Inventory Control is the supervision of supply, storage and accessibility of items in order to ensure an adequate supply without excessive oversupply. It can also be referred as internal control - an accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets or avoid fraud and error etc. Types of Inventory Control
Types of inventory control include the following:
* Some businesses control inventory by manually monitoring stock and ordering additional inventory when necessary. This may be done by visually observing when the stock of a particular item is low. Tools such as spreadsheets may make manual control easier. Manual control of inventory does not have a built-in alarm for when inventory is running low, which is the most significant shortfall of manually controlling inventory. A lack of inventory when it is needed most could result in missed sales and lost customers. Barcodes
* Another type of inventory control is the use of barcode technology, which is most often used by larger businesses that do not have the time or ability to physically monitor their inventory on a regular basis. The use of barcodes involves scanning a printed label as inventory moves along the supply chain to customers. This information is stored electronically and can be examined by a person or computer, allowing inventory to be managed efficiently. Using barcodes to control inventory could be expensive for some businesses because they have to purchase the related scanners, labels and software to take full advantage of this type of inventory control.
Radio Frequency Identification
* Radio-frequency identification is most often used by larger businesses. RFID uses microchips to control the flow of products and ensure property inventory levels are maintained. These microchips can be scanned at any point, and the information associated with inventory, such as time or location, is stored in a computer for analysis. This gives the business vast control over its inventory at any stage of its movement. Just-In-Time
* The just-in-time system of inventory control involves carrying only the amount of inventory necessary to meet customer demand for a particular day, week or month. While the manual or automatic systems mentioned previously may allow businesses to continuously have a steady supply of inventory, the just-in-time system adjusts the amount of inventory ordered to match anticipated demand. This could save a business money because they only have as much inventory as needed and can use leftover funds for other activities.
Advantages Of Inventory Control
Some of the advantages of inventory control include the following: Purchasing Information
* The purchasing department in any company relies on the data in the inventory database or system to alert them when it is time to purchase new supplies, raw materials and items that are sold directly to the public. From retail stores to companies that manufacture widgets, purchasing is a vital part of the supply chain. Without accurate information to guide them, purchasing departments may not purchase materials in time to complete customer orders. A company that practices lean manufacturing will not purchase supplies and materials until a specific level of inventory has been reached that triggers a purchase. Inventory inaccuracies in either direction cause that system to fail. Sales
* The sales department depends on accurate inventory numbers to plan their sales strategies. A salesman on a retail sales floor must be able to produce the item that they are selling to the customers. If he cannot consult an inventory database to let the customer know that an item is in stock, or if the database is not accurate, the wrong information will be given to the customer resulting in lost sales. An accurate inventory system is a vital tool for a retail sales department.