What Is Perpetual Inventory?What Is Perpetual Inventory?
Perpetual inventory is an inventory management system that continuously updates the record of inventory levels in real-time, allowing businesses to keep an accurate count of stock without needing a physical inventory count. This system, often supported by barcoding or RFID technology, logs each inventory transaction—including sales, returns, receipts, and movements—immediately as it happens.
How Perpetual Inventory Works
The perpetual inventory method is maintained through sophisticated inventory management software integrated with point-of-sale (POS) systems. Every time an item is sold, returned, or transferred, the software automatically adjusts the inventory record. This allows for up-to-date inventory counts, making it especially valuable in high-volume retail environments, where stock levels are in constant flux.
Benefits
One significant advantage of the perpetual inventory system is the real-time insight it offers into inventory levels, helping companies avoid stockouts and overstock situations. This system also simplifies the inventory management process, reducing the need for manual stock-taking, which can be labor-intensive and costly. The data from perpetual inventory systems provide crucial insights for managing supply chains, reordering products, and making data-driven business decisions
Comparison to Periodic Inventory
Unlike perpetual inventory, the periodic inventory system only updates inventory records at specific intervals, such as monthly or quarterly. This approach requires physical counts to determine the ending inventory balance, which can leave inventory information out-of-date. While periodic inventory might be simpler to implement for small businesses, the perpetual system is typically preferred for its accuracy, efficiency, and ability to support growth as a business scales
In summary, perpetual inventory offers businesses greater accuracy, real-time updates, and streamlined inventory management, especially when handling large product volumes. For many companies, these benefits justify the initial cost of implementing perpetual inventory management technology.
For a more indepth resource on the perpetual inventory method, check out Connect Book’s blog at https://www.connectbooks.com
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