What is Inventory Control?Also called stock control, inventory control consists of systems and procedures for managing inventory items in a company’s warehouse. It monitors the movement and storage of goods in a warehouse to help businesses maintain a sufficient supply in good condition. Establishing an inventory control system enables them to satisfy customer demands and maximize profits. Show
Inventory control is a key element of an inventory management system. Warehouse managers and production planners should adhere to the following activities and procedures in controlling their inventory:
Difference Between Inventory Control and Inventory ManagementAlthough these two concepts go hand in hand, there are slight differences between inventory control and inventory management. Inventory control handles existing stock in a warehouse, while inventory management involves the overall movement of goods across supply chains. The table below compares the two processes against their scope, goal, areas of concern, and actions.
Types of Inventory Control SystemsThere are two main types of inventory control systems: the periodic and the perpetual system. Choosing the right inventory control system will depend on the business type, size, and kind of inventory. This section discusses these two types in detail, covering their pros and cons, as well as what they’re best for. Periodic Inventory Control SystemThe periodic inventory control system pertains to a recurring count of goods at specific intervals. In this system, warehouse managers manually count their inventory on a monthly, quarterly, or annual basis. The exact period depends on an organization’s needs and business activities. Pros: It’s relatively simple and easy to manage for smaller inventories. It doesn’t require any specialized technology and equipment, making it easier to train individuals in. Cons: It becomes a lengthy process for companies with expansive inventories. The manual counting process is also highly prone to human error. Best for: The periodic system is ideal for small companies with minimal inventory. It also works best for businesses selling niche products and counting larger-sized goods. Perpetual Inventory Control SystemThe perpetual inventory control system provides an accurate count of inventory levels in real-time. It utilizes technology, such as barcodes and Radio Frequency Identification (RFID) tags, for tracking products. The information is then logged in a centralized database that warehouse managers can easily access. Pros: This method removes the need for manual counting. It gives warehouse managers a snapshot of their inventory counts over a specific period of time. Doing so drives data-driven decision-making for sales, ordering, and inventory management. Cons: An inventory control software can be expensive to maintain. Moreover, it might not capture discrepancies due to product theft, loss, damage, and scanning errors. Best for: The perpetual system works best for companies with multiple locations. It’s also great for businesses maintaining large inventories. Inventory Control TechniquesInventory control involves various techniques for monitoring how stocks move in a warehouse. Four popular inventory control methods include ABC analysis; Last In, First Out (LIFO) and First In, First Out (FIFO); batch tracking; and safety stock. This section explains how each of these methods functions and how they can support your business. Inventory Control Techniques ABC AnalysisABC analysis in inventory control classifies stocks based on their importance, price, and sales volume. These criteria determine the number of items a company will bring to the market. Just as its name suggests, it consists of the following categories:
Applying the ABC analysis of inventory control allows businesses to minimize the costs of carrying products while maximizing their stock returns. LIFO and FIFOBoth inventory control techniques organize how inventory items move in and out of the warehouse based on their arrival date. Priority will depend on the type of products available in the storage facility. Using the LIFO method, the warehouse puts out the most recent batch of items to the customers first. Doing so prevents products from going bad when delivered to the market. But with the FIFO technique, the warehouse prioritizes older stocks for processing and shipping. This way, they can keep the products fresh when the customer receives them. Batch TrackingBatch tracking is also a great way of organizing stock items in a warehouse facility. In this method, goods of the same production date and materials are grouped together. Doing this helps warehouse managers keep track of the following information:
Safety StockSafety stock involves having an additional set of goods on hand as a preventive measure for the market’s volatility. The amount should be over the average demand or use of the product. It acts as a safety net, should customer demand go above the projected amount. It also covers them for any uncertainty in supply performance, such as shipping delays. Tips on Getting StartedAfter discussing the types and techniques employed in an inventory control system, it’s time to put those measures into practice. Here are some tips to help you kickstart your inventory control process.
Explore our Free Inventory TemplatesSee how digital checklists simplify business processes with just a tap. Maximize Your Warehouse Inventory with SafetyCulture (formerly iAuditor)What are the 4 types of inventory management?The 4 Types of Inventory Management
The types of inventory management are Raw Materials, Works-In-Process, Maintenance, Repair and Operations or MRO and Finished Goods.
What are the 3 major inventory management techniques?In this article we'll dive into the three most common inventory management strategies that most manufacturers operate by: the pull strategy, the push strategy, and the just in time (JIT) strategy.
Which of the following types of inventory management systems is used to manage customer demand items?Supply chain management manages the process from supplier to delivering the product to the customer.
What are the 2 methods of inventory control?There are two key types of inventory control systems.. Perpetual inventory system. A perpetual inventory control system tracks inventory in real-time. ... . Periodic inventory system. A periodic inventory system is kept up to date by a physical count of goods on hand at specific intervals.. |