Maintenance Q&As

What are the different types of Inventory Systems?

Answered July 12 2019

Facilities typically use one of three kinds of inventory systems: manual, periodic, and perpetual. Although technological requirements and the complexity of implementation increase as you move from the first to the last, efficiency and accuracy are improved as well.

Manual Inventory System

In the past, all facilities needed to track inventory manually by counting items in stock. Today, some small businesses that carry low levels of inventory may still use a manual system. An employee essentially goes through the inventory, counts all items, writes down results, and enters the quantities in a spreadsheet. This information can then be used to re-order materials as needed.

Periodic Inventory System

Periodic inventory systems have become the bridge between manual systems and perpetual systems. Inventory can be tracked manually and periodically; however, barcoding systems have improved periodic inventory systems a great deal.

Facilities can easily implement a barcode system by tagging inventory items. These barcodes are periodically scanned to track the item from its arrival to the facility, throughout its travel or usage within the facility, and its final destination when it is either used in a finished product or consumed.

A central computerized tracking system can then provide routine access to the quantities and locations of items as well as initiate re-stocking orders.

Perpetual Inventory System

The most sophisticated inventory system delivers real-time data. As soon as inventory enters a facility, is moved, sold, used, or thrown out, the central system is immediately updated.

Radio frequency identification (RFID) tags play a large role in perpetual inventory systems. Active RFID tags can constantly send data and provide real-time information while passive RFID tags use electromagnetic energy from a reader to transmit data. Data from RFID tags can be sent to a CMMS system, giving management transparency into inventory levels that can help them make smarter business decisions.

Asset Management Questions & Answers