Types of inventory management systems - Dash101 Blog

Types of Inventory Management Methods for Best Customer Satisfaction

Inventory Methods
Porter carrying boxes in a warehouse

Managing your inventory is one of the best decisions you take for your business. You might not even realize the number of sale opportunities you lose, just because your product was out of stock in your store. This doesn’t just cause a loss in your revenue but also in your overall business reputation. However, when you manage your inventory, all of this is put to rest. There are different types of inventory management that can help you take your business to new heights.

If you’re new to the world of online business, all this might seem very new. But, if you own inventory you will have to manage it. The point is that as soon as you start managing your inventory effectively, you will be able to unlock the potential of your business in several areas. 

Right from driving more conversions to building a reputation for yourself in the market, you can expand your business to the world. But, only if you know the types of inventory management and the right one for your business.

You need to find out what works best for your company and also make a decision based on the products that you’re selling. For example, if you are are selling perishable items and non-perishable goods together you need to have different inventory management strategies for each of them. 

You can’t go on selling the units that enter last in your inventory every time you sell perishable items. We’re talking aout the LIFO technique here. Similarly, you can adopt a number of  strategies for storing your non persistent items. 

The first thing to do before adopting an inventory management strategy is to know the types of inventory management. Then based on your business needs, pick what suits you the best.

What is Inventory Management?

Inventory management is the quintessential practice of tracking your inventory from end to end. This means that you get to monitor every aspect of your inventory and make sure that they stand up to quality checks.

However, inventory management is not just about quality. It also gives you an estimate of your selling inventory and the number of units you have in your stock at any given time. Moreover, it helps you prepare for future by telling you how many units of a product should you buy. 

There are several tools in the market that help you manage your inventory effectively. Similarly, several 3PL providers will also help you keep an eye on your inventory. Dependingon the size of your business you can opt for these services hassle-free.

Concisely, here’s what inventory management does for your business-

  • It helps you count all kinds of inventory
  • Monitors your dead stock
  • Keeps an eye on your fast selling inventory
  • Promts you of aproduct going out of stock
  • Performs demand forecasting to help you prepare for the future
  • Ensures quality invenotry reaches the customer
  • Keeps your inventory in a ready state

What do You Mean by Types of Inventory Management?

Now that you know what inventory management can do for your business, it is imperative to understand its types. This will help you adopt the right strategy as per the needs of your business. 

The types of inventory management are nothing but techniques that can be  used to track stock levels of different products in your organization. Some of these typesof inventory management also helo you calculate your business profits. However, there’s more to what meets the eye. Types of inventory management can help your business in understanding and calculating other financial metrics as well. 

Keeping a tab on how much inventory you have is fundamental to your business. Types of inventory management can help you do all of this, and that too effortlessly. They have tehniwues that either help you do a timely check of your inventory all thotughout the year. Or it might be once a year check, which in turn night be a little bit time taking.

But, you don’t need to worry about these right now. We first need to understand the kind of product you sell and only then can you think of adapting any type of inventory management system.

Do I Need Types of Inventory Management for My Business?

Yes, absolutely. You need an inventory management system for your business. If you’re selling physical products in the market, you can’t do without an inventory management system. Most small businesses commit this mistake. They don’t use an inventory management system for their business. 

The point is that they think that the management of inventory for a small business is easy. You might be operating from a singe room, so what is the point is tracking stock units or keeping them in an arranged fashion?

While it might not seem intuitive, types of inventory management techniques help in a lot of ways. Some of these are mentioned below-

Save Time and Money

When you use the types of inventory management systems, they help you save your time and money. In other words, they take your business to new heights. You save your time with faster picking, packing and selling of inventory while spend less on maintaining them. Because your inventory is arranged and properly lined up, you need not spend every now and then on thier audit. 

Increase Efficiency

Managing your inventory undoubtedly increases your business efficiency. It helps you manage your stock units effortlessly and lower the burden of work from your shoulders, at the same time, it also relieves your staff from manual labour. Overall, types of inventory management increase the efficiency of your business. 

Provide a Heightened Level of Cutomer Satisfaction

When you have inventory in stock and well aligned in your warehouse, you can ship faster. You will be able to dispatch your products much faster. This means that if a customer comes to your website in search of a product with faster delivery, you are able to cater to their demands adequately. This leaves customers impressed and earns you a good reputation in the market. 

Grow Business

Business growth might be comprehensive, but it starts with your inventory. With types of inventory management systems, you get to scale your business. Reach out to customers from across the world and create an impact on them. Moreover, when you save costs and efforts in managing your inventory you can think of ways to grow your business.

What Happens if I Don’t Manage My Inventory?

What are the Types of Inventory Management?

Inventory Management
Man warehouse worker checking goods at warehouse.

Depending on the product you have, there are typoes of inventory management. Mostly there are four main types of inventory management you will come across in the ecommerce industry. 

Choosing a method is important because it impacts your business directly. Moreover, it is critical to otimized storage practices. Depednging on your business, one or more of these systems will help you achiev your goals. 

Let’s take a look at the inventory management systems-

Periodic Method

It is the type of inventory management system that is most suitable for small businesses. This means that startups, home based entrepreneurs and even part time online sellers can leverage this method. 

In periodic method of inventory management, data is sent to the inventory system periodically. You rely on inventory counts that are frequent and physically performed. Moreover, the changes in inventory are calculated based on the number of sales made and te number of items reordered during a period. 

Perpetual Method

This is yet another types of inventory management system. In perpetual method of inventory management, data is sent constantly to the inventory system. It is better for larger businesses such as those with their stores on popular marketplaces like Amazon  or Flipkart, alternatively, businesses in an omni-channel approach can also leverage this method. 

In perpetual inventory management method, you record items at every stage of movement through our business. This helps you understand the real-time picture of your overall inventory. Additionally, it keep you up to date about your stock units. This type of system heavily relies on software and tools. It also needs update from time to time and depending on deployment, it could lead to system downtimes. While this method does reduce the manual work of employees, it also sometimes create discrepancies in the system. 

Barcode Systems

Yet anothe popular types of inventory management is the barcode system. You  might have seen many inventory management systems use barcode systems as a common feature to track inventory. Barcodes can be used to organize and speed up the day to day tasks in warehouses. At the same time it also boosts the accuracy of systems and increases the efficiency. Mobie scanners are one of the most common features of the carcode systems. It helps in automatic system updates and efficiency stock movements with fewer mistakes.

RFID Tagging Systems

Last but not the least, RFID tagging systems are popular types of inventory management. Statistics indicate that these systems can help increase the accuracy of inventory management operations from 63% to 95%. In these systems fixed readers are used to scan the items. The data is then sent to the digital software for analysis.


Managing your inventory can seem like a big hassle. But, it isn’t the case if you take the right steps. Make sure that your inventory is of good quality when you send it to your customer. To ensure this use types of inventory management software depending on the need of your business. If you’re a small business start with a periodic method and then adopt a more rigorous and automated system. As you manage your inventory, don’t forget to pay attention to your shipping. Ship with Dash101 to safely deliver your inventory to your customers. 


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