Types Of Inventory Systems

Inventory Software

There is more than one type of system that you can use to keep track of your inventory. Drum roll, please. In fact, there are… two! Not as dramatic as you may have been expecting, but we are boiling everything down to their essence here.

The two types of inventory systems are:

  • By Hand
  • By Barcode Scanner

That is it. You really only have two options, and here they are. Of course, there is quite a bit more complexity to them than can possibly be contained these short names, so we will plow ahead and see which one works best for your business. So join us as we explore the two main types of inventory systems!

By Hand

By default, many small businesses keep track of their inventory manually because that is just the way they started managing their inventory in the beginning and so they have carried it with them through the years. It is natural for a startup to keep track of their inventory by hand because notepads, pens, pencils, and Excel spreadsheets are all cheap. Cost is a major issue to extremely small businesses because they do not have the resources at their disposal to afford a more complex inventory management system nor do they even need one because their needs are so small. If you think about it, it makes perfect sense. A startup most likely does not have multiple locations to worry about or a huge amount of inventory to track. It is only as a small business grows and moves past the initial stage that suddenly they find themselves in need of an improved inventory systems type.

As we have explained, small businesses often use a manual inventory system type because they already have access to Excel spreadsheets, and they do not have a lot of inventory to manage compared to much larger organizations and companies. Small businesses use Excel spreadsheets to organize data on their purchases, inventory levels, and reorders. They can do this because they do not have an enormous volume of purchases, inventory levels, and reorders to monitor, but this will eventually change for any successful business.

In the long term, the manual inventory systems type is probably the most expensive way to keep track of inventory due to the amount of time and the general lack of efficiency involved in making it work. It is painfully slow to attempt to manage inventory by hand. It requires hours and hours of physical cycle counts to make sure nothing has been forgotten and that the numbers on the books are actually accurate. In business, things are in a constant state of flux, and so warehouse managers have to record every big and small change they make to their inventory as sales orders come in and purchase orders go out.

Keeping track of inventory by hand is also problematic because it makes it difficult to forecast changes in supply and demand, which can result in product shortages and overstock. This can be disastrous if it leads to shortages at times when your customers are earnestly seeking certain products from you. If they go away empty handed, you can bet that this will not reflect favorably on your business in their eyes. Excel is simply not designed to help you generate in-depth reports on how to make the best use of your limited resources to manage your inventory.

By Barcode Scanner

Now we come to the automated inventory systems type. For most companies, adopting a barcode inventory system is a big step up from doing everything by hand. Using barcodes and scanners can save a lot of time. Fishbowl Go is an app that can be installed on both Apple and Android mobile devices to facilitate barcode scanning. Fishbowl Go integrates seamlessly with the main Fishbowl software, known as Fishbowl Manufacturing and Fishbowl Warehouse. These manufacturing and warehouse management solutions can get automatically updated with new inventory quantity levels when parts and products are scanned via Fishbowl Go. Fishbowl’s barcode scanners also speed up the cycle counting process.

Barcode scanners can be used to quickly order more of an item in your inventory when the quantity that is currently in stock gets too low. Just scan the item’s barcode and put in the number you want to reorder and it will be automatically sent over to Fishbowl Manufacturing or Fishbowl Warehouse to generate a purchase order and get it into the hands of the appropriate vendor. Barcode scanners allow you to keep inventory moving in and out of your warehouse at a rapid rate. In addition, you can scan every item in your warehouse once and set up automatic reorder points for them to save some work and make sure that your inventory quantities are always up to snuff. This way, you can do all of the work once and then not have to worry about doing it manually in the future. When an item falls to its automatic reorder point, Fishbowl will inform you that it is time to reorder and it will even let you know the quantity that you have set up to reorder. This saves a lot of time and it keeps you in the loop so that you will always know where you stand in terms of your inventory management.

Fishbowl is compatible with a variety of barcode scanners, offering a more efficient route to create purchase orders, cycle count inventory in the warehouse, reorder products on a regular basis, and track inventory in your warehouse and even across multiple warehouses. Fishbowl Manufacturing and Fishbowl Warehouse also integrate seamlessly with QuickBooks, which means that everything you enter into Fishbowl is recorded in QuickBooks. For example, when you fulfill a sales order, QuickBooks will generate an invoice to include with the package when it is shipped, and QuickBooks will also record the sale in the general ledger.

Fishbowl is the right solution for your business. Get a custom demo of Fishbowl software.

Need an easy way to create barcodes? Click here to access Fishbowl’s Free Barcode Generator.


There are two main inventory systems types:

  • By hand – Spreadsheets, hand notes, and other manual means.
  • Barcode scanner – An automated software solution accessible on mobile devices.

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