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Inventory management may not sound sexy, but the ability to track goods or materials is essential to the health of any business. Accurate information about inventory helps managers reduce waste, meet customers' expectations, and anticipate future demand. It's a critical part of maximising profit for your company.

Perpetual or Periodic Inventory?

Traditionally, if you wanted to know how many items a distributor had on hand, or what materials a manufacturer had in the warehouse, you would need to perform a physical count and reconcile it with paper systems or batch-based, on-premise systems used by different teams. Businesses would physically count stock at the end of a set period, and the inventory figures would be updated at that point. This is known as the periodic inventory system, as the information is updated periodically.

Perpetual inventory management, in contrast, uses inventory management software and processes that allow for real-time updating of the inventory count. Often, this means employees use bar code scanners to record sales, purchases, or returns at the moment they happen. This information is fed into a continually adjusted database that tracks each change. The automatic, or perpetual, updating of the inventory is what gives the system its name and differentiates it from the periodic approach.

In recent years, advances in inventory management software and the ability to integrate it with other business systems have made perpetual inventory a more practical and powerful option for many businesses. Additionally, cloud-based inventory management systems are often real time, a key element of a perpetual inventory system.

What Can Perpetual Inventory Management Software Do for You?

The perpetual inventory system has the advantage over periodic approaches in three main areas: reducing waste, increasing data accuracy, and improving warehouse management.

Waste Not, Want Not

As a business, carrying more inventory than you need is costly and can lead to wastage. On the other hand, carrying too little means you risk disappointing your customers and losing sales revenue to your competitors. As the perpetual inventory software is always up to date, you have instant visibility into stock levels, allowing you to respond to changes in demand more quickly.


Inventory management software relies heavily on automation, particularly the use of bar code scanners, for real-time updates. Automation removes some of the potential for human error, typos, and overlap so the business has a more accurate picture of inventory at any moment.

Warehouse Management

Knowing which items are frequently restocked, or the kinds of items that are most often needed together, is vital information for organising and maintaining an effective warehouse. Introducing inventory management software that connects the warehouse to point of sale, for instance, means the warehouse manager can plan for the most efficient use of space and resources to support the business and respond to automated system alerts when stocks run low.

Even Better Together

While all of these benefits are extremely useful, the real value of perpetual inventory software comes from the ability to integrate it with other business systems.

For instance, real-time inventory information is vital for the financial and accounting teams. Inventory can make up a large part of your stated assets, so integrating inventory management with financial systems helps ensure accurate tax and regulatory reporting.

It also improves things for your customers. With access to real–time data, salespeople can provide accurate shipping information, manage expectations, and provide a better customer experience that directly impacts your reputation. At the same time, integrating the inventory software with marketing systems provides that team with a current snapshot of what's selling and what's not. Marketers can set current information in the context of historical trends to understand customer behavior and position the company to meet anticipated customer demand.


Inventory management software that supports a perpetual inventory system is designed to give you more insight into your business from the ground up. It can help you run a leaner warehouse, and provide essential input into accounting, sales, and marketing functions. Ultimately, it can give you the key to deliver a better experience to your customers—and who doesn't want that?