The Perpetual Inventory System:the Pros And Cons

A company has to have inventory management in order to track its goods and services.If

you do not know what is in inventory, then you cannot maximize your profits.There are two kinds of inventory systems.Those would be 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.

The perpetual system is constantly updated.The system is update for when orders are shipped, placed or received.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.You can get updates only if the info is entered into the system.If it is not in the system, then the information cannot be analyzed, corrected or seen.This is why the information has to go in once an order is placed, shipped or received.

Of course, this system will have pros and cons too.Because the reporting is done in real time, this is a huge benefit.Sales personnel has to know what is in inventory before speaking to the customer.This is especially true if the customer is expecting same day delivery.With a perpetual system, a salesman can check inventory stats on his laptop or mobile phone.This info is convenient.It is a smart method of researching the product levels before getting the customer involved.

Previously, the salesman would have had to call someone back at the office to get this information.Someone would have to physically walk to the warehouse and get a stock check.This might take a long time to get information in this manner.This is why the perpetual system is popular.It saves time by always being consistently updated.

There are only a few bad things about this system.The main thing is that it is too expensive.The software for this type of system is not cheap.However, most companies find the system very beneficial, once the software has been purchased and installed.Also, if you have to enter the info, then this can be quite time consuming.The database has to be maintained.

As you can see, the perpetual system has both pros and cons, but it is a very good advance asset management to have.

by: Darren Folkes

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