What is inventory control and management?
The ability to forecast inventory requirements, as well as manage existing inventory stock will drastically impact business operations for the better. Here’s a look at what it means for your business.
This refers to the inventory currently in your warehouse, knowing exactly what is there, where it is, and what condition it’s in.
This refers to the forecasting of which products to order when, and from which supplier. Instead of simply referring to your warehouse, inventory management refers to complete supply chain management.
Inventory control methods
When it comes to inventory control, there are certain methods that can be adopted to optimise efficiency. In modern inventory control, these can all be digitised by implementing effective inventory control software. This will cover:
– Inventory tracking
Keeping track of what inventory is currently available can be done manually, but it’s much more effective to keep track using software solutions. These could incorporate RFID (radio frequency identification) whereby barcodes are scanned and products logged.
– Inventory administration
Alongside stocktaking, inventory control incorporates various administrative aspects such as monitoring purchase orders, deliveries, returns, and requisitions.
The importance of inventory control
A reliable inventory control system will alleviate a business of administrative hassles and streamline operations. Here’s a closer look at what effective inventory control will mean for you.
– Improved accuracy
Unlike manual stocktaking, inventory control systems will elevate the accuracy of your stock records. Minor errors made when manually taking stock can snowball, resulting in drastic over-or under-ordering.
– Track sales’ patterns
Inventory control software will allow you to assess which stock is most profitable, thereby outlining useful patterns that can be used going forwards. This type of control system will also identify any inconsistencies such as stock theft.
– Increased efficiency
Manually locating items in a warehouse can be time-consuming and impacted by error. By implementing an effective inventory control system, you’ll be able to increase the speed and efficiency of this process.
– Boost customer satisfaction
An effective system that identifies sales’ patterns, increases accuracy, and improves overall efficiency will also result in happier customers at the end of the day. Satisfied customers will return, which effectively increases productivity.
Types of inventory management
We’ve looked at the in-house inventory control, now to take a closer look at the various types of inventory management systems you can consider.
– Periodic inventory management
This type of system allows you to keep a tally of your inventory periodically, with changes calculated between these counts. This provides you with the inventory sales and items to re-order.
– Perpetual inventory management
This is a much more frequent system of inventory management whereby stock is recorded daily, providing you with the latest inventory tracking.
– Maintenance, repair, and operations (MRO) inventory management
This system tracks the location of the stock and keeps track of the condition of the items.
Factors impacting inventory management
There are many elements that must be considered when trying to enhance the effectiveness of your inventory management. Here are the key factors:
- Finance: Warehouse expenses, transportation costs, and actual inventory costs will all come into the inventory management system.
- Suppliers: An unreliable supplier will have knock-on effects that can be detrimental to inventory management.
- Manufacture: The time it takes from ordering an item through to arrival will impact inventory management, and an outsourced manufacturer might delay the process.
- Products: The type of product will determine inventory management as perishables will obviously have a shorter shelf life.
- Management system: An effective inventory management software solution will be much more effective than manual management.
Importance of inventory management
There are so many benefits to implementing a successful inventory management system. As with good inventory control, an effective inventory management system will:
- Organise your warehouse: An organised warehouse makes inventory management that much easier. This system can categorise stock according to priority, ensuring easily located placement.
- Improved accuracy: You’ll know how much inventory is available at any time, for re-stocking where needed.
- Time and cost-saving: When the stock is constantly monitored, there is no need to do inventory re-counts or analyse which are the slow-moving stocks.
- Increased productivity: Once again, the elimination of manual stock management and increased accuracy will boost productivity. This allows you to shift your focus to other business-enhancing ventures.
Objectives of inventory control
At the end of the day, your inventory control system must work to:
- Supply the product to the end-user on time and intact.
- Minimise waste, surplus, and obsolete products.
- Maximise productivity and efficiency.
- Lower storage and replacement costs of inventory.
- Protect against inflation by saving when the price of materials increases.
It’s worth partnering with a renowned software supplier. This will allow you to analyse your particular inventory needs, and identify areas to improve productivity.