If you’re familiar with inventory management, you’ve likely heard of “inventory control.” Just in case you haven’t, inventory control refers to the process used to maximize a company’s use of inventory.
The main goal of inventory control is to generate the maximum amount of profit from the least amount of inventory. Among companies that have large inventory investments, inventory control is one of their main concerns, most commonly among retailers.
Inventory Control Types
There’s a few different inventory control types based on the different ways companies use their inventory.
(1) Finished Goods Availability: Companies that have high levels of finished goods on hand can usually charge a higher price for products if they can be shipped reliably. However, many companies won’t be able to invest in a lot of inventory at once, especially when it cuts into profits. This is where inventory control can help.
This is where you need a balance between allowed backorders with a smaller level of on-hand finished goods. You may even consider just-in-time manufacturing, just depends on your company and which inventory control method makes more sense.
(2) Raw Materials Availability: Having control over your raw materials inventory can be a big challenge for companies. When it comes to raw materials, you want to make sure you have enough inventory on hand to ensure production is always running at full capacity. On the other side, you don’t want your business investing in huge amounts of materials you don’t need at the moment. There’s a delicate balance to both sides.
So, how do we control inventory in this scenario? We order frequently but only in small lot sizes. Do suppliers like this? No, so if a supplier isn’t willing to do it, you need to look into sole sourcing so you can concentrate on just-in-time deliveries.
(3) Work In Process: If you can reduce the number of inventory items you have in your production process, you’ll be able to lower your inventory investment. You may be surprised when you dig down deep and evaluate what inventory may be removed. Not only that, there’s other things you can do that may make your production more efficient. For example, you may want to consider subassemblies, changing locations to reduce inventory travel time or reducing machine setup times.
(4) Reorder Point: One of the biggest pillars in inventory control is choosing the best optimal inventory levels for reordering additional inventory. If your reorder level is low, this can keep your inventory investment low but it can also improve the chances of a stockout. You don’t want a stockout. If your reorder level is high, you have a big inventory investment. So, what’s the right inventory control method in this scenario?
Demand forecasting and inventory forecasting can help for those of you that have a fair amount of sales data from your POS. In fact, our POS Reporting here at Accelerated Analytics can help you with your inventory management.
Bottleneck Enhancement: For most companies, there’s always a bottleneck somewhere as it pertains to the production process. These bottlenecks can cause interference in the whole operation. We can use inventory control, an inventory buffer that helps us continue to run despite failures that would otherwise hurt you.
Outsourcing Inventory Control
Some companies choose to outsource their inventory control, partial or whole as a way to shift the inventory burden on suppliers. While you may make less profit from doing so, it may be worth the investment to get rid of your inventory issues all together.
You also have another choice as it pertains to controlling your inventory, that’s our powerful POS And EDI 852 software suite. When it comes to managing your inventory across numerous stores, you won’t find a better software. Scheduling a demo is simple and easy, just click here and fill out the form. We’d love the opportunity to show you how our software suite can help you manage inventory and grow your company.