If you are into a wholesale, retail or manufacturing business, then maintaining and optimizing your inventory is one of the most critical tasks.
Imagine it’s a New Year, and you are into the wholesale and retail business of clothes. What if your inventory is populated with last year’s stock of old designs, and there are no new products to sell?
It’s a loss—big financial loss for your business.
By controlling and managing your inventory, you can always be assured that the right products are present with you, at the right time.
Businesses which are heavily dependent on stocking products cannot afford to lose track of their inventory.
In this blog, we will share what is inventory control, the best features of an inventory control system, and how it is different from the inventory management system. We will also share types of inventory control systems present and give a brief idea on how to manage inventory.
What Is an Inventory Control System?
Among new business owners and recently formed MSMEs, there is a great deal of confusion when it comes to understanding inventory control system.
Inventory control is regulating and controlling the inventory which is already present in the warehouse of a manufacturer or wholesaler/distributor.
By an effective inventory control system, the business owner is aware of the exact position of each and every unit inside their inventory: How many units are about to be shipped, how many are already present, and how many units of the products are expected to come in.
With a single glance of the inventory control system, the management should be able to get a complete idea about inventory management and control.
In fact, the inventory management system is a part of an inventory control system.
What Is Inventory Management System?
Inventory management system, as the name reveals, is the management and optimizing of an inventory, all through the supply chain, right from the sourcing, shipping to order fulfilment.
Unlike an inventory control system which focuses on keeping track of every product in the inventory, inventory management system focus on forecasting and fulfilment of orders.
An efficient inventory management system will enable the management to ensure supply of the best selling products at any given point of time, forecasting the demand using historical data and current trends and making the new orders, as and when needed.
Both inventory management and control are inter-linked, and their main objective is to ensure that the businesses know where their products are in an inventory, and when/how to order new products.
Important Features Of Inventory Management System
- Forecasting and Predicting Demand: An ideal inventory management system should be able to forecast and predict the demand of the products, and ensure that the inventory never runs out of supply.
- Barcoding & Scanning: The new and technologically advanced inventory management system should have the option of barcoding and scanning the products so that they are categorized and labelled accordingly.
- Advanced Inventory Analysis: The system should be able to inform the user about the position of the products, their ordering history, and whether new orders should be placed or not.
- Customizations: Inventory management system should be customizable, as per the business needs and requirements. For example, if the SKU format needs to be altered, the end-user should be able to do it quickly without taking any external help.
- Cloud Technology Is Preferred: There exists both stand-alone inventory management system and Cloud based system. Since Cloud reduces IT expenses, and makes the system universally accessible via any device, the system to manage inventory should be Cloud based, which makes it even more powerful and flexible, at the same time.
Important Features Of Inventory Control System
As we already discussed what is inventory control, we will now share some of the critical features of an effective and efficient inventory control system:
- Stock Control System: This is the most important feature of an efficient inventory control system: It should be able to control and monitor stock and implement a system which makes the process automated and updated. The floor supervisor or the manager should know the exact position of any product inside the inventory, at any given point of time.
- Optimizing The Inventory: Factors such as optimal utilization of the floor space, managing the incoming shipment quickly, human resource management, etc. are critical features of an inventory control system.
- Managing Different Products, Different Materials At The Same Time: Since an inventory will have myriad products, materials and units stocked together, the inventory control system needs to be able to manage all these, at the same time. Enforcing policies and procedures and setting guidelines are part of this process.
- Timely Availability Of Products: It’s the primary job of the inventory control system to ensure that the products stocked inside an inventory are available in time, as and when needed.
Types Of Inventory Control System
There are mainly 4 types of inventory control system:
Perpetual Inventory Control: When the incoming and outgoing inventory is updated on a constant basis, then it comes under Perpetual Inventory Control. This cannot be done manually, and specialized equipment is needed for the same.
Periodic Inventory Control: In this system, the updates are not done every single time a new item comes in or goes out, but is updated periodically, at the start and at the end of a specific period. It can be done manually, but there are several disadvantages associated.
Barcode Inventory Control: In this system, barcodes are the primary means to keep the inventory records updated and for entering data. This is a fast and efficient system and eliminates the need for paperwork.
Radio Frequency Identification (RFID) Inventory Control: In this system, RFIDs or Radio Frequency Identification are used, instead of barcodes. This is a relatively expensive but faster way to manage inventory.
Need more data and suggestions for selecting the right inventory management system and inventory control system?
Book an appointment with an inventory and logistical expert at MSMEx, and get the best and timely advice, right here.
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