The Perpetual Inventory System: The Good and Bad

Inventory management is needed in order to keep track of a company's goods and services. If you do not know what you have in stock and what products you are selling, then you have no way of maximizing your profits. When it comes to controlling inventory, there are two main systems that can do it.

They are the perpetual and periodic inventory systems. The difference between the two is basically the manner in which they are updated. But, for the purpose of this article, we will concentrate on the perpetual system.

With the perpetual system, the inventory is always updated. Whenever an order is placed, received or shipped, the corresponding product will be updated in the system at that exact moment in time. You may check online about the inventory system.

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This is mostly possible due to technological advances that allow computers to be updated in real time. When product is received, it is put into the system via bar coding technology.

The perpetual inventory system is extremely popular because all retrieved and delivered information is up to date and in real time. You are guaranteed that the information that that is received within the reports is the most up to date information available.

However, if there are any mistakes, it is usually due to human error. The information is only as accurate if it is entered into the system. It cannot be seen, analyzed or corrected if it is never keyed into the system. This is why it is important that all orders are handled at the time that they are placed, received or shipped.