Perpetual Inventory Systems Lead To Perpetual Savings

The widespread use of computers and technology has led to many ways of cost cutting for retailers. A Perpetual Inventory System, or a continuous inventory system, is an inventory management system that allows businesses to have an up-to-date view of the status of inventory. With the use of barcodes, RFID and POS systems, it has become increasingly easy to track and manage inventory.

In this article, we will explore what perpetual inventory is, what are its advantages and how you can incorporate such a system in your organization.

What is perpetual inventory?

A perpetual inventory system is an inventory control system that provides real-time, up-to-date, inventory information to businesses. Using such a system, changes in inventory are continuously tracked and on-hand inventory can be determined with a significant accuracy. This is different from a periodic inventory system in which inventory transactions are recorded in batches. A periodic inventory system is similar to a bookkeeper entering all purchases and sales at the end of every month.


There are numerous advantages of a perpetual inventory system when compared to a periodic inventory system. Some of the advantages are listed here -

  1. Prevents stock outs, i.e. items going out of stock.
  2. Easier to track errors to the level of each individual item.
  3. Gives decision makers an understanding of customer preferences.
  4. Allows centralized inventory management across multiple locations.
  5. Reduces physical inventory counts.
  6. Provides greater transparency on discounts, purchases and returns.

There is also the fact that reporting becomes straightforward in a perpetual inventory system. Retail Pro not only comes with 150+ pre built reports, but it also provides the option of creating custom reports that suit your organizational needs.

Perpetual Inventory System - An Example

Ruchika works for ABC office supply chain. It is her job to manage the inventory. There is an inventory of over 5000 parts. Each part cost from Rs. 1 to Rs. 10,000. Ruchika knows that with such a large, expensive inventory she needs to be able to control inventory and know exactly what she has on hand for each part. She has decided that implementing a perpetual inventory system is the best solution.

Using barcodes on each inventory item and RFID scanners, workers are able to assist Ruchika in keeping track of each part that is received, moved, or sold. Each time Ruchika makes a purchase, the transaction is recorded in the system. Each time anything occurs that affects inventory, the perpetual inventory system updates the ledger for a specific part. This gives Ruchika an excellent view of what is happening with inventory, which wouldn't have been possible with a periodic inventory system.


Overall, a perpetual inventory system is the norm among all major retailers. The cost savings that accrue are too significant to ignore for any serious retailer. Technology has made perpetual inventory systems highly accessible. Marquee international retailers rely on Retail Pro for their inventory management needs, and so should you!

Contact us for FREE demonstration today!

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.