What is Inventory Control: Definition, Methods & Best Strategies

Definition of Inventory Control

What is inventory control? Inventory control is a process that can be carried out by a Company with the aim of maximizing the storage or inventory of stock of goods.

This is to ensure that the Company has the competent requirements to meet market demand as well as possible.

Function of Inventory Control

Surely in a Company, inventory control has many functions that can meet the needs of the Company, now see the following functions:

Can ensure that orders for goods are in accordance with the purpose so that they do not need to be returned.

Prevent delays in delivery, both raw materials or even goods that are currently needed by the Company.

Can be careful when the price of goods increases suddenly.

Can gain profit from purchases that have been made.

Store raw materials or goods that are indeed produced seasonally very well.

Provide the best service to consumers by providing goods or products that are really needed by consumers quickly and precisely.

Benefits of Inventory Control

Controlling the warehouse properly is very important in the operation of a business. Therefore, paying attention to product control in the warehouse directly can ensure business decisions are right and have a very strong foundation.

Well, here are 3 benefits of inventory control that you must know:

Reducing Operational Costs

Managing the warehouse properly will have an impact on business operational costs over a certain period of time.

However, keeping operational processes simple can help you eliminate many expenses such as materials and shipping processes.

Of course, with the right information, you can make decisions for business finances correctly.

Balancing Between Supply & Demand

When you have the right balance between supply and demand, it is very possible for your business to run as simply as possible.

Finding the right level of balance is one of the best ways to ensure a smooth process in production and also for sellers.

The method is very easy, you only have to implement and maximize a certain technology.

Because it will help you to get real-time information that can be used to determine the right time to fill stock or fulfill customer orders.

Safety Stock Preparation

Certainly by monitoring the Warehouse continuously in the right way, it will help you to anticipate goods by maintaining a very effective amount of safety stock for your Warehouse.

Good Inventory Control Method

The following are the best inventory control methods that you must do, so that inventory control in the Company can run successfully, see the following:

Tracking Inventory

The first way you can do is to track the overall inventory, starting from monitoring activities to tracking inventory products with the aim of finding out where the product is stored in the Warehouse.

The tracking process must be carried out in real time so that the number of products sent to customers can be known with certainty and clearly.

Set Reorder Point

The next is the set reorder point which will later require you or the Company to order inventory in very large quantities. This aims to anticipate if the stock runs out.

Quality Control

QC or commonly known as Quality control will help the Company in monitoring orders from suppliers or suppliers carefully.

In addition, QC also functions for other things such as monitoring inventory, making the right decisions, pleasing consumers to meeting existing requirements or regulations.

Therefore, the Quality control process will be easier and more efficient if assisted by inventory control.

Determining Inventory

If the Company you run has been running for a long time and is also quite stable, you should always try to maximize inventory as best as possible.

Why? because the need for product inventory will fluctuate throughout the year.

Thus, maximizing inventory must also be done by seasonal Companies, because products that cannot be sold consistently.

Implementing Zoning

Zoning will be very necessary if the Company already has many SKUs with various products. The goal is to maintain product order that can make it easier for you when you want to find the product.

That way, Zoning can help you to organize the Warehouse space very well, especially when determining certain areas according to your needs.

Regularly Auditing

By managing your inventory, it will certainly help the Company when conducting an inventory audit. Well, with inventory control, inventory audits can run very efficiently. Later, problems that arise can be more easily identified.

In addition, the previous method, namely zoning, has helped make the Warehouse space more organized very well.

Inventory Control Strategy

Inventory control has a very beneficial purpose for the company. In addition to the things mentioned above, inventory control is also often used to maximize the performance of a production area efficiently so that it can add value to its productivity.

To carry out this inventory control, several strategies are needed. Here are some inventory control strategies that you must know:

Optimize the Stock Reordering Process

The first inventory control strategy that you must know is optimizing the stock reordering process. What is meant by this strategy is that an inventory manager must be able to optimize the stock reordering process.

This is where an inventory manager must be able to make the right calculations for stock availability and current stock needs.

By optimizing the stock reordering process, there are several things that are beneficial. The first thing that is beneficial is the space or storage of the warehouse which is of course the main capital in inventory.

Next is the purchase capital which can be reduced in budget if the stock is calculated properly and each order is made in large bundles at once, and finally the productivity of the inventory manager which is often of high value if its optimization power is good.

Set the Minimum Stock Level

The next inventory control strategy is to set the minimum stock level. By setting the right minimum stock level, the quality of an inventory control is maintained.

Where, the stock does not run out or run out which can make the company lose a lot. In addition, by setting the minimum stock level, a company can understand the time to refill the stock of the goods.

Conduct Regular Inventory Audits

The next strategy in inventory control is to conduct regular inventory audits. This often has many advantages, especially in terms of company production.

This audit allows the available inventory to be known in its actual condition. Has it been sufficient so far? Or does it have quotation marks where there are frauds that are hidden around it.

By conducting regular inventory audits, it is certain that these questions can be easily answered. In addition, the condition of the warehouse or storage of supplies or inventory can be known.

Is the warehouse still suitable for use? There are inadequate facilities or other things. So regular inventory audits are the right step in overcoming these problems.

Implement FIFO & FEFO Techniques

Implementing the FIFO (first in first out) and FEFO (first expired first out) techniques is the right action in conducting inventory control. With these two techniques, a company will be very unlikely to experience inventory losses.

All goods will be distributed properly and use more appropriate techniques. Of course, both techniques can be adjusted and one of them can be chosen to be applied.

Store Your Inventory Well

Of course, inventory control will not move from good storage of existing inventory or supplies. Good storage will make goods of better quality and anti-damage.

Of course, this provides benefits not only in the quality of the goods that are maintained but also from the possibility of loss of stored goods due to damage.

Categorize Your Stock of Goods

Inventory control will also not move from proper inventory management. One form of proper management is categorizing existing stock of goods.

By categorizing existing stock of goods, it can be easier to find out which stock is running out, is needed, or is still very available so that there is no need to restock.

Use Integrated Inventory Control Software

Using integrated inventory control software is also a very appropriate strategy in inventory control. Where, by utilizing technology products, the inventory process will be better and more efficient to do.

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