Inventory vs Supplies: Key Differences and Tracking Tips

Both inventories and supplies require proper tools and strategies for their effective management. The term inventory management would, in general, involve maintaining a record of stock and forecasting the demand to ensure that the optimum amount is available at the right time. Just-in-time inventory and Economic Order Quantity are some techniques that can help businesses to efficiently manage their levels of inventory to meet demand without necessarily holding excess inventory.

Inventory management software is probably one of the most important enablers in giving visibility to stock levels, therefore helping a business make informed purchasing and production decisions. Examples include barcode scanning, RFID technology, and cloud-based inventory systems that improve stock accuracy and reduce labor costs. This, therefore, means that with such adoption, there is the potential for businesses to minimize stockouts, cut unneeded inventory, and enhance overall efficiency.

With supply management, the concern is to have enough materials to enable the continuance of operations without interruptions. It is especially important to keep inventory for small businesses. It may include establishing reorder points, implementing supplier management systems, and maintaining good relations with vendors. Accounting inventory supplies using a hand-held computer facilitates the tracking process for easy monitoring of the usage level to prevent running out of vital supplies.

Another important practice in supply management involves periodic audits. Unlike inventories that are usually counted at the end of an accounting period, supplies may not be subjected to as much scrutiny. Periodic checks, however, will prevent waste and ensure that supplies are being used with the economy.

It’s equally important to spell out clear policies on the use of supplies. For instance, having clearly defined policies on who can requisition supplies, what constitutes a worthwhile use of company time and resources for procurement, and how approval chains are set up, will go a long way in reducing wastage. Training employees on the judicious use of supplies and encouraging resourceful practices can also be done hand in glove with more efficient supply management.

Data analytics can play a very important role in developing better management practices for both inventory and supplies. Companies will be in a position to build far more accurate forecasts of demand by studying usage trends, seizing opportunities for cost savings, and fine-tuning their supply chain strategies. In addition, this will also create an ability to recognize various inefficiencies that relate to over-consumption or underutilization of supplies and inventory, respectively.