7 Reasons Why Inventory Control is Essential for Your Business

Inventory control is the process of managing stock once it arrives at a warehouse, store or other storage location. It is solely concerned with regulating what is already present, and involves planning for sales and stock-outs, optimizing inventory for maximum benefit and preventing the pile-up of dead stock. In this article, we will explore seven reasons why inventory control is essential for your business, and how it can help you achieve your goals.

Key Takeaways

Inventory control is the process of managing stock once it arrives at a warehouse, store or other storage location.

Inventory control is essential for your business because it can help you reduce costs, improve customer service, increase efficiency, ensure quality, plan ahead, gain an edge and grow your business.

Inventory control involves planning for sales and stock-outs, optimizing inventory for maximum benefit and preventing the pile-up of dead stock.

Inventory control requires data from purchases, reorders, shipping, warehousing, storage, receiving, customer satisfaction, loss prevention and turnover.

Inventory control can be done using various methods, systems and tools, depending on your business needs and goals.

1. Inventory control reduces costs and increases profits.

By keeping track of your inventory levels, you can avoid overstocking or understocking, which can lead to wasted resources, lost sales, customer dissatisfaction and lower profits. Inventory control helps you maintain the optimal balance of supply and demand, ensuring that you have enough stock to meet customer needs without tying up too much capital in excess inventory. You can also use inventory control to identify slow-moving or obsolete items and take action to clear them out or dispose of them efficiently.

2. Inventory control improves customer service and satisfaction.

Customers expect fast and reliable delivery of their orders, and they will not tolerate delays or errors caused by poor inventory management. Inventory control enables you to fulfill orders accurately and on time, by ensuring that you have the right products in the right quantities at the right locations. You can also use inventory control to monitor customer demand patterns, preferences and feedback, and adjust your inventory accordingly to meet their expectations and increase their loyalty.

3. Inventory control enhances operational efficiency and productivity.

Inventory control streamlines your workflow and reduces the time and effort required to manage your stock. You can use inventory control systems and tools to automate tasks such as ordering, receiving, storing, picking, packing and shipping, eliminating human errors and saving labor costs. You can also use inventory control to optimize your warehouse layout, storage methods, inventory turnover rate and replenishment frequency, improving your space utilization and reducing your handling costs.

4. Inventory control supports quality control and compliance.

Inventory control helps you maintain the quality and safety of your products, by ensuring that they are stored properly, handled carefully and checked regularly for defects or damages. You can also use inventory control to track the expiration dates, batch numbers and serial numbers of your products, enabling you to comply with industry standards, regulations and certifications. Inventory control also helps you prevent theft, fraud and shrinkage, by providing you with accurate and up-to-date records of your inventory movements and transactions.

5. Inventory control facilitates planning and forecasting.

Inventory control provides you with valuable data and insights into your inventory performance, such as sales trends, inventory levels, turnover rates, profit margins and more. You can use this information to plan your inventory strategy, budget your inventory costs, forecast your future demand and supply, set your inventory goals and targets, measure your inventory performance and evaluate your inventory results.

6. Inventory control boosts your competitive advantage.

Inventory control gives you an edge over your competitors, by enabling you to offer better products, prices, services and delivery options to your customers. You can use inventory control to differentiate yourself from other businesses in your industry, by creating a unique product mix, offering customized solutions, providing faster delivery times or lower shipping costs, or implementing innovative inventory practices.

7. Inventory control fosters growth and innovation.

Inventory control helps you grow your business and expand your market share, by allowing you to respond quickly and effectively to changing customer needs, market conditions and business opportunities. You can use inventory control to test new products, explore new markets, launch new promotions or campaigns or enter new partnerships or collaborations. You can also use inventory control to improve your business processes, enhance your product quality or design or adopt new technologies or methods.

Tips

Keep your inventory records accurate and up-to-date.

Monitor your inventory levels and trends closely.

Optimize your inventory turnover and replenishment cycles.

Minimize your inventory holding and handling costs.

Maximize your inventory value and profitability.

Inventory Control: A Statistical Report

Inventory control is the process of managing the quantity and quality of goods in stock. It involves planning, ordering, storing, tracking and distributing inventory to meet customer demand and business goals. Inventory control is essential for any business that sells physical products, as it affects the profitability, efficiency and competitiveness of the operation.

Global Demand for Inventory Control

The global demand for inventory control solutions is increasing due to several factors, such as:

The growth of e-commerce and omnichannel retailing, which require more accurate and timely inventory information across multiple channels and locations.

The emergence of new technologies, such as cloud computing, artificial intelligence, machine learning, internet of things, blockchain and robotics, which enable more advanced and automated inventory management systems.

The rising customer expectations for fast delivery, product availability, quality and customization, which require more responsive and flexible inventory control strategies.

The increasing complexity and volatility of supply chains, which pose more challenges and risks for inventory management, such as disruptions, shortages, excesses, obsolescence and theft.

According to a report by Grand View Research, the global inventory management software market size was valued at USD 2.07 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 5.0% from 2020 to 2027. Another report by Mordor Intelligence estimates that the global inventory management system market size was USD 2.66 billion in 2020 and is projected to reach USD 3.94 billion by 2026, registering a CAGR of 6.87% during the forecast period (2021-2026).

Benefits of Inventory Control

Inventory control can provide various benefits for businesses, such as:

Reducing inventory costs, such as holding costs, ordering costs, carrying costs and shrinkage costs.

Improving inventory turnover rate, which is the number of times a company sells and replaces its stock in a period, usually one year. A higher inventory turnover rate indicates more efficient inventory management and higher sales performance.

Increasing customer satisfaction and loyalty, by ensuring product availability, quality and variety, as well as faster and more accurate delivery.

Enhancing operational efficiency and productivity, by optimizing inventory levels, reducing errors and waste, streamlining workflows and processes, and increasing visibility and collaboration across the supply chain.

Supporting strategic decision making and planning, by providing data-driven insights and analytics on inventory performance, trends and opportunities.

According to a survey by Wasp Barcode Technologies, 46% of small to medium-sized businesses (SMBs) either don’t track inventory or use a manual method. However, using an automated inventory management system can help SMBs achieve significant improvements in their inventory performance. For instance, the survey found that SMBs that use an automated system have a 35% higher average gross margin than those that don’t.

Inventory control is a vital aspect of any business that deals with physical goods. It can help businesses meet customer demand, reduce costs, increase sales, improve efficiency and gain competitive advantage. The global demand for inventory control solutions is expected to grow in the coming years, driven by the changing market dynamics and technological innovations. Businesses that adopt effective inventory control strategies and systems can benefit from better inventory management outcomes and performance.

Frequently Asked Questions

What is the difference between inventory control and inventory management?

Inventory control is the process of managing stock once it arrives at a warehouse, store or other storage location. Inventory management is a broader term that encompasses the complete process of procuring, storing and making a profit from your merchandise or services.

What are some common methods of inventory control?

Some common methods of inventory control are periodic review system, perpetual review system (also known as continuous review system), economic order quantity, reorder point system (also known as fixed order point system), ABC analysis, just-in-time system (also known as lean system) and consignment system.

What are some benefits of using an inventory control software?

Some benefits of using an inventory control software are increased accuracy, reduced errors, improved visibility, enhanced reporting, easier integration, higher scalability and lower costs.

What are some challenges of inventory control?

Some challenges of inventory control are demand uncertainty, supply variability, inventory shrinkage, inventory obsolescence, inventory carrying costs and inventory optimization.

How can I improve my inventory control?

Some ways to improve your inventory control are setting realistic and measurable inventory goals, conducting regular inventory audits, implementing effective inventory policies and procedures, training your staff on inventory best practices, using reliable inventory tools and systems and reviewing and updating your inventory strategy regularly.

References:

https://www.macmillandictionary.com/dictionary/british/stock-control

https://books.google.com/books?id=NOOmR2D88Q0C

https://books.google.com/books?id=v9YjCgAAQBAJ&pg=PA1

https://www.merriam-webster.com/dictionary/inventory%20control

https://en.wikipedia.org/wiki/Inventory_control