In this chapter, we will explain what inventory control is, why inventory control is important for businesses, and its benefits and give you some of the inventory control best practices that you should implement for your company in order to improve business performance and increase profit and reduce costs.
Inventory control is a mix of techniques and technology to optimize inventory processes, improve operation and increase employee productivity. This method is often considered a stepping stone to inventory management.
Inventory control or stock control is a process of managing company inventory levels whether it is for raw materials and work-in-progress inventory for production, finished goods, or any other types of inventory located in your warehouse, shop floor, or other locations.
Inventory control is subjected to all items from the time you have them in stock to the time they have been delivered to your customers (ideal situation) or being disposed of as an obsolete inventory (not ideal situation).
Inventory control focuses on identifying any slow-selling products a company purchases or produces while also identifying the high-selling goods to ensure you have the right amount of stock to avoid having too much or too little stock in your inventory.
In the end, inventory control helps you to better answer the questions, “How much stock should I order?” and “When should I order the inventory?”
Inventory control is an essential part of inventory management to help you properly track your purchase orders, monitor your supply chain, and ensure your production keeps running and important items are not out-of-stock.
Having an effective supply chain is crucial for your business as 79% of companies with high-performing supply chains achieve revenue growth greater than the average within their industries.
Inventory control helps you to maximize your profit while the least amount of inventory possible is located in your warehouse/s without compromising on customer satisfaction or operational efficiency.
Inventory control helps you to improve the accuracy of inventory levels. In fact, for retail, inventory is accurate just 63% of the time, on average.
And according to the US Census Bureau, manufacturers and retailers were holding $1.33 of inventory for every $1 in sales and a similar ratio can be expected in other countries in SEA like Malaysia, Singapore, or Cambodia.
Effective Inventory control allows you to change that inventory/sales ratio for the better. Stationary stock does not do anything for your business or its bottom line. Make the most out of the precious space you have, while ensuring you always meet customer demand.
Here are some of the inventory control benefits:
An Inventory control system is software that helps you to monitor inventory movement, usage, and storage and automatically updates your inventory levels. It can use historical data to improve forecasting and allow you to set inventory policies and automatically reorder points.
This technology will integrate and manage purchasing, shipping, receiving, warehousing, and returns into a single system to improve company inventory handling, supply chain, and customer satisfaction.
An inventory control system can include numerous features to improve workflow, inventory tracking, and management of your inventory such as:
An inventory control system helps you to cut down on holding costs as reducing stock-outs and overstocks can lower your overall inventory costs by 10%. Having good inventory control features is the key point for a smooth inventory process.
When investing in an inventory control system, you should prioritize technology that can integrate with other business processes such as POS systems to track sales and stock levels in real-time across multiple channels of your business.
As technology is evolving, inventory control systems went through changes over time as well from simply tracking the number of SKUs and their amount all the way to making intelligent automation, workflows, reports, and forecast for business owners and inventory managers to make better and faster decisions and increase productivity.
And there are two key types of inventory control systems that you should know:
The best inventory control system will automate a lot of manual processes. It will provide an accurate picture of what inventory you have, where it is, and when you need to reorder to keep your stock at optimal levels.
As you could see, inventory control is an essential part of inventory management. Following are some of the inventory control best practices and tips:
The main difference between inventory control and inventory management is that inventory control is a part of inventory management only focused on the inventory movement, quantities, quality, and status within the warehouse while inventory management encompasses the entire inventory process from demand forecasting, purchasing, warehousing, supply chain, order fulfillment, customer returns and everything that comes with inventory management.
Often suggested by experts, inventory control is the first step of inventory management in order to understand which stock is in your warehouse and its condition, and from there move to more advanced inventory management methods such as forecasting, warehouse layout, order fulfillment optimization, and more.
Dynamics 365 is a portfolio of business applications that meets organizations where they are—and invites them to digitally transform. Each app is designed to remove the barriers and eliminate silos within organizations by working together with existing systems—or the entire portfolio of Dynamics 365 apps—for outcomes you simply can’t get unless every part of the business is connected seamlessly. Dynamics 365 offers several options for an inventory management system, each to fit your needs. Contact us to get personalized suggestion based on your needs, budget and industry.
Dynamics 365 Business Central is an all-in-one enterprise resource management System for Small-Medium Size Businesses to centralize, simplify and automate your business processes across Finance, Supply Chain, Sales, Inventory & Warehouse Customer Service, Manufacturing, and Projects.
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Intelligently orchestrate fulfillment, automate with a rules-based system using real-time inventory data, AI, and machine learning. Adapt quickly to future order volumes, complexities with pre-built connectors to specialized technology partners for order intake, delivery and logistics services.
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