Inventory control can be defined as management and supervision of storage, supply, distribution and a complete record of materials to conserve quantities for the customer’s need without excessive storage or loss.
Why inventory control management is important?
You must have a proper knowledge of your inventory like how many items are in the stock, where the items are located, and how much you require ordering for more demand. Otherwise the company will face a hindrance in in running smoothly towards its growth because of the lack of inventory information.
What should be your Inventory Control Techniques?
There are many inventory control techniques employed to ensure a maximum efficiency and profit. Here I am sharing some of the important solutions in the regard of inventory control techniques.
1-Do you have Any Stocking Policy?
Stocking policy includes the maximum and minimum level of the stock. There should be a defined upper limit and lower limit of the supplies to be kept in the network of your inventory locations. Set some optimized re-order points and average inventory levels to ensure that cost is controlled. Safety stock levels help you to decide that supply is not short fall to a critical limit.
2- Do you Prepare your Inventory Budget?
Annual inventory budget estimation is prepared in advance every year before the inventory is procured. This budget must include total cost of the inventory which includes material cost, operational cost, logistic cost and distribution cost.
3- Have you Calculated Inventory Turnover Ratio?
Inventory turnover ratio determines that how quickly the stock is used in a given period of time. The high turnover ratio means the shorter shelf life of the product and leads to higher sales and profit with low profit margins. The demand pattern must be tracked wisely so that the product refill estimation is accurately optimized.
4- Have you Adopted Optimal Purchasing Procedures?
Adopting some optimal purchasing practices that line up with actual sales and demand patterns will ensure you that your inventory is under your control. Those inventory items which have not been sold within the accounting period should be classified as dead stock and eliminated from the inventory to avoid excessive carrying cost. Item with the decreasing customers demand should be identified and its safety stock level and re-order points must be adjusted to lessen the risk of obsolescence and price.
5- How Optimization Inventory Software Helps?
Automatic inventory software is designed to keep a record of quantity and value of each inventory stock item. Such systems integrate various operational subsystems that are the part of inventory management system. These systems are deployed in wide choices of applications according to the tracking and management needs of your specific business process. It also track orders and shipment and allows online process of placing and order for the customers.
