What is inventory control and how is it implemented?
Maintaining rock-solid inventory control is the key to running any business. Several tasks, ranging from procurement and warehousing to final disposal, come under the domain of inventory control.
Since well-regulated inventory is important for running smooth operations daily, stock control should be a top priority for businesses. If implemented the right way, it can greatly boost operational efficiency.
There are two primary kinds of
1. Perpetual inventory system
Under a perpetual inventory system, you update your inventory records as soon as an asset-related activity happens, like a new inventory item being procured, moved across locations or an old one being sold.
A perpetual inventory system is generally preferred by companies that have fast-paced operations and want real-time data about inventory levels. It also eliminates the need for carrying out taxing inventory counts after each month.
A perpetual system works best when paired with a labeling system to track inventory movements. This automates data entry and eliminates the chances for human errors. However, this system may fail to account for stolen or missing items if the inventory count is not backed by regular physical checks.
2. Periodic inventory system
Organizations using this system record stock levels only at the beginning and end of each month. Any inventory bought during a specified period is recorded in the purchases account.
The purchase account is then shifted to the inventory account to determine the cost of goods available for sale. Inventory count at the end of the month is then deducted from items available for sale to determine the inventory that was sold.
This method is both complicated and prone to errors. It halts business operations during critical inventory counts. As a result, workers try to rush through counts, which creates discrepancies between actual and recorded amounts. What’s worse is that these discrepancies are often hard to spot, given the long gaps between count periods.
Furthermore, the periodic system does not allow you to keep tabs on lost items since the sold inventory is adjusted to meet the ending inventory level. This control system is likely preferred by smaller firms who do not have to work with high stock levels and work with low budgets for technology tools.
Benefits of inventory control system software
Investing in inventory control system software can give you a better edge over storage and distribution of your inventory. It simplifies asset handling, reduces carrying costs of the inventory, and offers a host of other benefits to fool-proof your inventory operations.
1. It improves supply chain visibility
If implemented correctly, the inventory control system software gives you reliable information regarding all inbound and outbound transactions of your inventory.
It records all changes in inventory from procurement to sale. This makes the whole supply chain process more visible and gives you control over your assets even when you’re away from them.
2. It allows for accurate forecasting and planning
Warehouse management requires excessive investment. Thus, it is essential to accurately forecast demand for inventory and purchase it accordingly. Automated inventory system software alerts you of shortages on time, keeping you stocked with optimal quantity.
It also lets you predict inventory requirement for future projects so you can pre-order certain items and never lag behind meeting your deadlines. Accurate forecasts and well-grounded procurement policies always keep your warehouse full and put an end to project delays.
3. It scales up with your business
Given the ever-expanding markets and a current need to scale up to stay in the burgeoning competition, it is important to opt for a system that can grow along with your business.
Inventory control system software is capable of upgrades without the need for additional hardware investment. Whether you expand to new markets or introduce new product lines, it has the storage and processing capacity to support new ventures.
How can an inventory control system software add value to your business
Implementing inventory control system software may sound like a huge investment at first. However, it is worth considering if you want to revamp your operations and reduce your warehousing costs in the long run.
Here are five ways inventory control system software can enhance your business workflows:
1. It creates barcode labels for easy identification of asset items
A credible check-in and check out system is critical to tracking asset movements within a company. Inventory control system software helps you design unique barcode tags for each item so you can monitor when and where certain items are being used.
It even allows you to design the barcode tags so you can include important asset information as you like. This may include asset identification numbers, procurement dates or vendor names.
The unique barcode numbers act as identifiers and help trace down where assets are being used or sold. With the labeling system integrated with the inventory control system, every time a staff member checks out an item, the system is automatically updated.
Automated check-ins and checkouts greatly accelerate the
2. It specifies threshold levels to avoid stock outs
One of the greatest challenges of inventory control is to maintain a balance between over and under stocking. Storing excess stock can lead to higher holding costs and tie up financial capital in needless inventory. A stock shortfall, on the other hand, can slow down operations and decrease sales.
Inventory control system software lets you specify a minimum threshold level for each of your inventory items. Automated purchase orders are drafted and vendors are alerted as soon as your stock reaches the specified limit. This way, you don’t have to squander your time in manually maintaining an optimal stock quantity.
3. It records bin locations for multiple warehouses
Whichever industry you may work in, storing inventory at multiple warehouse locations and tracking asset movements across these can be quite a handful.
Inventory control system software helps you keep tabs on the locations of every item by recording its GPS coordinates. It instantly updates the location of inventory items as soon as they are checked into a new office or checked out to another warehouse across the city. Any associated staff members are also notified of the change in location.
A rock solid surveillance of the entire distribution chain prevents loss by theft or misplacement. It also keeps your warehouse, field and office teams coordinated.
4. It tracks usage history for accurate forecasting
All businesses face variance in sales and asset utilization patterns. Changes in revenue may occur due to seasonal fluctuations or varying consumer preferences. Asset utilization patterns may differ if certain inventory items become obsolete or are no longer needed after project completion.
Whatever the case may be, it is crucial to plan ahead of such fluctuations and adjust your stock accordingly. Inventory control system software allows you to record and study historical patterns in sales and asset utilization to project future usage.
5. It assists in conducting asset audits
Most companies may view asset audits merely as a governmental regulation but they play a crucial role in keeping a close eye on your inventory and its usage. Keeping regular inventory checks and tracing down the source of misplaced inventory is the last thing you want to be working so hard on.
Inventory control system software maintains real-time data of your assets. It shows which team member is in charge of an asset in a given period of time, allowing you to easily spot causes of theft or misplacement should they occur.
Inventory control system software can be the sharpest tool in your shed
Given the current advancements in technology and a need to automate business processes, investing in inventory control system software is a wise choice! It helps remove roadblocks resulting from manual data entry, equipment shortages, and extensive inventory counts to make your daily operations faster and smoother.
Apart from automating inventory workflows, inventory control system software also comes with supercharged features for data analysis. It helps you generate performance reports and calculate the inventory turnover ratio so you can closely monitor business progress.
With inventory control system software by your side, you never slog through your daily tasks and are sure to deliver your short and long term business targets.
Read more: 5 Ways To Effectively Implement A Barcode System In Your Business
About EZOfficeInventory
EZOfficeInventory is the leading inventory control software that helps you perform inventory audits, avoid stock outs and maintain inventory levels. Real-time data and analytics keep you in charge of your inventory at all times.
