What is inventory control?
Inventory control is the procedure of managing an organization’s stock levels, whether in its own warehouse or spread across different locations. It involves the management of products from where you have them in stock to where they will go (ideally to the customer) or their disposal (not optimal). An inventory control system tracks their movements, use as well as storage. Inventory control is regulating your inventory levels to ensure that you’re keeping the correct quantity of each item. An effective inventory control system will monitor your purchase orders and maintain a smooth supply chain. In addition, systems can be set up to assist with forecasting and establishing reorder points.
The inventory control process can encompass:
- Barcode scanner integration
- Complete inventory counts
- Ensuring that physical inventory is properly tracked by integrating purchase and sales orders
- Information about the product, its locations, and historical contexts
- Reports and changes
Inventory control vs. inventory management
Although they all deal in inventory, inventory control is distinct from inventory management. Controlling inventory is done using the inventory at the warehouse of a distributor. Knowing which products are stored in your inventory and their location within your warehouse is important. It is essential to ensure that your inventory is in good order and organized to reduce costs.
Inventory management includes the business process that involves replenishing products and forecasting. Management includes when to order products and the amount to purchase to avoid stockouts or excessive inventory. It ensures that the proper inventory is in the correct spot, at the proper time, and in the proper amount. You can improve the control of your inventory when you enhance your control over inventory.
How an Inventory Control System help Your Ecommerce Businesses ?
It Gives Your Real-time Access to Inventory Levels
If you select a permanent inventory system, such as the database will be working in real-time. This benefits your employees or anyone else in close contact with your inventory and your products because they can stay in touch with the inventory tasks, like the reordering process.
Accessing inventory in real-time can also allow businesses to notify customers of the availability of products and other questions about the product that can improve overall customer satisfaction.
It Optimizes Workflow Logistics
A system for inventory control can simplify the process of getting a product through the ordering stage to the buyer. For example, when a buyer purchases a product from an online store, the item will be assigned an order number.
This number not only allows customers to track the status of the production process but also permits the business owner to keep track and keep track of the progress in making the product ready for shipment.
The products are often assigned different numbers within an inventory control program before reaching a buyer. This includes a tracking number, which customers can use to stay informed of their package’s location when delivered. For business owners, after the package is delivered, the transaction is completed.
It’s Financially Beneficial
Your company reaps the financial benefits of having a well-balanced inventory. Your customers are more likely not to abandon their orders because of back-ordered items, and you’ll have more storage space. In the end, better inventory management will improve your profits.
It leads to fewer manual errors
A system for controlling inventory automatizes specific inventory processes, so there’s less room for human errors and fraud. For example, every detail of your inventory’s location is recorded from purchase order through delivery and may be checked if there are any ambiguities.
It leads to better customer satisfaction
In the end, companies are looking to make their customers satisfied. Control systems for inventory allow online retailers to offer products with prices, availability, and discounts, enticing customers to purchase more products. Clients will likely shop elsewhere if a company cannot manage its inventory.
Types of Inventory Control Systems
The systems for controlling inventory have advanced. In the past, they were little more than spreadsheets. But nowadays, machine learning has added greater automation to inventory control. There are two main types of systems for controlling inventory.
1. The system of perpetual inventory.
A permanent inventory control system keeps track of the inventory in real-time. Once the product is sold, the barcode is scanned and removed from the inventory database of the world. The barcode is scanned and added to an inventory database if a receipt is received. Each component of the system can access the same database and information.
A perpetual inventory gives the most precise view of inventory changes and provides a complete analysis of inventory levels without the requirement to count inventory manually. It’s ideal for businesses of all sizes and is essential for stores with high sales volume or multiple locations.
2. A periodic inventory process.
A periodic inventory system keeps up-to-date by an actual count of inventory items at regular intervals. If you have a system for periodic inventory, the business won’t know the number of goods it owns until the physical count is complete. It’s simple to see the way this could cause problems in the process of processing orders. Your inventory count was correct several months or even weeks ago. Still, when customers want to purchase the item, you need to physically inspect your inventory to verify whether it is available to sell.
Manually counting stock is a procedure that requires much time and energy. Every SKU needs to be counted. This is not a good idea for large stores. A regular system is suitable for small firms with small amounts of inventory.
Most used Inventory control techniques
Economic order quantity
Economic order number, sometimes referred to as EOQ, is the formula. It is the best amount of inventory a company should purchase based on factors such as production costs total and demand rate.
It assists in releasing any inventory-related cash that is tied for the majority of companies and decreases the direct expenses. Additionally, inventory management software is also a great tool to improve inventory management in a smarter method.
ABC analysis
It involves categorizing inventory into three categories: A, B, C, and A, depending on the significance of the inventory’s profitability. A category comprises costly products, so an inventory of a smaller size is kept. The B category is characterized by an average-priced inventory with medium-to-high sales frequency. Inventory in Category C is low in value, but they have the highest sales rate. It is less controlled in terms of inventory when compared with A or B.
Just-in-time (JIT) Inventory management
It’s a method to schedule raw material orders from suppliers according to the production schedules, thereby reducing the costs of inventory. As a result, there will not be any excess inventory that is not in line with the demands of production, which means it eliminates the need for dead stock in the organization.
Inventory of Safety Stocks
Businesses may order additional inventory to buffer stock to meet the projected demand. It is a way to correct underestimating demand.
Slow, fast, and inactive (FSN)
It involves categorizing inventory into slow-moving, fast-moving, and non-moving inventory to decide the rate at which businesses can place orders.
Implementing inventory Control Systems
Organizations can make use of the latest technology to control inventory. These systems can be used to integrate a variety of inventory-related tasks, including buying, receiving, shipping or storage, warehousing and tracking, and the process of reordering.Â
The system will guarantee the availability of the correct inventory in the appropriate locations as needed to meet the demand for the product. Two kinds of inventory management systems are offered to select from. They are periodic and perpetual systems based on whether the business is looking to monitor the inventory every day or not.
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