The ability to track data in real-time has been a true game changer for the CPG industry. Like never before, sales teams have access to data and insights from the field that can give them a better idea of where they’ve been, where they are, and help them shape where they are ultimately going. Inventory management is one of the many aspects of business that has undergone major changes thanks to advancements in the way we track and analyze CPG data.
Periodic Inventory Definition
In the past, many companies tracked periodic inventory — a form of inventory management that uses an occasional manual count of products in order to measure this important metric. While tracking inventory on a periodic basis may work for smaller businesses, periodic inventory tracking can be time consuming, is subject to human error, and depending on how frequently it is done, usually fails to provide brands with the accurate information they need to make critical, data-backed decisions.
Perpetual Inventory Definition
Perpetual inventory, on the other hand, involves the constant updating of inventory levels. This continuous tracking gives brands a much more accurate and up-to-date snapshot of their inventory and allows them to take a proactive rather than a reactive approach to changes in stock levels, order management, and data analysis. Perpetual inventory tracking is carried out with the help of technology that automatically updates and stores inventory data in a central database.
Advantages of Perpetual Inventory Tracking
There are many advantages to using a perpetual inventory system over a periodic one. Below, we take you through a few of them to help you better understand the value of perpetual inventory tracking and how it empowers your team to make data-backed decisions that fuel growth.
Generate a constant flow of accurate data
When it comes to monitoring your stock levels, using a periodic system often results in lapses in understanding when it comes to discrepancies. You are far more likely to catch episodes of shrinkage or theft with perpetual inventory because rather than waiting until the end of a month, a quarter, or even a year to make sure all of your numbers are matching up, you are getting constant updates that allow you to act accordingly and uncover the source of an inconsistency. If just last week you know you sent out a 200 unit shipment to an account and they run out after only selling 170, you’ll be able to identify this problem before it’s too late.
Prevent out-of-stocks
Out-of-stocks have the potential to severely harm your business. Not only can they cost you in lost sales, but frequent out-of-stocks can jeopardize your relationship with retailers and compromise customer brand loyalty. This is why perpetual inventory tracking is so important: you are not only better equipped to identify out-of-stocks as they happen, but also to predict and prevent them ahead of time.
Free up resources
In the business world, time is money, so it follows that any wasted or misspent time ultimately costs you. When you’re operating with a periodic inventory system, countless hours that could be spent on more pressing tasks end up being spent physically counting products and manually recording that information. With a perpetual inventory system, inventory tracking is instead done in real time, taking a tedious task that easily takes hours and and chopping it up into a bunch of small ones that could take literally seconds, depending on the level of automation you use.
Get insight into the field
No one can be two places at once, so when your products are in 20+ places at any given time, it can seem nearly impossible to stay in the loop. Luckily, cloud-based technologies have empowered sales leaders to gain insight into the field without ever even having to leave their desks. A perpetual inventory system can do the same by providing instantaneous updates on stock levels in multiple locations at once, giving you the opportunity to plan and assign reps to the right task at the right time.
