What Is Inventory Control?
Inventory control, also known as stock control, involves regulating and maximising your company’s inventory. The goal of inventory control is to maximise profits with minimum inventory investment, without impacting customer satisfaction levels. Inventory control is also about knowing where all your stock is and ensuring everything is accounted for at any given time.
What’s the difference between inventory control and inventory management?
At first glance, inventory control and inventory management seem similar. After all, they both cover similar bases revolving around the question of “How much stock should I order?” However, although these two terms are often used interchangeably, they actually deal with different aspects of inventory optimization.
Inventory control involves warehouse management. This includes:
- Keeping track of the stock that is already in the warehouse. This includes knowing what products are being stocked and how much of a particular item is available.
- Aspects of warehousing designs, such as knowing where everything is and ensuring that the products are stored well.
Inventory management, on the other hand, involves:
- Stocking the right amount of inventory
- Paying the right amount for your inventory (Economic Order Quantity)
- Knowing your reorder point
- Ensuring you have the right amount of inventory in the right place
Basic inventory control techniques and procedures
Whether you’re using the latest inventory management system or still using Excel spreadsheets, there are a few simple things you can do to control your inventory.
- Determine the right amount of stock using the Economic Order Quantity formula or Reorder Point Formula.
- Keep your stock organized with easily understandable SKUs.
- Keep an eye on quality control using batch tracking software.
Common inventory control challenges
One of the biggest challenges in inventory control is to decide how much to order. In order to avoid obsolescence and spoilage, inventory forecasting must be utilized to keep inventory levels low yet adequate to match customer demands.
Examples of Inventory Control Gone Wrong
Even big players fall victim to improper inventory forecasting.
With over 11,000 stores in 27 countries and an average of $32 billion in inventory, Walmart’s inventory supply chain is an impressive logistical accomplishment. Nevertheless, Walmart’s has experienced out-of-stock problems. Find out what went wrong.
What does good inventory control look like?
As mentioned above, a retailer’s worst nightmare is to go out of stock. Lost sales and lost goodwill can tarnish a brand’s reputation in record time. However, with effective inventory control to ensure that well-received products can always be delivered, going out of stock can be avoided with good inventory control.
Examples of Inventory Control Managed Well
H&M manufactures 80% of its retail inventory in advance and introduces the remaining 20% based on the most current market trends. These manufacturing strategies help the company to reduce lead times, keeping them at the top of their inventory control game.
If you’d like to take control of your inventory, the best place to start is with a free trial of inventory control software. Try out TradeGecko – you can avoid stockouts, make prompt reorders, and get automatic stock level updates.
Read next: Introduction to inventory forecasting