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This is Marshall, CEO and Founder of Pharus, bringing you our first informational and educational blog post on one of my favorite topics -- inventory management.

During my time working as a fractional CFO with CPG brands, one of the most impactful areas of our business that helped drive decision making was our inventory tracking. Inventory tracking helped drive a number of things including when to order product next, how much of each product we should be ordering, how much product we are wasting, among others. Despite this, we often struggled with maintaining a high quality process for ensuring that these metrics were accurate.

Let’s dive into what makes an inventory tracking process and system useful and what can lead it off the rails.

What is inventory tracking?

Before we dive into how to track inventory in a productive way, let’s first define what it means to track inventory. The process of inventory tracking refers to counting and transcribing the number of products, materials, and goods that exist in any of the available locations. This can include items like labels and ingredients, as well as finished goods like drinks, bars, or packs. The more frequently inventory is counted and marked down, the more accurate the data is. However, counting inventory more than weekly is overkill and most companies start on a monthly cadence.

Why inventory tracking is important?

This may come across as a very elementary question — obviously we need to know how much inventory we have in order to know when we to order our next production. However, many companies operate on a “general feel” for inventory or trying to calculate it by seeing how much they purchased last and how much they think that they’d sold since then. However, product spillage (waste / sampling) is going to happen and it’s important to know what your actual inventory is, not just what you think it is.

How do I get started?

There are a lot of tools out there that help with managing inventory (including ours!). However, we recommend always starting in an Excel Spreadsheet or Google Sheet. It’s near impossible to pick the right inventory technology if you aren’t tracking it in any capacity — how will you know whether or not you need to track finished goods or raw materials or both unless you just go do it? This process will help you understand the value that it provides for you and your business.

How does Pharus help?

At Pharus, we provide a full-scale inventory management and inventory forecasting tooling. We help at every step from marking down purchase orders and fulfillment of production orders to tracking sales in the interim periods. We provide inventory projections and analysis of inventory spillage to help you know when to order next and what you should be ordering. Here are a few screenshots of our inventory system — reach out if you want to learn more!