What is inventory control ?
Inventory control is a process of planning and executing the movement of goods into, through, and out of a warehouse, as well as for the storage of products. It includes the control of raw materials, finished goods, stocks, and products on hand or in transit. Inventory control is typically conducted by warehouse managers or production planners.
Inventory Control Tips to Make Your Business Run Smoothly
What is Inventory Control?
Inventory control refers to the process of purchasing, shipping, receiving, and storing products. It also includes tracking their turnover and reordering as necessary.
The process of inventory control determines which products are slow-moving in the supply chain and deters your business growth and prevents you from stocking or buying goods that can result in dead stocks. The process also identifies fast-selling goods that need raw materials frequently to avoid stockouts.
Small business owners can track inventory levels using period or perpetual inventory control meaning your inventory is always accounted for and in check when a customer order is placed. Periodic inventory counts occur on a daily, weekly, monthly, or annual schedule. On other hand, perpetual inventory counts require integration with a point-of-sale system to continuously record stock levels.
Benefits of Inventory Control
Inventory control is an essential component of the supply chain management process, which includes monitoring the flow of goods and materials into a distribution channel, as well as inventory levels for each product. The need for accurate data that enables you to make decisions in real-time is also crucial.
Here are some of the benefits of inventory control-
- Managing the right amount of inventory levels
- Assists in determining the exact time required for the procurement process by calculating the lead-time, wait-time, etc.
- Timely inventory counts periodic or perpetual.
- Provides real-time movement of materials.
Do You Know-: Inventory control refers to the process of purchasing, shipping, receiving, and storing products. It also includes tracking their turnover and reordering as necessary.
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What is Inventory Management?
Inventory management refers to organizing and managing stocks in a warehouse, providing you with the exact amount of stock you have at a time. Best inventory management systems like Zipinventory allow business owners to determine the right amount of raw materials required, manage seasonal demands, keep track of inventory, calculate reorder points, and reduce stock shrinkage.
Why is Inventory Management Important?
A major benefit of inventory management is that it reduces the cost incurred in acquiring excess raw materials. Inventory management also allows you to build customer satisfaction by ensuring that you have the stocks to meet customer demand. Sometimes due to inaccurate demand forecasting or wrong decisions, businesses tend to have more than required inventory and safety stocks. On the other hand, companies may overestimate their inventory, which can lead to stockouts and not being able to meet customer demand.
Inventory Control vs. Inventory Management
Inventory management and inventory control may sometimes be used interchangeably; however, they are different in function.
The main focus of inventory control is on inventory in stock that can be picked, packed, and shipped, get more inventory, and order processing.
On the other hand, inventory management is a system of inventory tracking, ensuring the right stock levels at the correct locations. The inventory system also includes warehouse management, setting the right to reorder points, and determining obsolete inventory.
Note-: Inventory management and inventory control may sometimes be used interchangeably; however, they are different in function.
How do you know if your inventory is too high or too low?
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What are the Steps of Inventory Control?
Managing inventory is an essential process in several industries, including food and retail. Inventory control is the process of managing raw materials and finished goods to keep track of how much you have on hand.
Here are the steps to help you stock your warehouse more efficiently-
1- Determine inventory levels
When you begin to evaluate your production process, the first step is to determine the level of inventory required for order fulfillment. Setting optimum levels of inventory is essential for the business to work seamlessly, as more than required inventory would lead to wastage of resources, while less inventory will result in stockouts and delays in production.
An inventory control system will allow small businesses to set the right inventory levels, so they do not run out of raw materials. Top inventory management software such as Zipinventory Features tools to control inventory levels, eliminate stockouts, and prevent dead stocks.
2- Set Re-order Level
Customer demand and trends are ever-changing. Sometimes there can be a rise in customer demand for a particular product and businesses may overstock their raw materials to meet future demand. However, demand for any product is uncertain and may go down, resulting in the wastage of raw materials that sit in the warehouse.
Small businesses can install inventory management software to reduce overstocking of inventory in case the demand goes down for a product. You can set re-order levels and check stock levels with inventory control methods like the ABC inventory system and JIT inventory management.
3- Select the right inventory control method
Once you have set re-order levels, select the right store inventory control method that suits your business model. There are several types of inventory control methods, assess your business needs and select theinventory control system accordingly. You can use the First-in-first-out method if your business deals with perishable inventory, or the JIT inventory method if you do not have enough warehouse space to store additional inventory.
Best inventory management systems like Zipinventory allows business owners to choose and implement the right inventory control method, saving money and resources being wasted in storing excess inventory.
Tips for inventory control and management
Inventory management is a skill that is essential for any business. Ensuring that your inventory levels are always low and that you have more in stock than needed can improve your business's efficiency, reduce product costs, and allow room for growth. In addition to these benefits, there are also other ways to utilize inventory control and management techniques.
Here are some of the most important tips for getting the most out of inventory control and management.
Keep track of all incoming stocks
For effective inventory management, small businesses should check what is being delivered from the supplier with what was ordered in the first place. You might trust your suppliers and have a good relationship with them; however, it is crucial to check the inventory you have received to make sure that it is the same as ordered and you will be able to fulfill your orders.
An inventory management system helps businesses keep track of all incoming raw materials accurately. You can also generate reports to analyze what you ordered and what has been delivered from the suppliers. Manually counting incoming inventory can be time-consuming, instead, an inventory management system saves time by automatically keeping an inventory count.
Label goods correctly
A business may stock products of different sizes and shapes. Make sure that you store the different products separately so that you pack correct customer orders. Plus, you can color-code your order slips according to color labels on the product packages.
The order management feature of an inventory control software allows small businesses to automate product labels and keep track of order slips and forms through barcode scanning.
Check expiry dates
If you deal with perishable products, make sure that you keep track of the best before dates as shipping out of date dates can result in heavy fines. Small businesses can install an inventory control system to keep track of best before dates and the First in first out (FIFO) inventory control method to sell the inventory that came in first.
Top inventory systems allow you to keep track of out-of-date products and send alerts when a product's best before date is near. A barcode scanner registers the expiry date and serial numbers of all products when they come in, ensuring they are stored and picked accordingly, which reduces waste and increases profits.
Small businesses face issues while handling returns. It is essential to restock a returned product immediately into stocks. In case packing is damaged, make sure the product is repackaged properly and ready to be shipped again to customers. And in case the product is returned because it is defective, then ensure that the issue is addressed with your supplier.
Effective inventory management provides real-time tracking of returns. A robust inventory system allows business owners to quickly process returns. In case a replacement is required, inventory management systems immediately update the stock levels and also help in creating a return label.
Understand your sales data
Small businesses require to study their sales data to determine which products earn the highest profits. Use the abc inventory system and focus on products that get you the highest profits. You should prioritize the sale of the most profitable products and monitor the sales data to understand how much these products sell during a period.
The ABC analysis allows you to determine which products are essential and the ones that can be purchased less to avoid over-stocking. The stock is divided into three categories by using the ABC analysis.
Category A products earn the maximum profits and are of the highest priority.
Category B products may not be as profitable as category B products but still account for 15% of your profits.
Category C products add the least to your profit and add about 5% to your revenue.
But category C products are essential as you need to keep stock of these to save space and money.
store inventory control systems allow business owners to identify Category ABC products. You can analyze sales data and determine which products get you the maximum revenue.
Use FIFO for precise forecasting
In a First in First out inventory control method, the oldest goods get sold first. The FIFO control method is beneficial for businesses that deal with perishable goods, as it can reduce wastage and spoilage. FIFO method is also beneficial in keeping track of price fluctuations, as older products are sold first, making sure that older products are out first, placing new inventory in the warehouse. Best inventory systems automate the FIFO method, allowing businesses to sell older products first. FIFO method ensures that products are accounted for based on their expiry dates, serial numbers, and packaging by barcode scanning when they enter the warehouse.
Determine minimum stock levels
Small businesses have a different lead-time for every delivery. You will require to establish the time needed to restock raw materials, so the production does not get affected due to stockouts. If your raw material runs out in the middle of production and customer demand is not met, it can negatively affect your reputation.
Typically, small businesses maintain safety stocks to make sure that essential raw materials do not run out. Buffer stocks allow businesses to maintain minimum stock levels to fulfill customer orders in case of a miscalculation in demand forecasting.
Inventory management software allows businesses to set the minimum stock levels required for order fulfillment. Top inventory systems also send low stock alerts before an essential raw material is about to run, so you do not have to worry about low stocks.
Audit your stocks
It is essential to run stock audits regularly for effective inventory control. Stock audits allow you to keep a check on the exact amount of raw materials you have against what you need to fulfill a customer order. You can use period or perpetual inventory check methods to keep track of goods available in the warehouse. Periodic checks are done weekly, monthly, quarterly, or annually, depending on the type of goods you sell. Perpetual checks require a POS system and continuously check your inventory every time a new customer order is placed.
Manually stock audits can be time-consuming and are prone to human errors. The inventory control software can check and analyze your inventory quickly and allows you to generate reports regularly. Inventory software automates the stock auditing process, ensuring that you never run out of essential goods in your warehouse.
Use an automated system
Inventory management software is one of the best methods to eliminate human errors. By automating your business process as much as possible, you can save time and resources and reduce any instances of errors that can cost you a lot of money. Best inventory management systems are a one-time investment and allow you to check several processes in real-time simultaneously. You can generate regular stock level, sales data, and order processing reports among many in just minutes. You will never have to worry about low stocks or overstocking of products in your warehouse with an inventory management system. You can check stock movement from the time it enters your warehouse till the time it goes out as a finished product in real-time.