What is Inventory Management?

Inventory management is the process you use to keep track of the amount of product you have stored on your warehouse shelf, inside your store, or in stock with other retailers and distributors. Controlling your inventory allows you to have enough inventory to fill orders, but not too much inventory to overspend on inventory costs. The goal is to have the right amount of inventory in the right place at the right time and at the right price.

What is Inventory Control?

Inventory control is the process of managing inventory levels for a business, which includes any inventory in stock on hand, and inventory being held for you in another location. Your control follows the inventory cycle from when you purchase inventory, it ships to you, you receive it and stock it, then ship it to a customer. Your inventory control system monitors inventory movement, usage, and storage.

The goal for inventory control is maintaining enough inventory for everything you need. You track your purchase orders via your supply chain. Inventory analysis allows you to forecast inventory needs ahead of time to stock the optimal amount of inventory. You can do all of this manually or use the right inventory tools and equipment to manage it automatically.

Controlling your inventory can include:

  • Using barcode scanners to input inventory
  • Inventory counts
  • Tracking physical inventory along with sales and purchase orders
  • Product information, location, and history
  • Routine reports and inventory adjustments needed

The ultimate goal of inventory control is to buy enough to fulfill customer orders on time but spend the least amount possible by having just enough inventory to fill those same orders. Customer satisfaction is paramount and costly human error is reduced as much as possible.

Types of Inventory Management Systems

What is an Inventory Management System?

Your inventory is in constant flux as sales, returns, receipts, and other factors affect it. While it might seem overwhelming at first, keeping control of your inventory is one of the most important jobs for a successful retail or wholesale business.

As your business grows, your inventory scales up, making controlling your inventory more difficult. However, using the right inventory management tools and techniques to manage your inventory is a game-changer, allowing you to automate the entire process.

There are two basic inventory management systems, periodic and perpetual inventory systems.

Periodic Inventory System

A periodic inventory system manages stock by counting inventory on a periodic basis, usually once a quarter or twice a year. This system counts the entire inventory each period, then reconciles the count with the purchase and sales numbers.

Perpetual Inventory System

With a perpetual inventory system, products are counted when they are received, produced, sold, or returned. This system offers a more up-to-date stock accounting and is less dependent on periodic stock counts.

Inventory Management Tools and Techniques

One of Ordoro’s primary goals is to ensure that customers understand the best top-of-the-line tools, techniques, and information when it comes to inventory management. To that end, here are some of the online inventory management tools Ordoro has to help answer any questions you might have.

Inventory Management Guides

  • Pick and Pack Strategies
  • UPC Barcode Management
  • Kitting
  • Tracking Inventory
  • Purchase Orders
  • The SKU

Support Articles

  • Inventory Management Terminology Explained
  • How Do Inventory Quantities Get Calculated in Ordoro?
  • How Kitting (Bundling) Can Be Used in Ordoro

Blog Posts

  • Master Inventory Management with Ordoro
  • How to Physically Organize Your Inventory
  • How Accurate is Your Inventory Count?

Inventory Management Techniques

What inventory techniques do you use to manage your inventory? Here are some of the most popular techniques.

1. Cycle Counts

This technique divides up your total inventory into smaller, more easily managed lists of products. You can divide them in whatever way makes the most sense for your inventory, but you should have high-risk and high-value categories.

High-risk items are inventory that historically has the most discrepancies, spoilage, or loss. High value items are inventory products with the highest cost or sales value.


FIFO stands for first in, first out. This technique uses the oldest inventory first when fulfilling orders.

3. ABC Analysis

This technique identifies the inventory items that you need to focus on the most – using value and usage as ways of determining where to focus your attention.

4. Just in Time

JIT is a technique to purchase to receive inventory just in time for it to be used. However, this only works if your shipments reliably arrive on time.

5. Surplus Inventory and Dead Stock

You can end up with surplus inventory if you don’t effectively manage your stock. 

Cross-merchandising is one way to eliminate surplus inventory. However, if you can’t sell your excess inventory, it becomes dead stock. Deadstock has no use in your operation and can be donated or discarded.

6. Par Levels

Maintaining par levels is one way to have a minimum amount of inventory in stock. Your par level is the least amount you can have before reordering.

7. Safety Stock

Safety stock is kept for emergencies or busy selling seasons so you don’t run out of inventory.

8. Contingency Planning

Contingency planning is similar to safety stock, except you’re planning for a specific event or reason you may have a run on stock.

9. Consignment Inventory

Consignment inventory is inventory you hold that is owned by someone else. When you sell it, you give the owner their percentage.

10. Dropshipping

Dropshipping is when you receive orders and then send them to your supplier who will ship them to the customer.

11. Key Performance Indicator (KPI)

KPI analysis is something you can do on an ongoing basis to learn what triggers a higher number of sales or profits.

Best Inventory Management Software

Ordoro has the best inventory management tools for ecommerce retailers. That’s because Ordoro was designed specifically for ecommerce businesses. Ordoro will smooth out your workflow by integrating with your existing sales and purchasing systems.

  • Keep Inventory Unified: Integrate all of your sales channels into Ordoro to coordinate your multichannel business with your inventory.
  • Get Rid of Spreadsheets: You can fulfill orders and restock products while Ordoro tracks your inventory automatically. If you set up a low inventory threshold for inventory, Ordoro will let you know when you need to reorder.
  • Automatically Sync Inventory: As your inventory changes in response to orders and purchasing, Ordoro will automatically adjust your inventory counts.
  • Maintain inventory integrity as you use kitting as a way to market your products.
    • Use Ordoro’s built-in kitting system to bundle products as single units for sale. Ordoro will manage your inventory to support this process.
  • Improve Supplier Relations:  Ordoro’s software will make it easier to track inventory needed to purchase and can organize purchase orders while analyzing inventory costs.
  • Improve Accuracy with Scanning Barcodes: Ordoro supports UPC barcodes which you can scan, set, and search. You can also tag inventory with aisle and bin locations.
    • Assign Products to Suppliers: Match suppliers to inventory items for coordinated purchasing to resupply in just a few clicks.
    • Dramatically Lower Pick and Pack Errors: Using Ordoro’s barcode scanning feature, you can reduce costly fulfillment errors. You will receive an error message for orders containing too many products, and if a product shouldn’t be in the order.
  • Analyze Your Inventory Numbers: Ordoro contains built-in analytics that tracks all of your metrics for the entire inventory management system. You can get a report at any time or export a CSV file to analyze in QuickBooks or other accounting software.

Ready to Learn More?

There are a lot of great things about Ordoro’s inventory management software. If you’d like to learn more, schedule a demo.