Oct 21, 2020 5 Min READ

The Ultimate Guide To Inventory Tracking (2022 Update)

5 Min READ
The Ultimate Guide To Inventory Tracking (2022 Update)


Are you looking to know more about inventory tracking and what it can do for you? Then you’re in the right place. While inventory tracking can be a complex configuration of different systems both online and offline, there’s also no need to be afraid of the system.

Adding inventory tracking to your warehouse management strategy is vital for the growth and development of your business.

Tracking inventory will help you keep items in stock, provide timely shipments, and improve your business’s profits by eliminating lost inventory.

man using inventory tracking inside of warehouse

What Is Inventory Tracking?

Inventory tracking is the culmination of all things inventory. It tracks how much inventory you have, how much you’ve sold, how much is in transit, how much you’ll need to order, etc. Solidifying a proper inventory tracking system can be the difference between a failed warehouse and one that runs like a well-oiled machine.

Adding inventory tracking procedures to your warehouse management strategy is vital for the success and further growth of your business. Without it, you will have to work ten times harder but see lesser results.

The Benefits of Inventory Tracking

There are many substantial benefits of inventory tracking that both help your business thrive as well as streamline the day-to-day activities of your employees and business operations.

Knowing How Many SKUs You Have

Knowing how many SKUs you have in your warehouse is essential to avoiding out of stocks and backorders for customers. This may seem obvious, but without good inventory tracking, you won’t have accurate numbers, and that can cause huge issues. Inventory tracking not only keeps a precise number of the SKUs in your warehouse but lets you get ahead of low stock, which is very important.

man looking at inventory tracking system on computer

Knowing Where Those SKUs are Located

Your inventory tracking procedures help to locate and track where your SKUs are within the warehouse. Knowing this is important for having accurate inventory counts and makes the picking process far more efficient.

You may also find that a SKU is located in an area that makes it challenging to pull. This can be an opportunity to take frequently picked SKUs and position them in a more convenient place in the warehouse.

Real-Time Supply Chain Tracking

Long are the days where you need to record inventory numbers and transactions by hand. Inventory tracking streamlines these processes so that you can view real-time supply chain metrics. Seeing inventory levels, sales, and other metrics in real-time can help alleviate any backorders or other issues with inventory.

It also improves customer service, as they can answer any fulfillment questions to customers with accurate numbers. If a business customer calls with bulk order requests, these orders can be placed (or not) depending on how much available inventory there is at that moment.

More Visibility to the Business

Inventory tracking systems can keep everyone in the loop. Warehouse employees, managers, administrative staff, and more can gain more visibility into the business operations. It also streamlines activities, and administrative staff, given some access to view certain information can save themselves the pain of having to call the warehouse to confirm something.

Less Likely to Fall Out of Stock

Accurate, live counts of your inventory can help keep things in stock and keeps the websites updated with real-time numbers. A slow system and outdated inventory is the number one reason things can fall out of stock. If your inventory system is delayed even a little bit, and an item sells out but isn’t updated in time to the website, you will have many upset customers getting out-of-stock notifications.

More Easily Control and Divert Backorders

In line with preventing out-of-stock notifications, your inventory tracking system will more easily allow you to handle these situations. If an item is out of stock, and you can see both the order information and the upcoming re-stock dates, you can assist this customer by offering them a replacement stock of a similar item, or reach out and ask if they are ok with placing a backorder.

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Often a customer may be willing to wait for the out-of-stock item if they are alerted directly of the date it is expected, rather than an automated message. This can lead to canceled orders that you don’t want.

Different Methods of Inventory Tracking

Card Systems

Card systems are a manual method for tracking inventory. It required manually jotting down every single transaction from the point of sale to the shipment of the item, then stored in an organized dex. This method was very time-consuming and obviously left things open to human error. It has since been phased out of most warehouses, but in the event of an outage, it is often necessary to continue tracking while systems are down.


Using spreadsheets to track inventory is also very outdated, but it can potentially work for smaller operations. IT can also be a useful back-up tool to ensure accurate numbers and to have records in the event that systems are down. Many people may utilize Google Sheets or Excel spreadsheets for tracking purposes.

The good thing about the spreadsheets is you can set formulas, color codes, and pump out reports and charts based on your spreadsheets. So although not recommended for most inventory tracking, they can come in useful for other purposes.


It seems nowadays there is an app for everything—inventory tracking is no exception. Inventory tracking apps allow users to be mobile while still using their inventory tracking systems. They can be incredibly user-friendly and allow for real-time results without the need for a computer station. Some popular inventory tracking apps include ShipBob, Extensiv Warehouse Manager, MyStock, and Inventory Now.

woman using inventory tracking technology inside of warehouse


One of the more commonly used inventory tracking methods is outsourcing to a third-party logistics business. 3PLs work great because it takes the work out of the hands of those working internally in your business. Benefits of hiring a 3PL include cost reduction, automation, scalability, mitigate your internal risk and providing a better customer experience overall.

Integrating a 3PL into your existing processes can streamline many facets of it. You can get direct, real-time results fed from your 3PL right back to your own reporting software. It saves time, money, and can ensure accuracy amongst all touchpoints of your workflow.

Common Challenges of Inventory Tracking

One of the biggest challenges that come with inventory tracking is the amount of inventory you have. As your business grows, so does your warehouse, and your inventory management must become more and more comprehensive to be able to keep track of everything.

If you sell a complex array of items, it makes inventory tracking more complicated. If your current business is expanding into other markets, updating that inventory management software, as well as your inventory management system and processes, it’s essential to have an inventory tracking software that can keep up.

Another challenge is that inventory tracking is just time-consuming in general. But to maintain an accurate and efficient warehouse, it must be done. Allowing the proper time to train and implement processes along your supply chain can ensure everything within the warehouse knows how to use the systems the importance of tracking inventory. From the point of sale to the final shipment, it’s vital to maintain stock levels and manage your inventory the right way.

inventory tracking system inside or large warehouse

The Best Method to Use for Inventory Tracking

We believe the absolute best method to use for inventory tracking is a mobile app software like Extensiv Warehouse Manager that allows users to cover every single step of the supply chain, right from the palm of their hand. Things move fast in a warehouse, and it’s important that you can move with it and get accurate inventory counts no matter where you are.

A 3PL software like that can integrate with other platforms you use like Shopify or Netsuite that you use for incoming orders and outgoing shipments. Utilizing a program like that via a computer, laptop, mobile device, and link it to all of your inventory barcode scanners can be the difference between a failed warehouse and one that continually grows each year.

We believe that inventory tracking is the most important part of your warehouse management software, and it should be put as a top priority. Using the tools available to you and moving away from manual processes and into more mobile advancements, you should be an inventory management master. Using TopShelf, you will be able to cover all of your bases while still sticking to what you know—warehouse management. Check out a FREE demo today, and see how you can improve your processes in no time.

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