The Two Most Used Inventory Tracking Systems Fit for Every Business

Estimated reading time: 5 mins

As a business grows and goes global, its inventories get bigger and more complicated due to which the traditional inventory management and tracking practices no longer play well with their existing processes. When a business expands its territory as well as its portfolio, the number of products, product varieties, warehouses, and supply chain becomes extensive and thereby their inventory management becomes more tricky.

For effective inventory management, it is necessary to establish coordination between all warehouses and various supply chains. It is also essential to maintain optimum inventory levels for all the products while eliminating potential situations like deadstock, overstock, and incidence of inventory shrinkages. So, to ensure more profits and fewer losses for extensive inventories, the items need to be tracked every time. For this purpose, businesses are using inventory tracking systems integrated with inventory management software.

What is an Inventory Tracking System?

An inventory tracking system is a software that allows you to track inventory and gather the data regarding real-time stock levels for better inventory control over a range of locations. It’s inventory management software that consistently keeps an eye on stock levels and generates an alert when the inventory falls below the optimum level.

Moreover, it brings transparency to your supply chain as you can track your inventories or deliveries with ease and know their real-time location and condition. This way, the inventory tracking system helps you ensure your purchases are right on time and have enough inventory to meet your production demand.

Inventory tracking can also be done manually. Here, the monitoring or calculation of inventory is done physically by the authorized staff. This manual tracking of the stock is ideal for small businesses with limited inventories. Grocery stores, small retail, and clothing stores usually employ this practice. But when it comes to large companies with more significant inventories, the manual tracking practice turns time-consuming, inaccurate, and unproductive. The only solution is using an Inventory tracking system. Let’s look at these systems in more detail.

#1 Barcode Inventory System

The Barcode inventory system is a widely used tool that automates the inventory tracking process. Many modern inventory management softwares come integrated with barcode technology to offer a complete solution for the businesses. The system includes software that is usually accessed in desktop or smartphone and hardware, including barcode printers and scanners.

To track inventory, the essential requirement of this system is to generate barcodes for every item present. The first step towards creating barcodes starts from registering all the items of the stock in a spreadsheet and then importing it to the software. This software further generates unique barcodes for every item listed in the sheet following which they are printed using the barcode printer and then pasted on all the items.

The next step includes scanning the barcode attached to the items. For this purpose, barcode scanners are used which when pointed at the barcode, read, and gather the information encoded by it. The information collected is then used by a centralized computer system to track the inventory. Mostly, these barcodes contain lot numbers, batch id, etc., using which item can be easily traced. Whenever an item is scanned, its movement is registered in the software. Depending on its action, i.e., in or out of stock, the list is updated. The Barcode inventory system is considered ideal for small businesses.

#2 Radio Frequency identification(RFID) Inventory System

RFID inventory systems are rapidly gaining popularity for inventory tracking purposes. The system requires unique RFID tags to be placed on every item of the stock and an RFID scanner to scan those tags in order to track the inventory. The scanner uses radio waves to communicate or detect the RFID tag present on the items. These tags are not like the ordinary tags present on the products you buy. RFID tags contain a microchip consisting of a radio transponder. This transponder inside the tag actuates with radio waves transmitted by a nearby scanner. Thus, it enables the scanner to read data such as batch id or any other data for real-time information about the location.

There are two types of RFID scanning technologies being used these days; Active and Passive technology. In active RFID systems, the scanners are fixed at various checkpoints in the warehouse. These scanners record and track the movement of every item passing through it by reading the RFID tags placed on them. Whereas in passive systems, handheld RFID scanners are used to track or scan the tags present on the inventory. Active RFID systems have a long-read range as compared to Passive systems. Therefore passive systems are used for indoor-inventory tracking purposes, and active systems are ideal for long-distance uses such as in logistics and shipping industries. Plus, passive technology is cheaper as compared to Active technology.

RFID Inventory systems hold a range of benefits when compared to the Barcode Inventory systems. The significant advantage of RFID systems is that the tags are rugged and can withstand extreme weather conditions. RFID tags do not wear off easily, whereas barcodes are not sturdy and can lose the print easily. RFID systems scan items a lot faster and also don’t hold a line of sight requirements. The only disadvantage of RFID technology is its higher costs due to which they are used mostly for valuable and expensive items.


Inventory tracking is essential for effective inventory management as well as for boosting profits. Real-time monitoring improves supply chain visibility as well as enhances transparency in inventory. Inventory tracking also helps in analyzing stock levels so that businesses can maintain optimum inventory levels at all the time to meet the production and customer demand on time.

Author Bio- Hi There, I am Shaun Williams, a content writer with Goodfirms, a research platform forCloud Computing, Ecommerce companies, Translation services companies, among many others. I enjoy communicating ideas and knowledge creatively and also ensure that the readers never suffer from boredom while reading my posts.

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