In inventory management, businesses rely on a standardized measurement unit to count, order, track, and audit inventory. This is known as inventory units of measure or UoM. In this article, we’ll better define inventory united of measure, discuss its importance, and provide a handful of inventory UoM best practices that can help save your business time, money, and stress.
What is a UoM in inventory?
Inventory UoM, or inventory units of measure, are the standardized, physical units by which your business quantifies its stock. Units of measure help businesses understand how much of a given product they really have in stock—and how much they’re ordering from a vendor or selling to a customer.
Examples of units of measure include:
Just about every kind of business relies on UoM to manage inventory. From warehouses to shipping partners to retailers, units of measure create clarity along every touchpoint of the supply chain. Sometimes, all parties will use the same UoM to avoid pesky conversions—and costly errors.
Imagine a wholesaler sells a bakery steel-cut oats and a variety of other dry goods. The bakery emails their contact person at the wholesaler requesting an array of items, including “20 oats.” The wholesaler isn’t sure what the customer means. Do they want 20 pounds of oats? Twenty five-pound bags of oats? Twenty cases of oats, which contain ten bags each?
There’s no way to be sure. That’s why both the wholesaler and the bakery should agree upon a standard UoM for all communication, from ordering to invoicing. By clarifying precisely what unit of measure oats are bought and sold, the two companies have eliminated a significant source of confusion.
That’s why all order sheets, inventory lists, and invoices must also clarify units of measure. Businesses of all shapes and sizes should ensure that UoM is always articulated across all mediums, from inventory reports to demand forecasting reports.
Why is UoM in inventory so important?
As noted above, inventory units of measure significantly reduce confusion about inventory quantity both internally and between businesses and their vendors and customers. All partners along the supply chain enjoy more efficient, less error-prone daily operations by clarifying the exact UoM by which inventory is counted, reordered, purchased, and sold.
Another benefit of UoM? It ensures complete, as-expected orders for businesses where time is money. For example, in the construction industry, a job site that needs 200 steel beams will incur significant delays if a UoM error results in the delivery of only 20 steel beams. This work stoppage can push a whole project back weeks, raising costs (and stress levels) for the business.
Moreover, while UoM is undoubtedly important for all businesses, it’s especially crucial for industries that provide essential services. For companies in the health, medicine, and safety sectors, it’s all the more necessary to ensure that when delivery of medication or personal protective equipment arrives, the order arrives as expected.
UoM best practices
There are a variety of best practices that can help your business track inventory UoM more accurately and efficiently. Here are five of the most important:
- Use all lowercase UOMs. This will keep your inventory lists tidy, readable, and consistent—even across multiple locations. (Think: lbs., kgs., and ft.)
- Avoid UoM like “each” and “piece” whenever possible. These vague terms can create confusion, especially if you rely on multiple vendors or store products across various locations. Pick the most precise, most specific UoM possible.
- Whenever possible, avoid converting UoMs. If you can track inventory using the same unit of measure you buy and sell it in, you should. (This is only sometimes possible.)
- Whenever possible, use consistent UoMs internally. While you can’t always control your vendors’ UoMs, insist that all internal business locations track inventory using the same UoM. This will make everything from accounting processes to year-end audits that much easier.
- Create a reference guide for UoM conversions if necessary. Make sure every person on your team understands what UoM your business uses internally and how that differs from UoM used by suppliers and customers.
Related: How to Find Suppliers You Trust
Why UoM changes along the supply chain
In a perfect world, all partners along every notch in the supply chain would use the same units of measure to quantify inventory. But for a variety of reasons, this is next to impossible. After all, manufacturers and wholesalers may move massive volumes of inventory and require a higher UoM to manage their stock. Retailers, and especially end customers, may work in significantly smaller numbers by default. Traditional suppliers may desire a UoM somewhere in the middle.
Regardless of how UoM changes for inventory along your supply chain, ensure that your internal team has clarity about these discrepancies. For example, if your business tracks and resells paint by gallon but purchases it from a manufacturer in 20-gallon vats, your inventory management system should reflect the change. Your inventory app (or spreadsheet) should identify the UoM as 1 gallon, but your ordering protocols should also clarify the vendor’s UoM.
How to keep track of UoM using inventory management software
Your business should implement an inventory management system that tracks UoM and can help your business create more accurate, efficient inventory tracking processes. Fortunately, modern inventory management software allows your business to track inventory by customized UoM.
You can use an app like Sortly to clearly define units of measure for every item in your inventory. The app allows you to designate various UoM for every item on your inventory list. These UoM include pounds, kilograms, yards, meters, gallons, and more. You can also use notes, custom fields, or other features to detail UoM variations between vendors and customers.
The best inventory management software helps your business track UoM while offering key automation features that also speed up every other aspect of inventory management.
Related: More About Sortly’s Units of Measure Functions
Experience the simplest inventory management software.
Sortly is a top-rated inventory management app designed to help businesses track inventory UoM more easily. The app offers tons of intuitive, time-saving features, the ability to track unlimited products across various locations, data-rich reporting, low stock alerts, and in-app barcode and QR code scanning.
Curious whether Sortly is a good fit for your business? Start your free, two-week trial today.