What is Inventory Control?
Inventory control is the practice of coordinating, monitoring, and overseeing the availability and stock capacity of inventory items which means having adequate stocks that are not too many. It encompasses monitoring inventory, orders, sales, and deliveries to ensure that an organization can make the right decisions in regard to inventory holdings, in a bid to cut down on expenses and increase productivity in doing business.
Importance of Inventory Control:
Inventory control is very important in ensuring that the correct inventory levels are achieved, holding costs are minimized, and that situations such as stock-out or overstocking are not realized. It assists businesses in cutting operation costs, managing cash effectively, and meeting the expectations of consumers through guaranteeing the availability of products.
Objectives of Inventory Control:
The main goals of controlling inventory are keeping stock of inventories, operating costs low, maximizing profits, the space of storage, and minimizing loss. Achievements of these objectives can enable businesses to run smoothly and meet consumers’ needs in the best way possible.
Ensure Stock Availability:
The need to ensure stock availability can also be understood as a need to reach the right level of inventory that would be sufficient to satisfy the customers’ needs without running out of stock. This would help to eliminate instances of stockouts, backorders, and where possible, the resultant loss of sales much to the pleasure and benefit of the consumers.
Maximize Profitability:
The case of optimization indicates that profitability depends on proper management of stock to minimize cost while maximizing revenue. In this respect, inventory management reduces the cost of holding unsalable stocks and excessive control of purchasing, while also guarantees the availability of popular products to enhance the company’s revenues and improve the gross margin.
Save Storage Space:
Storage space through control of stocks is the process of putting in place ways and means of arranging stocks in the right manner and order so as to avoid the filling up of large stocks. This helps in minimizing on hasty establishment of storage facilities, decreases the storage costs hence increases the utilization of the available space hence improving functionality.
Reduce Wastage:
To increase efficiency, the wastage of many products can be controlled through careful stock management in order to avoid spoilage of perishable products. It is important to manage inventory to also allow products to be used within a given shelf life and thereby reduce wastage and losses, hence cutting unnecessary costs and enhancing sustainability.
Steps involved in Inventory Control:
Some of the processes in the management of inventory include the determination of the minimum stock, establishing a reorder point, adopting the proper way of handling the stock, checking on the stock, and performing an audit on it. These steps assist in a way that the perfect amount of stock is being ordered at the perfect time hence reducing the cost.
Setting minimum inventory levels:
Evaluating minimum inventory thresholds with regard to fixed order quantity entails designing policies that regulate the desirable level of inventory sufficient to avoid stock-out situations. This guarantees constant availability, fulfilling the customer’s needs without delay, and simultaneously eliminates the expenses connected with overstocking.
Deciding on the reorder point:
Choosing the reorder point involves establishing the quantity below which it becomes necessary to place an order in order to restock the inventory before it is depleted. This takes into consideration the lead time, the demand rate, and the safety stock, to avoid acquiring stock anew especially when the safety stock is low.
Choosing a Reliable Inventory Control Method:
Selecting a reliable method of controlling inventory includes techniques such as the JIT, EOQ, or the ABC analysis. These methods make it easier to control stock also cutting costs and attaining the best stock levels depending on the needs of the business and the demand levels.
Difference Between Inventory management and Inventory control?
Inventory control is a broader concept that includes all the activities carried out in an organization from the forecasting of the inventory levels to the ordering and controlling of the inventory. Inventory control is a subcategory of the overall supply chain management and refers to the processes of ordering, obtaining, and controlling the supply of inventory. While there is a general scope for implementing inventory management, inventory control relates to the real process of managing inventory at a company level.
Inventory Control Systems:
Inventory control systems are known to be processes, procedures, or tools aimed at controlling and regulating inventory. These systems are used to manage the inventory, control the quality of the products, and avoid some extra time-consuming processes by using systems that are able to perform some functions automatically and report the exact data needed.
Quality Control and Inspection:
Quality control & inspection consist of examination of the stocks received & issued to ensure that they are of the right quality. This process assists in sustaining the excellent quality of the products, eradicating vices such as defects in the products so that clients are not offered substandard products.
Scanning Barcodes For Auto Updates:
Barcode auto updates is an inventory control procedure where barcodes are scanned so as to update inventory. This makes it more accurate, cuts down on errors, and provides an avenue for tracking stocks at the right time to avoid running out of stock, thus making inventory an easy course to manage.
Warehouse Accounts:
Warehouse accounting encompasses the financial processes involved in the accurate, efficient, and profitable handling of goods stored in a warehouse. This involves capturing inventory acquisition, stock quantities, and sales in order to provide a check and balance on inventory asset account balances to assist in decision-making processes in inventory management investment and operational costs.
Ensure Stock Availability:
Since inventory control systems refer to the area of having enough stock quantities in the stores, it is important to ensure that these stocks are available within inventory control systems. Efficient tracking and the use of automatic systems can reduce cases of stockouts such that the products are always in stock to meet the customer’s demand, which will increase the level of satisfaction and sales.
Stock Shelf Life:
Stock rotation entails the process of ensuring that the stocks particularly perishable and non-perishable goods do not go bad by following their shelf life. Stock management systems also assist in tracking the time that food takes on the shelves before it is sold, the sale rate of the products that approach their expiry dates, and how to always restock the shelves with new products to avoid having spoiled stock.
Inventory Control Procedures:
Inventory control measures are planned and coordinated actions and measures designed for achieving effective control of inventories. These procedures help to track the materials better, have the right stock, and store them in the right way; all of which help to bring order to the company’s processes while reducing costs.
Prioritize location and accessibility:
Concerning location and accessibility it is important to arrange merchandise inventories in a way that the items that are utilized most often are easily obtained. This eliminates the time taken to search when they are not easily located and increases productivity, and efficiency of the storage and retrieval systems in the warehouse or storage area.
Get Rid of Unneeded Stock:
One form of automation is tallying and remote elimination is to shed unnecessary inventory or to eliminate inventory that is no longer necessary. This enables the company to release space, cut holding expenses, and enhance its cash flow by eliminating those items that are not commercially beneficial.
Label All Products:
Applying labels on all products means that every stock must be labeled in such a method that it is easily identifiable by the bar code or RFID tag. This makes it easy to identify the various products in stores and it also minimizes mistakes that are likely to occur while handling the stock.
Make sure you’re keeping track of your inventory:
Stock control entails the methods through which organizations are able to track their stocks with relative ease for the purpose of determining their levels, flow, and all undertakings affecting the same. This means that correct records are kept, quickly detect differences, and replenish when stock levels are low or too high.
Establish the floor and layout arrangement:
The determination of the floor and layout arrangement entails setting up the warehouse or storage area to be as efficient as possible. Adherence to layout increases mobility, optimizes space, and improves the flow of items apart from improving the general performance of stock control activities.
Check stock quickly after delivery:
Deliveries are the transportation of goods to the firm from the suppliers and include the immediate examination of stocks as they arrive at the business. This assists in the detection of variations so that substandard products do not get to the stock, and record keeping is done in the right manner.
Set a cycle count schedule:
Cycle counting is the process of counting inventory on a recurring basis so that within a definite period a certain number of counts can be completed. This continuous process facilitates maintenance of stock records, early detection of variation that may exist, and in effect minimizes the necessity of making physical stock-takes annually.
How Inventory Control can affect your business:
Inventory control management plays a crucial role in the efficiency of a business and its bottom line, customer satisfaction included. It maintains the right inventory quantities that will not lead to more wastage, shortages, or overstocking. In this case, effectiveness in controlling inventories will consequently enhance the uses of cash, processes, and revenues respectively. On the other hand, it becomes detrimental to the business since it leads to high costs, slow sales, and unsatisfied clientele.
FAQs
1) What is Inventory Control?
Inventory Control involves the proper handling and monitoring of assets to attain proper inventory status of stored products, cut costs, and keep the organization’s operations running efficiently.
2) What are the objectives of Inventory Control?
Inventory objectives include availability of stock, control of holding costs, up, increase in profitability of the stored goods, proper utilization of storage space, and elimination of waste.
3) What are the steps involved in Inventory Control?
Some of the procedures in inventory control include minimum stock level, reorder point, selecting of inventory control approach, checking of stock or inventory, and inventory taking.
4) Difference between Inventory Management and Inventory Control
Inventory control is a component of inventory management that deals with the regulation and control of inventory to maintain appropriate stock levels, while inventory management refers to all the processes connected with predicting, ordering, and sustaining the flow of inventory.
