How does a perpetual inventory control system operate?

A perpetual inventory control system operates by updating inventory records continuously every time an item is sold or received. This means that as sales are made or stock is restocked, the system instantly reflects these changes in the inventory levels. This real-time tracking allows businesses to maintain an accurate account of stock on hand, which aids in better decision-making regarding ordering, stock management, and overall inventory optimization.

This approach helps prevent stockouts and overstock situations because the business always has up-to-date data on inventory availability. It enhances the efficiency of operations, enabling retailers to respond more quickly to demand and adjust inventory levels as needed. The capacity to monitor inventory levels consistently is a significant advantage compared to systems that rely on infrequent counts or manual recording methods.