Overstocking, out-of-stocks, and other events that can exhaust the inventories are common business problems that proper inventory control aims to do away with. To simply put, inventory control is the act of ensuring that right number of stocks are maintained and the cost of holding stocks is kept low. As long as proper controls are carried out and implemented, it is expected that best-selling products will always have enough supply and everything in the inventory will have the right amount of stocks to meet customer demands. Consequently, with the management’s more guided purchasing decision, inventory control can reduce the man hours that every employee will have to spend in reordering and receiving goods that actually are not in demand. Additionally, strategic stocking can also free up warehouse space which can help reduce the unnecessary carrying costs that a business has to bear.
The entire inventory control process is undoubtedly a huge one. When it was conceptualized, a traditional approach was derived and instantly followed. Everything then was entirely done manually and was purely based on paper. However, in the long run, such an approach was proven to be inefficient and highly error-prone as it was much easier to lose notes or log inaccurate data despite the huge amount of time the inventory staff would spend. Retrieval of records that could assist to major inventory purchase decisions was also unreliable, inconvenient, and time consuming and this had taken a toll on the potential income as future inventory needs were left uncatered if not addressed with significant delays.
As soon as the digital age stepped in, businesses had found an aid in computers with helpful office applications like excel spreadsheets as these provided a more reliable and convenient storage of records. However, such a digital solution eventually came short especially in terms of automation and security, i.e. there was a lack of automatic update of records and regular automated backup of data was not well defined. While to date, micro businesses that are still starting up in the industry still utilize such office applications, a lot of companies ranging from small to large sized have already learned to invest in a more sophisticated and advanced inventory control system to achieve a highly streamlined and efficient inventory control system.
What is Inventory Control System?
Inventory control system is a type of software, either web based or desktop based, that a firm utilizes to achieve an easier, more efficient, and overall better management of inventories. It takes care of the inventory which constitutes the buffer of raw material, work in process items, and the finished and ready-to-sell goods.
In this digital age, Google will most likely suggest a lot of inventory control programs from different software companies but among all varieties from simple to complex offered depending on the firm’s scale and nature of operations, popular inventory control modules that big companies and retail businesses commonly use include ABC Inventory Control System, Computerized Inventory Control System, Fixed Order Quantity and Fixed Period Reordering, Just-in-Time System, Outsourcing Inventory system, and Three-Bin System.
Eight Important Features You Should Look for In an Inventory Control System
The many options of inventory control system available in the market today can get quite overwhelming especially with all the set of advanced features each software provider boasts of having. With such, it is important to stay focused with your priorities and stick to your budget as much as possible, i.e. make sure you invest your hard earned money in the inventory control system that best fits your business requirements and needs. Unless you have unrestrained budget for it, you’d know you’re getting the best value of your investment if the inventory control system you’re choosing has the following features:
1. Basic Inventory Control
Technically speaking, an inventory control system is not a legit inventory control system if it lacks the basic inventory control feature. Inventory control may sound simple but this actually is the most requested feature companies look for in a good inventory software as it provides a systematic and streamlined approach of controlling and managing inventories across sale channels and/or multiple warehouses. This replaces the traditional spreadsheet-based recordings and updating where formulas can be easily manipulated and timely manual effort is needed to monitor and manage inventory levels. On top of the automation of the basic inventory management, depending on the advancement of the inventory control system, it can highlight or alert the users if certain stocks are near their reorder or critical points.
2. Reorder Alerts and Notifications
The least an inventory management software can do is notify or alert the users whenever stock levels of certain products fall below the previously set reorder point which was already predefined before users could start using the system. This feature makes it easier and convenient for users to keep track of the inventory without putting the security and accuracy of data at stake. Contrary to the manual inventory control where warehouse or inventory personnel need to check inventory levels and run inventory counts from time to time to identify which items need replenishment and when, reorder alert and notification feature keeps an eye on all inventory levels and notifies the users immediately whenever items are within the critical range. Time is considered the ROI here.
3. Barcoding and Barcode Scanning
While it is pleasing to witness an increase in the number of your daily orders, failing to manage the processing of demands efficiently and promptly can result to bottlenecks. Unfortunately, every disappointed customer can hurt the potential income of the business especially when perceived collectively. This is where inventory control system comes to the rescue. A good system can handle even a high volume of orders by streamlining the process through its barcoding and barcode scanning feature where personnel can easily scan the codes into the system and the latter does the rest of the updating and balancing of inventory figures.
4. Demand Forecasting
This feature assists in the decision-making phase. With the right tools in place, business owners will have a more guided decision on which products should be restocked more; thanks to this feature where a presentation in a form of graph and detailed reports show which items are selling fast and which channels are doing better. More advanced inventory control systems even drill down into important sales attributes like the color, material, scent, or size.
5. Accounting Integration
Accounting systems are a vital component for businesses to run successfully. Hence, more often than not, companies that are willing to invest in an inventory control system already have accounting systems in place. As inventory data serve as a huge chunk of accounting concern, having an inventory control system that is integrate-able with accounting systems is a major plus as it facilitates easy ledger posting.
6. Lot Monitoring
This feature easily identifies products, especially those that are FDA regulated, that get recalled for some reason and with only a few clicks, a list will be automatically generated containing each recalled product’s location and other details unlike the manual process where warehouse personnel carries out actual checking of each item on each warehouse block.
The Benefits of Using an Inventory Control System
Inventory management used to be just a practice that every company promoted. Through many decades, however, it has become a vital area that has to be effectively and efficiently managed and attended to.
A simple inventory mismanagement can break a business but as long as there’s an inventory control system in place, potential inventory challenges and errors can be significantly reduced or prevented. Here’s how using an inventory control system is beneficial:
1. Enhanced Accuracy of Inventory Orders
An inventory control system streamlines the entire inventory management process and eliminates updating and recording errors that manual or spreadsheet approaches usually commit. As it helps maintain accurate data, reports about inventories become way more reliable and the likelihood of product shortages is significantly reduced.
2. More Organized Warehouse
Such a digital solution aids in a more organized warehouse. Business owners will also be able to optimize their warehouses by strategically placing best-selling products in the most accessible racks. As a result, time efficiency in managing inventories is achieved and fulfilling orders is fast tracked.
3. Time and Cost Efficient
There are proven monetary and time benefits that show how inventory control system is a great business investment. On hand and ordered products can be easily tracked, the need for inventory counts is reduced, and warehouse personnel can finally focus on optimizing other areas that can help improve the inventory control process.
4. Enhanced Productivity
Inventory control devices like barcode scanners and inventory control systems can help significantly enhance staff productivity as these put an end to the manual processes.
5. More Loyal Customer Base
With an improved inventory process aided by an inventory control system, i.e. the right and in demand products have enough number of stocks, customer demands are expected to be met quickly and smoothly. As a result, customers will be lured to come back for more services and products
