How to keep track of inventory? | Here is the answer

11 min read

What is inventory tracking?


The answer to “how to keep track of inventory?” refers to managing the quantity of the goods purchased and sold by the company throughout the business operations. 

how to keep track of inventory


Whether you are a new business or an already experienced one in your field, tracking your inventory is a must. It’s necessary for ensuring the healthy growth of your business. Inventory tracking is particularly common for those suppliers who produce physical goods. These are the goods that are specifically important to keep track of. They occupy space, they are likely to spoil, and they are subject to delivery when needed. 


Typically, inventory management is organized through tracking every SKU that would arrive in the store. SKU is the barcode available on the label of each product to be scanned by the product suppliers to enable them to track the product over the distribution, purchase, and delivery phases. 


How to keep track of inventory?


As technology evolves, new advanced ways are developing to keep track of inventory. Thus, the traditional tools are gradually replaced with new software systems and solutions. 

Therefore, this article is to introduce you to one of the newest and simplest software systems, which will guide you throughout your entire inventory tracking process. 


The way you have been doing it so far

Excel inventory template 


One of the most widely used tools for inventory tracking is Excel. It allows various useful, necessary, and efficient functions by enabling you to track your inventory through an inventory template designed by yourself. 

  • Inserting formulas! You will be encountering numerous calculations with every sale and purchase of an inventory, especially if you have chosen the perpetual inventory management system. Excel allows easing these calculations by creating a formula for each transaction. Later, it has all your costs, sales, and purchases measured automatically. 
  • Updating your inventory data with the sales quantity! Arrange your cells in the same size, select all of them, and notice the Sort function. By implementing this, you will be consistently reminded of important quantity-related information, which includes letting you know when to place new orders. Furthermore, using Sort is efficient for keeping track of the income generated as a result of inventory sales. You simply need to add a value for each unit of inventory and Implement the SUM function with Sort. When you update your orders, Excel will automatically calculate the income generated after every sale of inventory. 
  • Creating multiple sheets in a single document! There are many categories of inventory that you will want to track. Therefore, having to create a separate spreadsheet for each category would be time-consuming. Moreover, the likelihood of losing the file or forgetting to update it together with the other files is greater when you are working on more than one document for the same inventory data. Placing all your sheets in a single Excel document, naming them accordingly, and having them all handy will make you more productive and organized.


The way you should start doing it from now on

eSwap inventory management system


The flexible inventory management system designed by eSwap gives a chance to have all your inventory data on one screen.

  • Control your inventory by linking your listing! Linking enables you to connect listings from your stores to an eSwap product to keep your stock levels correct. For example, if you go to Products → Listings → Not Linked, you will notice your channels listings on the left part of the table and matching products in eSwap on the right side. Click on the Link Matchings button, and the system will automatically link products and list them in eSwap products. Afterward, the system will search matching products with SKU. After finding them it will automatically link them and update stock levels in different stores. This signifies that you have the same stock levels, which will be immediately updated by the system after Sale or Purchase orders. 
  • Manage your orders! With eSwap’s order management, you are able to track your orders from their draft status until when they are shipped!
  • Get into multichannel inventory management! One of the biggest benefits of using eSwap is that it enables to integrate with multiple shops, and keep track of the integration online momentarily. Therefore, you can integrate with such popular marketplaces and services such as Amazon, ebay, Shopify, Xero, etc. 
  • Report and analyze! The best tools to help you track your inventory efficiently are the ones enabling you to analyze the components of your inventory. This tool of eSwap system allows to control the following metrics: total sales, profit, cost of goods, taxes, discounts and quantity. 


Main formulas to know for keeping track of inventory 


There are a couple of formulas that are essential to know for keeping track of your company’s inventory. While the daily calculations conducted by a software system would help you guide the entire process of purchases and sales, these formulas will serve you for analyzing the sale frequencies of certain goods, their profitability, etc. 


Cost of Goods Sold 


The cost of goods sold is an expense account in the balance sheet, which signifies that it increases with debit and decreases with credit. It refers to the costs the company makes to produce its inventory, which include the labor payments, the raw materials, the transportation expenses, etc. 

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Inventory, Order & Shipping Management Software



COGS = beginning inventory + purchases – ending inventory 


Calculating COGS is essential for understanding the crucial inventory formulas, which include the inventory turnover ratio. 


Average Inventory


Average inventory is estimated to get a clue of a general inventory status for a specific period of time. Most commonly, business owners calculate monthly average inventory. This helps to determine how much inventory they have left after purchases and sales at the end of the month. 

The formula for this is:


Average inventory  =  beginning inventory + ending inventory 



Inventory turnover ratio 


Inventory turnover ratio is used to illustrate the frequency of the product’s sales. In other words, it shows the intervals on which the company sells the product. To calculate the inventory turnover ratio, we need to have both the COGS and the average inventory. Given these numbers, we are able to use the formula:


Inventory turnover ratio =    cost of goods sold

average inventory

Day’s sale ratio


Ultimately, to understand how many days you will need to sell your inventory, you would need to implement the day’s sale ratio. The only formula you need to use here is the inventory turnover ratio. Once you have it, you are all set.


Day’s sale ratio = 365 / inventory turnover ratio 




Tracking inventory is crucial for managing your budget, finding the patterns of your product distribution, recognizing the strengths and weaknesses of your selling process, etc. Inventory templates provided by Excel are helpful to organize your data, consistently update it and keep it handy. However, the eSwap software management system steps ahead of the traditional tracking methods by automatically updating your inventory sales and purchases, integrating with well-known services and managing your orders from one screen. Inventory calculation formulas, in their turn, are necessary to evaluate the movement of the inventory and to draw conclusions regarding that. 


To say it in a sentence, if there is an asset you need to constantly keep track of, that’s undoubtedly your inventory!