Your inventory goes through so many hands along the way — making it difficult to track and safeguard. The goal of freight inventory tracking is to ensure that you can accurately track your inventory from beginning to end.
Here’s what you need to know to start accurately tracking your inventory:
What Is Inventory Tracking?
Inventory is an important investment, and you should know where it is at all times. This is the purpose of inventory tracking.
Inventory tracking helps ensure inventory's safe and efficient transport to and from suppliers, carriers, and customers.
What Are the Different Stages of Inventory Tracking?
There are four different stages of inventory tracking you need to know about so that you always know where your shipments are:
Tracking Inventory From a Supplier
Inventory tracking begins even before products are in your possession. Unless you’re producing products on your own, you’re likely getting them from a supplier — a process that requires tracking to safeguard your investment.
You often have to plan for the delivery of a shipment to ensure that you can accept it and that it’s properly stocked. If you’re not yet tracking your inventory, however, you could end up missing the delivery.
Tracking Inventory to a Customer
Perhaps the most important stage of inventory tracking is when it goes from your warehouse to a paying customer. After all, you’ve likely provided your customer with a delivery date, which they are actively anticipating.
If anything goes wrong along the way, it’s important to take notice, inform the customer, and take steps to get the shipment back on track. For this reason, inventory tracking is an essential component of providing excellent service to your customers.
Tracking Returns From a Customer
Another stage of inventory tracking involves tracking inventory that a customer is returning. This stage of inventory tracking can quickly get complicated depending on what the item is and why it’s being returned.
For example, you would likely handle the return of a defective product differently than you would handle the return of an item that the customer simply didn’t like. Some returned items could potentially be re-sold, which is why it’s important to keep tracking these items.
Tracking Damaged Goods
Finally, you need to be tracking damaged goods. It’s essential to track damaged goods to maintain accurate inventory counts. For example, say that you have ten damaged products but don’t account for them in your inventory.
If your inventory gets low, you’re then left thinking that you have ten products to sell, when in reality, you have zero.
What Are the Most Important Concepts Used in Freight Tracking?
You can become a freight tracking professional in no time with this list of key concepts and definitions:
- Less-than-truckload shipping (LTL): LTL freight refers to a smaller shipment that doesn’t take up an entire truck and weighs between 150 and 15,000 pounds. These smaller shipments are charged based on how much space they take up, making them very cost-effective. The carrier then fills the remainder of the truck with other loads to maximize its profits.
- Full truckload shipping (FTL): Refers to shipments that take up an entire truck all on their own. These larger shipments are the only ones on the truck. However, it’s still possible to use full truckload shipping even if your load doesn’t technically take up the entire truck; you just need to be prepared to pay a premium to reserve the entire truck.
- Progressive rotating order (PRO) number: Refers to a tracking number with seven to 10 digits to identify the freight shipment. Shippers can view freight pickups, stops, and deliveries with the PRO number.
- Standard Carrier Alpha Code (SCAC): Refers to a specific carrier assigned by the National Motor Freight Traffic Association (NMFTA). With the SCAC number, shippers can view the carrier in charge of their shipment.
- Tracking number: The PRO number and the SCAC are combined to form a complete tracking number that identifies the freight and carrier transporting the shipment. Shippers can enter their tracking number online to view the status of their shipment.
- Shipping barcode: The PRO number and the SCAC are combined to form a shipping barcode that you can quickly scan at each point in the journey. When the shipping barcode is scanned, the shipping status is updated, and the shipper is notified.
- Bill of lading (BOL): Refers to a shipping document issued by a carrier to a shipper that contains important information about the shipment, including the sender, the recipient, origin, destination, dimensions, weight, value, and description. The document and BOL number acts as a shipping receipt and must be signed by an authorized representative at each transaction between the carrier, shipper, and recipient.
Why Is Inventory Tracking Important?
While tracking your inventory’s shipment status may seem complicated and perhaps unnecessary, it’s extremely important. Here are some reasons why you should care about inventory tracking for your business, no matter its size:
1. Inventory Tracking Can Prevent Missed Sales
There’s nothing worse than missing a sale due to out-of-stock items. Most customers aren’t willing to wait around for your items to come back into stock. Instead, they will simply look elsewhere.
Even if out-of-stock items are an anomaly for your business, they can still result in thousands of dollars in missed sales when they do occur. You can prevent missed sales and avoid potential losses by tracking your inventory.
2. Inventory Tracking Improves Customer Satisfaction
No matter how amazing your products are, your customers aren’t satisfied with delayed shipments or shipments that get lost and never arrive. As a result, inventory tracking can improve customer satisfaction by ensuring that shipments arrive on time.
Even if a shipment is delayed for an unavoidable reason, inventory tracking allows you to notify the customer ahead of time — something that’s always appreciated. If a shipment gets lost, you can quickly send a replacement item to the customer and save face.
3. Inventory Tracking Provides Valuable Insights
Accurate data is an essential component of running a successful business printed for future growth. When you’re not properly tracking your inventory, you’re likely dealing with inaccurate financial reports as a result.
While a few inaccuracies here and there might not seem like a big deal, it could lead to a domino effect — affecting everything from your balance sheet to your profit and loss reports. The good news is that you can easily avoid these issues by tracking your inventory.
4. Inventory Tracking Simplifies Reordering
The reordering process is difficult. On the one hand, you don’t want to order too many products. On the other hand, you don’t want to short your order. Due to supply chain issues and lengthy shipping time frames, timing is also an issue with reordering.
However, when looking at an accurate inventory sheet, you can quickly determine how many products you need and when you need them. After they’ve been ordered from the supplier, you can continue to track and get notifications about them until they arrive.
5. Inventory Tracking Can Lower Warehouse Costs
Last but certainly not least, inventory tracking can help lower your warehouse costs. On the one hand, inventory tracking ensures that you always have the right inventory in stock. Too much inventory leads to increased warehouse costs, whereas too little inventory leads to shortages and losses.
Inventory tracking also helps with the picking and packing processes. Accurate inventory information can help warehouse staff quickly pick and pack your orders instead of running around looking for items that aren’t where they’re supposed to be.
How Does Freight Tracking Work?
Several different players are involved in the freight tracking process that determines how the process actually works.
Carrier
A carrier transports your goods from a designated origin to a designated destination. It’s important to work with a carrier that’s properly licensed, registered, and insured to guarantee the safe arrival of your shipment. It’s also important to trust your carrier based on experience and reputation.
You can check the status of a carrier through the Federal Motor Carrier Safety Administration. The FMCSA is the federal entity tasked with ensuring safety in motor carrier operations and has developed strict requirements and regulations that carriers must abide by.
Freight Broker
It can be difficult to find a trustworthy and reputable carrier on your own, which is why you may want to consider working with a freight broker. A freight broker works with both shippers and carriers to match qualified carriers with shipments that need a delivery.
Freight brokers are a great option if you’re looking to ship a large number of goods, need your goods shipped quickly, or have other specialized shipping needs. Since freight brokers have large carriers networks, they can handle a high volume of shipments. This also means that they’re able to get orders shipped more efficiently.
Finally, freight brokers can meet a wide variety of different shipping needs, including but not limited to less-than-truckload shipping, full truckload shipping, intermodal shipping, cross-border shipping, drayage shipping, and expedited shipping.
The best freight brokers also offer access to dry vans, flatbeds and reefer shipping if necessary.
Third-Party Logistics
If you’re looking for more than just shipping assistance, you should consider third-party logistics services that handle different aspects of order fulfillment. Stay tuned for more information about 3PL companies to choose the best solution for your shipping and inventory needs.
What Are Some Limitations of Inventory Tracking?
Inventory tracking comes with both advantages and disadvantages. Here are some of the challenges of inventory tracking that you need to be prepared for:
Inventory Tracking Is Complicated
Inventory tracking tends to be quite complicated. After all, you’re dealing with thousands of units that are constantly moving. With so many moving parts, you need to be extremely diligent and organized to track your inventory effectively.
Inventory Tracking Is Time-Consuming
Since inventory tracking is so complicated, it can take up a ton of your time. When it comes to inventory tracking, you need to work smarter — not harder. Thankfully, it’s possible to efficiently track your inventory with an inventory tracking system — more on those later.
Inventory Tracking Might Be Inaccurate
Inventory tracking is also prone to flaws and inaccuracies. One wrong move can mess up the entire system. As a result, it’s important to have a contingency plan if your inventory tracking isn’t 100% accurate so that you can quickly locate an item.
How to Effectively Track Inventory?
The challenges of inventory tracking can be solved by implementing an inventory tracking system. There are many different systems of inventory tracking to choose from depending on your volume, budget, and needs.
1. Card System
In the old days, inventory tracking was done using a card system wherein each shipment had its own card, and each shipping transaction was then written down on the card.
The card system comes with a lot of flaws. For starters, it’s prone to human error since each transaction has to be manually written down. Additionally, writing down every transaction for each shipment is extremely time-consuming. Finally, the card system can be difficult to track and organize since it’s all done manually.
2. Spreadsheet System
As technology advanced, spreadsheets presented themselves as a better inventory tracking method. Creating a spreadsheet with all the information you need to track your inventory effectively is quite quick and straightforward. For example, you can include your SKUs, quantity, and location columns.
While spreadsheets may seem technologically advanced compared to the card system, they still involve a great deal of work since they need to be manually updated. For this reason, spreadsheets are ideal for inventory tracking for small businesses with small volumes of products and orders.
However, businesses quickly outgrow the spreadsheet system as they gain more products, customers, and orders.
3. Inventory Tracking Tools
Many businesses these days opt to use inventory tracking tools to manage their inventories. These tools take a lot of the work out of inventory tracking by using automated processes. These tools come in many different forms with various capabilities depending on your needs.
However, inventory tracking tools also come at a cost. Most inventory tracking tools require a monthly subscription, although there may be several different pricing plans to choose from.
4. Third-Party Logistics Companies (3PL)
If you’re looking to lighten the load of inventory tracking, then you should consider outsourcing to a third-party logistics company. A 3PL can handle everything from order storage to picking, packing, shipping, and receiving.
Depending on the size of your company, working with a 3PL in these areas could prove to be extremely worthwhile. Just be aware that 3PL companies often charge premium prices for these specialized services.
It’s up to you to determine whether it’s worth it or not.
Conclusion
The first step to accurate inventory tracking is to work with a reputable logistics provider like RPM. RPM actively tracks and monitors your shipments to make sure that they arrive on time.
Sources:
Bill of Lading Definition | Investopedia
19 Best Inventory Management Software Apps | NerdWallet
Is Third-Party Logistics Good for You? Advantages and Disadvantages | Market Business News
