How Do Barcodes Work? Discover What Lies Behind the Stripes

Inventory accounting follows and marks the changes in inventory assets. This allows businesses to track how much inventory they have, what it is worth, and when it needs to be replaced.  It helps businesses avoid overstocking or undersupplying products, which can lead to financial losses. In this article, we will guide you through the advantages of this type of accounting and show you how it can lead to a more successful business. What is Inventory Accounting? Simply put, this is the process of tracking and reporting the value of a company's inventory. The goods that make up the inventory are placed in one of three categories: raw materials, work-in-progress, and finished goods. This is important to know, as your inventory can go from one category to the next until it is sold. Keeping track of all three categories is part of good business practices as it makes it much easier to calculate your profits at the end of an accounting period. It’s a vital tool for businesses of all sizes because it provides essential information about your company's assets and can also help improve decision-making, increase efficiency, and boost profits. Inventory Accounting Terms You Need to Know Before choosing the most suitable accounting method, it would be beneficial to get acquainted with two key terms - cost of goods sold (COGS) and ending inventory (EI) Cost of goods sold (COGS) can include materials, labor, and shipping. COGS is a key figure in many financial calculations, such as gross margin and operating expenses.  There are several different methods for calculating COGS, but the most common is to use beginning inventory plus purchases minus ending inventory. This method gives the company a good idea of the actual cost of its goods and allows for more accurate financial planning. Ending inventory (EI) is the merchandise that a company has on hand at the end of an accounting period. The ending inventory is essential for keeping a steady inventory balance because it represents the merchandise that will be used to generate sales in the next accounting period.  Accordingly, companies must carefully manage their ending inventory levels to ensure they have enough merchandise to meet customer demand.  Different Methods of Accounting for Inventory Management  There are several different inventory valuation methods used by businesses to determine the cost of their inventory. The most common ones are the first-in, first-out (FIFO) method and the last-in, first-out (LIFO) method.  The FIFO method assumes that the first items purchased are also the first items sold, while with LIFO, the assumption is that the last items purchased will get sold first.  Other less common inventory accounting methods include the weighted average and specific identification methods.  The weighted average method calculates the cost of inventory based on the average price of all units in stock, while the specific identification method tracks each item individually from the moment it enters the supply to when it is sold on.  We’ll get into each of these methods more to bring you the complete picture of their advantages and disadvantages. But no matter which inventory accounting policy is used, accurate inventory records are essential for proper financial reporting.  The Right Method for Your Business The choice of valuation method can have a significant impact on a company's bottom line.  As a result, accountants and financial managers must understand each method's pros and cons before choosing one for reporting purposes. FIFO Method The FIFO accounting method, or "first in, first out," is a method used to calculate the cost of the inventory on hand. The assumption with FIFO is that the first items acquired will be removed from the stock before the others. It is most often used in manufacturing and retail environments where products have a shelf life or expiration date. When using FIFO, the first inventory purchases are assumed to be sold first and are therefore charged to the cost of goods sold.  This method can help to prevent spoilage since older items are more likely to go bad before newer items.  While the FIFO inventory accounting method is not always the most efficient way to determine the cumulative inventory value, it can be a helpful tool for keeping track of stock levels and ensuring that materials are used in a timely manner.  It can help businesses avoid obsolescence, as older items are less likely to be sold if they can’t compete with newer items in stock. For example, stocking older iPhones isn’t likely to be profitable as the new model will be much more desirable than its previous generation.  The FIFO method is all about efficiency - by ensuring that the items sitting around the longest are used first, we can avoid waste and ensure everyone gets what they need.  LIFO Method LIFO stands for "last in, first out." It's a method of accounting for inventory management in which the most recent products added to inventory are the first ones sold.  The main advantage of LIFO is that it closely resembles the real-world flow of inventory, which can give business owners a more accurate picture of their actual profits and losses. LIFO can help businesses maximize their profits by selling goods that are likely in high demand. In some cases, LIFO can also help to improve customer service levels by ensuring that the most recently received items are the ones that are shipped out first.  This method can also have some disadvantages, however. For example, if prices rise, businesses using LIFO will report higher costs of goods sold and lower profits than those using other methods. As a result, LIFO is not always the best choice for businesses. Also, LIFO inventory accounting can lead to difficulties in managing inventory levels, as businesses may find themselves with a surplus of older items that are no longer in demand.  Weighted Average Method The weighted average accounting method uses the average cost of a company's goods sold during a period to determine the value of its ending inventory.  The weighted average cost is calculated by taking the total cost of goods available for sale and dividing it by the total number of units available for sale.  This method is a lot simpler than both FIFO and LIFO methods. It doesn’t offer the same level of accuracy as those two, but it does represent an efficient way to calculate your overall profit over a certain fiscal period.  Specific Identification Method This method is best used when accounting for stock comprising a small number of high-priced items like cars, machines, or jewelry.  That’s because this method assigns a specific cost to each unit of inventory rather than averaging the cost across all of them. The process is generally done by tracking inventory from the time it is purchased until the time it is sold, which requires additional resources, and, therefore, isn’t for businesses with a high number of different items that need to be tracked. How to Manage Your Accounting A company's inventory is one of its most important assets. It represents the raw materials, finished goods, and work in progress that a company has on hand to support its operations. As such, it is essential to have an accurate valuation of inventory in financial reporting. While many businesses choose to outsource their inventory accounting, there are several benefits to doing it in-house.  The most important benefit is that you'll have complete control over your data. This means you can customize your reports to fit your specific needs and ensure that the information is always accurate.  With good inventory management software and POS system providers that permit third-party interfacing with accounting software, you will be able to track inventory items as they move through the system. If you can find affordable accounting software, you'll also save money by avoiding the fees associated with outsourcing. Ultimately, accounting inventory by yourself can give your business a valuable competitive advantage. Whichever way you manage your accounting, doing so will offer several advantages. It can: Help keep track of inventory levels and value, Enable better detection of obsolete inventory, Help avoid overstocking or undersupplying products, Provide useful information for financial reporting, Help save money on inventory costs. Bottom Line In our inventory accounting guide, we showed you why this is such an essential tool for small businesses and how to use it to your advantage.  This type of accounting allows businesses to track their inventory levels, value their inventory, and make informed decisions about purchasing and selling merchandise.  It can also help businesses to manage their cash flow and provide information about when inventory levels are low and need to be replenished.  Overall, inventory accounting is a valuable tool that can help small businesses to run more effectively and efficiently.

Barcodes can be found on almost anything these days, from products at the grocery store to educational books at the university shop. They have many uses, including identifying products, ensuring improved inventory control, and scanning prices. What exactly is a barcode? Here we will delve a little bit deeper into what a barcode is and what it means, the different types of barcodes, their parts, and how they are used. What Does a Barcode Mean? One of the common challenges people have with barcodes is understanding what they are and what they mean. At its simplest, a barcode is a machine-readable representation of data. This data can be used to identify and track objects with a barcode reader.  Because barcodes can be read by machines, they can be automatically entered into a database to track inventory and inventory management. This can save businesses money by preventing them from overstocking products or accidentally selling items for less than they are worth. Types of Barcodes The most common type of barcode is the Universal Product Code or UPC. This type of barcode is used on products at the grocery store. Another common type of barcode is the ISBN, which uses 13 digits and can be tracked online without requiring a barcode scanner. Next, there are GS1 barcodes. What is a GS1 barcode? These barcodes are similar to UPC barcodes, but they are primarily used to track inventory and prices. GS1 actually stands for “global standards one,” which is an internationally recognized barcode standard for goods.  This type of barcode can be found on products at the grocery store, construction materials, books, and many other shippable items. Finally, there are QR codes. QR codes are a newer type of two-dimensional barcode that has become more popular over the years. They can be used to store information about a product or website on various surfaces, including stickers, posters, and even t-shirts that you can wear.  QR codes can quickly be scanned by a smartphone to instantly access anything on the internet, from company websites to restaurant menus. As you can see, all types of barcodes have a purpose in business and deciding on which one to use ultimately depends on the way your business operates. Parts of a Barcode Barcodes have two main parts: the human-readable part and the machine-readable part. The human-readable part is the series of numbers or letters that you can see. This part is used to identify the product. The machine-readable part is the series of black and white bars that the machine reads. This part tells the machine what the product is and how it should be tracked. Uses of Barcode Technology So what is a barcode used for? Barcode scanners and technology can be used in a variety of ways. The most common use is helping businesses with inventory balance, tracking goods, and querying the database for product prices on the spot.  This can be helpful for retail stores to prevent overstocking or selling below market price. Barcodes can also be used to track library books, products at the grocery store, and other items. However, some types of barcodes, such as QR barcodes, can also be used for marketing purposes. Since they are 2D, these barcodes can be printed on signage, mugs, hats, and all sorts of business marketing materials. Benefits of Barcode Technology There are several benefits of using barcode technology. One is that it can save retail stores time and money by preventing them from overstocking products, miscalculating inventory, or accidentally selling items for less than they are worth. Another benefit is that barcodes can be used to track a variety of objects, from college books to products at the grocery store, with barcode scanners. This can be helpful for people who are trying to keep track of their belongings and for retail stores using it for part management and inventory control. Final Thoughts A barcode is a machine-readable representation of data used to identify and track objects. They can be found in almost anything, from products at the grocery store to library books. Barcodes can save businesses time and money by preventing them from accumulating too much inventory, miscalculating, and wasting precious resources. Additionally, barcodes can be used to track a variety of products and objects. This can be helpful for people who need to keep track of their belongings or for businesses that need inventory tracking. The uses of barcode technology are endless and will continue to evolve over the years with the adoption of QR code technology by the average smartphone user. Now that you know what a barcode is, you will know exactly how they work next time your shop at a retail store or use the postal service.

Amazon is a behemoth of a company. It dominates the online retail market and shows no signs of slowing down. But what many people don't know is that Amazon's success relies heavily on its distribution network.  This system consists of many parts, all of which work together to ensure speedy and accurate delivery of products to customers. In this article, we'll take a look behind the scenes at how inventory management at Amazon works. We'll examine the segments of this system and how they all work together to make Amazon the giant it is today! The Importance of Amazon’s Inventory Management  Amazon has made a fortune by being extremely efficient in its inventory management. It has come a long way since it opened its first warehouses in 1997, both in terms of storage space and supply chain logistics. Although the company now owns storage space of over 300 million square feet in the United States, it has also made steps toward a simpler, just-in-time inventory system. This means Amazon orders products from suppliers when they are needed to fill customer orders. Owing to this approach, Amazon can avoid the cost of storing excess inventory. Moreover, the products are less likely to become outdated or damaged while sitting on shelves. Of course, this system requires a high degree of coordination between Amazon and its suppliers. But, by carefully managing its inventory, Amazon has been able to achieve unprecedented levels of efficiency and profitability. How Does Amazon Manage Its Inventory  When Jeff Bezos founded Amazon in 1994, he had a simple mission: To be Earth's most customer-centric company. To achieve this goal, the people at Amazon have always been willing to experiment and take risks, whether it's developing new technologies like the Kindle or reinventing the way we shop with Prime.  Behind the Amazon inventory management system lies a simple insight that eCommerce customers want their goods as quickly as possible and to get as close as they can to the experience of shopping at a physical store. To help them achieve that, Amazon uses modern tech throughout the process, from online shopping to the last stages of delivery. The company has a team of data scientists who analyze customer buying patterns and use that information to forecast future demand. The goal is to maintain a good inventory balance, meaning get exactly the right amount of stock. In turn, this would reduce waste and ensure that the products customers want are always available.  Amazon uses technology to keep track of its inventory. It boasts GPS-enabled devices that scan items as they are loaded onto trucks and uses RFID tags to track items as they move through warehouses. This allows the team to know exactly where each item is at all times, so they can quickly find and ship it to the customer who ordered it.  State-of-the-art logistics ensure that products are delivered efficiently to Amazon warehouses. In the delivery of goods to an Amazon fulfillment center, the use of its custom app Relay streamlines the process for both the warehouse and the delivery vehicles. Another big part of Amazon's warehouse management system is its use of robots and artificial intelligence. With more than 520,000 robots in their fulfillment centers around the world, Amazon teams get considerable help from these robots in moving inventory around and loading it onto trucks for shipping. In addition to physical robots, Amazon relies heavily on artificial intelligence to help manage its inventory. For example, the company uses AI-powered algorithms to predict which items are likely to sell well in the future and stock accordingly.  The company became the third approved provider of drone delivery services in the US. This innovation is meant to give Amazon an advantage over its competitors by lowering the costs of last-mile delivery, which is often critical in terms of the resources it requires.  Thanks to these efforts, Amazon is able to keep its inventory well-stocked and fulfill customer orders quickly and efficiently.  Amazon Facilities and Shipment Process Facilities play a vital role in this system, as there are currently 305 Amazon fulfillment warehouses. These are giant storage spaces that hold inventory and are connected to Amazon’s distribution network. When customers order items from Amazon, they are sent from the nearest fulfillment center. The company also has over a thousand distribution centers, which are used to store products before they are sent to fulfillment centers or customers.  Although the fulfillment center is at the heart of Amazon’s operations, there are five facility types that make up the Amazon distribution network. We’ll take a quick look at what they are and what part they play in Amazon’s order management. Cross-Dock Center Amazon cross-dock centers are basically large warehouses where inventory is sorted and then shipped out to fulfillment centers. The term "cross-docking" comes from the fact that these facilities typically have loading docks on both sides of the building so that inbound and outbound shipments can be loaded and unloaded. As the first stop in Amazon’s warehouse system, cross-dock centers have a much smaller staff than traditional warehouses since there is no need for employees to pick and pack orders. Instead, the focus is on rapidly and accurately sorting inventory as it arrives so that it can be quickly reloaded for shipment to its final destination. Fulfillment Center The Amazon fulfillment center network is one of the most important pieces of infrastructure in the company's business model. By stocking inventory in large warehouses and using sophisticated software to track sales and trends, Amazon was able to create one of the best inventory management systems on the market.  Each Amazon fulfillment warehouse stores merchandise until it is sold. When an order is placed, the appropriate item is picked off the shelf and shipped to the customer.  As Amazon’s average fulfillment center is 800,000 square feet, the company uses a complex system of barcodes and scanners to keep track of all the items. When an item arrives at a fulfillment center, it is assigned a barcode that is scanned into the system. This allows Amazon to track the location of every single item in its inventory at all times. Sortation Centers Amazon sortation centers are distribution facilities where orders are sorted by destination ZIP code and then shipped further. At a sortation center, workers scan and sort customer orders before loading them onto trucks for delivery. By sorting orders according to their destination ZIP code, Amazon is able to reduce shipping times and costs.  Delivery Stations Delivery stations are also an essential part of Amazon’s warehouse management structure, as the last-mile delivery that they serve contributes to cutting delivery costs.  These delivery stations are small warehouses that package and ship orders to customers. Amazon workers at these facilities pick, pack, and ship customer orders. Some delivery stations also serve as sorting centers, where packages are sorted by destination before being sent out for delivery.  Amazon Prime Now  Amazon Prime Now is a service that offers ultra-fast delivery of items from local stores and restaurants. It is currently available in the United States, the UK, and select markets across the world. In each city, Amazon has established so-called "Prime Now hubs," which are staffed with drivers and personnel who fulfill orders placed through the Prime Now app.  How Do Fulfillment Centers Work  A key part of Amazon’s eCommerce inventory management strategy, the fulfillment center network ensures the speedy service Amazon customers have come to expect. However, these centers don’t function the same way you would guess.  Most businesses designate areas of their storage facilities for certain types of goods, let’s say, apparel or tech. But because of the enormous space that Amazon’s warehouses occupy, this wouldn’t be efficient at all. Instead, as soon as the commodity arrives at the fulfillment center, it is placed on the first available shelf. Both the item and the shelf barcode are scanned and entered into the system so the item could be located.  When something needs to be picked up for shipment, it’s usually time for robots to assist. The robot waits for the Amazon employee at the designated shelf, its job being to take the item and drop it off for shipment. This saves time, as workers don’t have to cart from the shelf to the shipment area.  How Can You Benefit From Amazon’s Warehouse Management? Anyone who has ever shopped on Amazon knows that the company is an eCommerce powerhouse. But what does this mean for you, the customer? Well, there are certain benefits to Amazon's efficient warehouse management. For example, you can often find great deals on items that are in stock and ready to ship. Moreover, Amazon Business is one of the prime wholesale websites where you can find supplies in bulk and pay less, especially if you're stocking up for your company.  There are also advantages if you’re using Amazon Marketplace to sell your products. You can benefit from Amazon’s FBA inventory management service. The Fulfillment by Amazon program takes care of the entire process from order to delivery. The only thing left to do is optimize the keyword research for your product and push it up Amazon Marketplace rankings. Then sit back and watch your sales volume go through the roof. Bottom Line Amazon has become synonymous with eCommerce for good reason; the company has revolutionized the way we shop. Certainly, a big part of Amazon's success is the efficient management of its massive inventory. By leveraging a combination of fulfillment centers, robots, and artificial intelligence, Amazon is able to keep track of every single item in its inventory at all times and ensure that popular items are always in stock.