Learn more about inventory control: definition, its difference with inventory management, methods, types, and ways to maximize your inventory.
Inventory control or stock control is the process of managing inventory items in a company’s warehouse and other locations. It consists of systems and procedures that monitor the movement and storage of goods to help businesses maintain a sufficient supply in good condition. Establishing an inventory control system empowers businesses to satisfy customer demands and maximize profits.
Inventory control is a key element of an inventory management system. Warehouse managers and production planners should adhere to the following activities and procedures in controlling their inventory:
Although these two concepts go hand in hand, there are slight differences between inventory control and inventory management. Inventory control handles existing stock in a warehouse, while inventory management involves the overall movement of goods across supply chains.
To quickly define, inventory includes all the goods and products of a company that are ready to sell, along with the accounting of raw materials required to produce these goods. The table below compares the two processes against their scope, goal, areas of concern, and actions.
An inventory control system is a technology-driven method for managing and tracking inventory, which includes raw materials, components, and finished products. These systems help businesses monitor stock levels, order quantities, and storage locations, ensuring that they have the right amount of stock at the right time.
There are two main types of inventory control systems: the periodic and the perpetual system. Choosing the right inventory control system will depend on the business type, size, and kind of inventory. This section discusses these two types in detail, covering their pros and cons, as well as what they’re best for.
The periodic inventory control system pertains to a recurring count of goods at specific intervals. In this system, warehouse managers manually count their inventory on a monthly, quarterly, or annual basis. The exact period depends on an organization’s needs and business activities.
The perpetual inventory control system provides an accurate count of inventory levels in real-time. It utilizes technology, such as barcodes and Radio Frequency Identification (RFID) tags, for tracking products. The information is then logged in a centralized database that warehouse managers can easily access.
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Inventory control involves various techniques for monitoring how stocks move in a warehouse. Four popular inventory control methods include ABC analysis; Last In, First Out (LIFO) and First In, First Out (FIFO); batch tracking; and safety stock. This section explains how each of these methods functions and how they can support your business.
Inventory Control Techniques | SafetyCulture
ABC analysis in inventory control classifies stocks based on their importance, price, and sales volume. These criteria determine the number of items a company will bring to the market.
Just as its name suggests, it consists of the following categories:
Applying the ABC analysis of inventory control allows businesses to minimize the costs of carrying products while maximizing their stock returns.
Both inventory control techniques organize how inventory items move in and out of the warehouse based on their arrival date. Priority will depend on the type of products available in the storage facility.
Using the LIFO method, the warehouse puts out the most recent batch of items to the customers first. Doing so prevents products from going bad when delivered to the market.
But with the FIFO technique, the warehouse prioritizes older stocks for processing and shipping. This way, they can keep the products fresh when the customer receives them.
Batch tracking is also a great way of organizing stock items in a warehouse facility. In this method, goods of the same production date and materials are grouped together. Doing this helps warehouse managers keep track of the following information:
Safety stock involves having an additional set of goods on hand as a preventive measure for the market’s volatility. The amount should be over the average demand or use of the product.
It acts as a safety net, should customer demand go above the projected amount. It also covers them for any uncertainty in supply performance, such as shipping delays.
After discussing the types and techniques employed in an inventory control system, it’s time to put those measures into practice. Here are some tips to help you kickstart your inventory control process.
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With good inventory control training, you can effectively reinforce the best practices outlined in your operating manuals and Standard Operating Procedures (SOPs). And on top of higher quality work and better productivity, it can also help your workers become more aware of potential issues and be proactive in preventing mishaps along the way.
With SafetyCulture’s Training feature, you can easily transform your work instructions into training slides that are interactive, visually appealing, and easy to understand. You can also make training accessible to your team using their preferred devices.
SafetyCulture can be used as an inventory control software to help warehouse managers in improving their inventory control systems. It allows them to conduct warehouse audits to check for lost, stolen, or damaged products. This platform also reduces human error through digitized inventory tracking systems.
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Leizel Estrellas is a content writer and researcher for SafetyCulture. Her academic and professional training as a researcher allows her to write meaningful articles that create a lasting impact. As a content specialist, she strives to promote a culture of safety in the workplace through accessible and reader-friendly content. With her high-quality work, she is keen on helping businesses across industries identify issues and opportunities to improve every day.
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