Only 1% of retail brands and D2C manufacturers have 90% inventory accuracy. 39% of those struggling cited siloed inventory data as a major issue.
When data is fragmented, businesses face overstock and stock-out situations. This poor inventory accuracy can hinder growth and competitiveness in the market.
This article explores how maintaining an accurate inventory database can help tackle these challenges. Learn its definition, real-world cases demonstrating its benefits, and fundamental design principles for success.
Building Inventory Database: Table of Contents
What is an Inventory Database?
An inventory database is a single repository for inventory-related data (e.g., purchase records, product descriptions, and inventory levels). Businesses dealing with physical goods—like manufacturers and retailers—use this for efficient inventory management.
The database is the central point of all connected systems across the supply chain.
If integrated into an Enterprise Resource Planning (ERP) system, the database provides real-time cost information. Finance teams can easily track the value of on-hand stocks and prepare accurate financial statements.
Organizations can likewise sync it with Warehouse Management Systems (WMS). The WMS feeds data to the database and automatically syncs inventory updates as warehouse staff pick, pack, move, and ship items.
Maintaining a database for inventory management can reduce carrying costs and support real-time visibility across multiple locations. The following section explains how it works.
How Inventory Databases Facilitate Real-Time Tracking
Sales, restocking, and logistical movements make inventory levels unpredictable. Fortunately, an inventory database offers oversight by providing real-time data tracking and monitoring in multiple ways:
Real-time stock level monitoring
An inventory database leverages technology to track up-to-the-minute inventory movements. The balances automatically reflect all inventory-related transactions as they happen.
For men’s grooming product brand Fulton & Roark, NetSuite’s ERP integration spared them from error-prone, time-consuming spreadsheet management.
Pre-integration, they performed manual double data entry: recording data in spreadsheets and updating financial and inventory information in their desktop accounting software.
Fulton & Roark today maintains efficient operations and accurate stock levels. They gained better visibility into margins and inventory, further supporting their e-commerce growth.
“An inventory database is not just a record-keeping system; it’s a strategic tool that drives efficiency and profitability.”
— Anonymous
Low-stock or overstock alerts
Databases can be configured to trigger automated notifications when inventory levels dip below a certain threshold. Thus, teams can reorder supplies before shelves run dry.
Overstock alerts, on the flip side, can signal when products are sitting idle. Marketers can then run promotions or redirect surplus inventory to other high-demand areas.
The retail industry expects inventory distortion to cost $1.77 trillion—overstocks accounting for 32% and out-of-stocks for 68%.
These inventory problems are inevitable for most businesses, but it doesn’t have to be the norm. They can boost customer satisfaction, mitigate financial losses, and keep cash flow fluid with real-time insights on inventory levels.
“What gets measured gets managed.”
— Peter Drucker
Batch and expiration date tracking
Inventory databases feature real-time tracking capabilities for users to identify products nearing expiration dates. This is crucial for food and beverage, pharmaceutical, cosmetic, and other industries with perishable goods.
The fewer expired products businesses have, the less money they lose. A McKinsey report found that grocers and manufacturers could save $80 billion in new market potential by repurposing food that would otherwise go to waste.
Knowing how long products last and predicting future demand can help achieve that. Still, these are all contingent upon having accurate, reliable data in the inventory database.
Below are best practices to help maintain this accuracy.
How to Maintain Accuracy in Your Inventory Database Design
Well-structured databases facilitate seamless storage and quick retrieval of inventory data. Users should find it easy to find, add, update, or remove every piece of information.
Mapping out the database components—entities, attributes, and relationships—can help attain this. Below are inventory database components for Serene Sip, a fictional premium tea shop, for illustration.
1. Entities and Attributes
Entities represent the core objects or components within the database to keep track of. Each entity corresponds to a real-world object, concept, or event relevant to the business.
Meanwhile, attributes are the specific data pieces that describe or define an entity. They have a data type, such as text, number, date, or boolean.
- Products. The Products entity stores information about each product available at Serene Sip.
Attributes | Examples |
Product ID | 1001 |
Name | Matcha Set |
Description | A complete matcha set including premium matcha powder, a bamboo whisk, a ceramic bowl, and a scoop. |
SKU | MST-BNDL-001 |
Price | $39.99 |
Quantity on Hand | 120 |
Reorder Level | 30 |
Category | Tea Blends |
- Suppliers. The Suppliers entity displays all the brand’s supplier information.
Attributes | Examples |
Supplier ID | SUP-0012 |
Name | Kyoto Tea Co. |
Contact Information | Phone: (987) 654-3210 Email: info@kyototeaco.com |
Address | 123 Chai Street, Kyoto, Japan |
Lead Time | 3 weeks |
- Customers. All data related to Serene Sip’s existing customers go under this entity.
Attributes | Examples |
Customer ID | CUS-000268 |
Name | Reica Bloom |
Contact Information | Phone: (123) 456-7890 Email: reibloom@gmail.com |
Address | 456 Wellness Way, Tea Town, CA |
- Orders: This entity tracks customer orders, indicating purchased products and current order status.
Attributes | Examples |
Order ID | 1105181900 |
Customer ID | CUS-000268 |
Order Date | 19-11-2024 |
Total Amount | $119.97 |
Order Status | Processing |
- Inventory Transactions. This entity tracks stock level changes: addition (i.e., purchases and customer returns) and subtraction (i.e., sales, supplier returns, damaged/spoiled goods).
The example below illustrates Reica purchasing 3 matcha sets.
Attributes | Examples |
Transaction ID | MRAX1234310121 |
Product ID | 1001 |
Transaction Date | 19-11-2024 |
Quantity Changed | -3 |
Type | Subtraction |
Each database entity must be designed to work cohesively with others to enhance data flow. That’s where relationships come in.
2. Relationships
Relationships define how different data entities interact with one another (i.e., one-to-many or many-to-many). These components help maintain data integrity and facilitate complex queries.
Serene Sip would organize key relationships within its inventory database as follows:
- Product-Supplier Relationship (One-to-Many). A supplier delivers multiple products to Serene Sip, and those products are only distinct to that supplier.
Example: Kyoto Tea Co. supplies tea products, including the matcha set and other tea blends.
- Customer-Order Relationship (One-to-Many). A single customer can place multiple orders, but each order is linked only to one customer.
Example: Reica Bloom may purchase matcha sets today and order a chamomile tea sampler next week—a different order entry.
- Product-Order Relationship (Many-to-Many). An order can include multiple products, and a product can appear in multiple orders.
Example: Serene Sip manages orders through a junction table (e.g., OrderDetails). It links products to their respective orders, such as Reica Bloom purchasing 3 matcha sets.
Optimizing these considerations in your inventory database design can help streamline the inventory management process. They keep the database reliable, user-friendly, and accessible.
Reinforcing Inventory Database Integrity
Databases offer real-time tracking, low-stock alerts, and batch expiration monitoring to optimize inventory management systems. However, the data stored within your inventory database is only as valuable as its accuracy.
Partner with Infoverity to enhance your database integrity and validation. Our Master Data Management (MDM) solutions help maintain accurate and consistent inventory data, streamlining data processes and reducing duplicate efforts.
