accurate data. Furthermore, it gives users real-time inventory visibility from delivery to sales, avoiding instances of inventory loss.

So, are you still going to stick with your manual inventory process? We hope not.


CloudCompass is a cloud consulting company specializing in cloud business solutions. For more information on its solution and other products, you may refer to the following useful links:

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