Inventory Control: Definition & Common Systems

What’s Inventory Control?Inventory control may spell the difference between failure and success with your organization. Appropriate control can help optimize your gains while keeping minimal inventory in your warehouse. Really, getting to this point of stock management perfection is the holy grail for most businesses. So what’s inventory management, and how do you implement it within your own enterprise?

What’s the significance of inventory control?

Inventory control refers to the techniques and methods used to discover the minimum quantity of inventory required to keep your company running smoothly. The key word here is”minimal”. It permits you to prevent tying up your funds in excess stock. To completely define this activity, we need to clear up some confusion. We often interchange the effective management of your stock and stock control. The simple fact is these are related but distinct. The inventory control definition restricts it to optimizing inventory levels. Rental management, on the other hand, is a much broader term that manages the whole process of procuring, monitoring, and selling of your inventory.

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Elements to notice about stock management

The major bulk of the management technique is handling your warehouse operations efficiently. At its heart, it requires keeping a precise and thorough count of your inventory and inventory levels, including detailed histories and information of your products. You want to keep proper syncing with your inventory levels and future purchase orders. First and foremost, you will need stock data to know how much inventory to order at the ideal time, to ensure maximum gain. Knowing the right order amounts forces you to rely on historical sales data to create an educated estimate. This is summed up with Economic Order Quantity, or EOQ. This is the amount you will need to purchase for a particular stock, taking into account your fixed costs, how much the item is in demand, and the cost to maintain that thing in stock (known as the holding or carrying cost). But, forecasting is a science as far as it is an art. Demand can be notoriously fickle, and any rapid change and can throw predictions off dramatically. Good control of your inventory needs a delicate balance. You don’t need to be out of stock when a client places an order, but you also don’t wish to be overstocked, either. That ties up your funds to your inventory, which can be better used elsewhere in your business. Inventory control is a complex process that involves several important procedures to ensure it runs smoothly. Going beyond that, it also requires good coordination and organizational management to successfully pull off.

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Benefits of successful store stock management

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Successful inventory control is an essential component of your inventory management initiatives and will ultimately affect your bottom line. Surprisingly, many businesses struggle with this idea. Even large companies like Walmart fail to get it right. They have reported leaving around $3 billion worth of sales on the table due to stock-outs. Inventory control is a two-way road that benefits both the company and the market it serves. Keeping optimal stock levels make certain that your customers are always able to buy the items they want when they need them. Lots of people would switch brands due to poor customer experience, and out-of-stock situations bring about those disappointments. More than servicing your marketplace, appropriate inventory control can save a great deal of money. Bear in mind that your stock is an asset your company owns till you sell it. Whatever happens to these stocks will incur a cost on your end.

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The biggest offender: spoilage

Spoilage is the number one problem solved by appropriate inventory control. This is particularly crucial if you deal with perishable products like food. You don’t wish to order extra inventory that you can not sell in time, since it will spoil and appear as expenses. Then there are problems like missing items in your inventory because of mismanagement, or worse, theft. Using a tight control on your shares means that you may detect these problems early on and prevent them before they develop into a larger problem.

Keep storage in mind, also

Additionally, there are storage costs to take into account. By way of instance, items that will need to be stored at cold temperatures (fish, by way of instance ) will incur electricity costs from refrigeration. But the best advantage of stock management is that frees up your funds that would otherwise be spent in your stocks. These are funds which are best reinvested in additional business activities, like marketing for example. Do not forget that the objective of your stock is to receive the minimal stock amount to get the most profit. Finding the biggest stock quantity isn’t the best way to get there.

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Methods for stock control

To successfully control your inventory, you can rely on several techniques and methods. Here are some of them, from the easiest to the more sophisticated:

Manual Inventory

This is the most elementary inventory management method there is. It’s merely setting aside a group to manually count your stocks and upgrading your management system. Sometimes, this is as straightforward as a spreadsheet. Manual inventory is often done yearly or monthly. While easy to implement, this approach to stock control is prone to mistakes and takes a whole lot of time. That is why it’s more suitable for smaller companies with simpler operations. For more sophisticated businesses, it may be counterproductive to monitor inventory this way.






Cycle Counting

Cycle counting is a stock management technique where, rather than counting your whole inventory, you simply check some of it. You then repeat the procedure at a later date but check another portion every time. Done regularly enough, it may give a good enough overview of your inventory levels without having to spend too much time on it. Cycle counting is convenient, and the results are amazingly accurate. The trick to cycle counting is to do it regularly.

ABC Counting

ABC Counting is an inventory management technique that prioritizes products in your inventory based on specific criteria. Then you categorize these high priority items together into classes from A-C, thus the name. This counting technique uses the Pareto Principle when categorizing items. This is a famous principle that states that 80 percent of those results come from 20 percent of the energy or work. Applied to stock control, you will find that 80% of the sales come from approximately 20% of your stock. It’s this fast-moving 20 percent you ought to put in the A group. Stocks at the A group are counted more frequently since they are”mission-critical” items which will need to always be in stock. Slow-moving stock items in the B and C groups are counted less often. ABC counting saves you time and is incredibly effective because you focus the majority of your effort on just the shares that matter most.

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How to Choose the Best stock control system to your company


Visibility is the name of the game with any approach to stock control, which means that you need to be able to quickly find any item in your warehouse. You need real time, correct data at your fingertips to have the ability to make proper choices in a snap. That is why any system you select should have a stock location be the core. It not only shows you the particulars of a particular stock but also where it’s in your warehouse design. This permits the fulfillment department to track down and prep the item for shipping in the fastest time possible.

Lot Tracking

Lot monitoring is also a crucial part of a sound inventory control system. By way of example, you will need to have the ability to know if a specific stock was tagged for returns. Tracking is also vital when you’ve got perishable food items to adhere to food safety protocols. When you will need to do product recalls, understanding which inventory belongs to that lot can make the process simpler.


Forecasting is another place where having the appropriate tools and data is crucial. The system ought to be able to forecast and alert you if inventory levels are at dangerous levels. Advanced systems can even buy inventory if they’re at discounted low quantities.


But among the most essential factors of a stock management system is its ability to integrate well with other systems in your business. Coordination is everything with stock control. The sales staff, for example, needs real-time information on inventory levels, so that they know which items to drive. Subsequently, inventory management can get valuable data from the sales staff to help forecast stock levels. Not needing tight integration with your other business functions can be damaging to your inventory control attempts.

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