Inventory Tracking: Importance, Functions, and Methods

In today’s fast-paced business setting, it’s crucial that companies stay on top of their processes in order to meet the needs and expectations of customers. Though there are many ways to do so, one of the most important and leading methods today is inventory tracking. 

In this article, we’ll go over what inventory tracking is; as well as how it can benefit eCommerce businesses.

What is Inventory Tracking? 

Inventory tracking is the act of keeping track of the SKUs currently in your company’s hold, where they are stored, and the quantities currently available in each storage location.

When your inventory is accurately tracked, it reduces supply chain delays and allows faster fulfillment times. 

What is an Inventory Tracking System? 

Inventory tracking systems are any type of inventory software, dashboard, or program that collects and displays real-time data about the status of your items (or SKUs) in order to support better inventory management. 

With this information at your fingertips, you will better equip warehouse staff to fulfill orders, redirect units to another location, or order more units of an out-of-stock item. 

Inventory Tracking Examples 

Inventory tracking affects several areas of the business, including production quality control, accounting, forecasting sales, and customer relations, among others. However, the process of tracking inventory takes different forms in different businesses.

For example, inventory tracking can monitor inventory turnover, how quickly items cycle through your company’s supply chain within given periods of time. It can also track the reception of materials from suppliers, monitor customer returns, and keep your team up to date on any damaged goods. 

Benefits of Inventory Tracking

Using inventory software for your warehouse allows your company to stay on top of the items you currently have in stock within multiple storage facilities. Therefore, it’s not difficult to imagine that simple inventory management can have so many distinct benefits, which include: 


When you have a system monitoring the status of your products that are spread throughout your storage spaces, avoiding overstock and accurately fulfilling orders becomes much easier. 

Your tracking system will collect also data concerning past sales activity, allowing your company to more accurately plan your item restock habits in the future. 

Saving Space 

Warehouse space can be expensive and precious. Accidentally overstocking items can be a safety hazard on the warehouse floor, not to mention a waste of funds. An effective system will make optimization much easier, as you’ll enjoy accurate stock information. 

Clarifying Components of the Supply Chain 

Kinks along the supply chain can drastically affect fulfillment times, which can impact your customer’s experience. Tracking inventory can benefit all areas of the supply chain, from raw material manufacturing to picking and packing to shipment and delivery. 

Customer and Supplier Satisfaction 

Customers are much more satisfied with their shopping experience when their item arrives at the promised time. The ability to track their package’s progress in real-time can boost the experience even more. 

Conversely, suppliers enjoy the ability to monitor specific data around the items they produce with inventory tracking. 

Challenges of Inventory Tracking 

Though tracking your company’s inventory can be extremely helpful, it can also be a hindrance for a few reasons. 

It’s Time-Consuming 

Keeping track of inventory takes time. This is especially true for large and growing companies that have a lot of logistics to keep track of. In many cases, the time it takes to monitor levels of stock might be better spent on marketing, analyzing consumer trends, or any other business-building activity. 

Inventory Tracking Isn’t Always Easy 

Your company’s stock is designed to move from place to place, eventually landing in the hands of the customer. This constant movement makes items difficult to track, especially if you replenish inventory often. 

If your company’s stock is constantly in rotation, the effort of tracking it may not be worth the result.

Bigger Inventories Are Harder to Manage 

As your company grows, it can be difficult to scale up your inventory tracking habits to match your increasing output. Tracking gets increasingly difficult as you introduce more and more new products (and therefore more SKUs) to your tracking software. 

Scaling Up 

If you currently practice manual inventory tracking, the best way to scale up is to invest in a specialized tracking software or platform that will allow complete automation, reducing the risk of human error. 

Inventory Tracking Methods and Solutions 

The best methods for inventory tracking will vary depending on a company’s size, scope, and product type. 

Card Systems 

Card systems consist of manually written stock transactions at every point in the supply chain. This method can be time-consuming and prone to error. 


There are several inventory apps currently available that even integrate with online storefronts, such as Shopify. However, apps can have limitations due to their generalized design.   

Third-Party Logistics 

3PLs are specially hired to oversee the entire fulfillment process, which reduces a great deal of stress and responsibility on company management and staff. 


Spreadsheets work well for tracking small business inventory but can quickly be outgrown as companies expand and add more SKUs. 

Scaling Up 

Most smaller businesses can receive some of the inventory control solutions they need from card systems or spreadsheets. However, inventory apps and 3PLs can be extremely helpful as companies expand to feature more products, more storage, and more customers.   

Partnering with a 3PL 

There are a few distinct ways in which partnering with a third-party logistics company can transform your inventory tracking process.   

Tracking Automation 

3PLs are motivated to stay on top of the latest advancements in automation technology. A 3PL will help your company track your inventory in the most streamlined and efficient way possible. 

Integrating Solutions 

With a 3PL, you’ll be able to review your inventory from anywhere with integrated software. This will also allow you to keep track of all of your fulfillment centers and orders in one spot. 

Projecting Demand 

It’s important to be able to plan for your company’s future in terms of stock and marketing. A 3PL can help you do just that with accurate data tracking and automatic restock reminders. 

Want to learn more about how 3PL service could transform your business? Contact us to request a free quote.