Learn more about inventory control: definition, methods, types, and ways to maximize your inventory.
Published 24 Mar 2023
Also called stock control, inventory control consists of systems and procedures for managing inventory items in a company’s warehouse. It monitors the movement and storage of goods in a warehouse to help businesses maintain a sufficient supply in good condition. Establishing an inventory control system enables them to satisfy customer demands and maximize profits.
Inventory control is a key element of an inventory management system. Warehouse managers and production planners should adhere to the following activities and procedures in controlling their inventory:
Although these two concepts go hand in hand, there are slight differences between inventory control and inventory management. Inventory control handles existing stock in a warehouse, while inventory management involves the overall movement of goods across supply chains.
The table below compares the two processes against their scope, goal, areas of concern, and actions.
There are two main types of inventory control systems: the periodic and the perpetual system. Choosing the right inventory control system will depend on the business type, size, and kind of inventory. This section discusses these two types in detail, covering their pros and cons, as well as what they’re best for.
The periodic inventory control system pertains to a recurring count of goods at specific intervals. In this system, warehouse managers manually count their inventory on a monthly, quarterly, or annual basis. The exact period depends on an organization’s needs and business activities.
Pros: It’s relatively simple and easy to manage for smaller inventories. It doesn’t require any specialized technology and equipment, making it easier to train individuals in.
Cons: It becomes a lengthy process for companies with expansive inventories. The manual counting process is also highly prone to human error.
Best for: The periodic system is ideal for small companies with minimal inventory. It also works best for businesses selling niche products and counting larger-sized goods.
The perpetual inventory control system provides an accurate count of inventory levels in real-time. It utilizes technology, such as barcodes and Radio Frequency Identification (RFID) tags, for tracking products. The information is then logged in a centralized database that warehouse managers can easily access.
Pros: This method removes the need for manual counting. It gives warehouse managers a snapshot of their inventory counts over a specific period of time. Doing so drives data-driven decision-making for sales, ordering, and inventory management.
Cons: An inventory control software can be expensive to maintain. Moreover, it might not capture discrepancies due to product theft, loss, damage, and scanning errors.
Best for: The perpetual system works best for companies with multiple locations. It’s also great for businesses maintaining large inventories.
Inventory control involves various techniques for monitoring how stocks move in a warehouse. Four popular inventory control methods include ABC analysis; Last In, First Out (LIFO) and First In, First Out (FIFO); batch tracking; and safety stock. This section explains how each of these methods functions and how they can support your business.
Inventory Control Techniques
ABC analysis in inventory control classifies stocks based on their importance, price, and sales volume. These criteria determine the number of items a company will bring to the market.
Just as its name suggests, it consists of the following categories:
Applying the ABC analysis of inventory control allows businesses to minimize the costs of carrying products while maximizing their stock returns.
Both inventory control techniques organize how inventory items move in and out of the warehouse based on their arrival date. Priority will depend on the type of products available in the storage facility.
Using the LIFO method, the warehouse puts out the most recent batch of items to the customers first. Doing so prevents products from going bad when delivered to the market.
But with the FIFO technique, the warehouse prioritizes older stocks for processing and shipping. This way, they can keep the products fresh when the customer receives them.
Batch tracking is also a great way of organizing stock items in a warehouse facility. In this method, goods of the same production date and materials are grouped together. Doing this helps warehouse managers keep track of the following information:
Safety stock involves having an additional set of goods on hand as a preventive measure for the market’s volatility. The amount should be over the average demand or use of the product.
It acts as a safety net, should customer demand go above the projected amount. It also covers them for any uncertainty in supply performance, such as shipping delays.
After discussing the types and techniques employed in an inventory control system, it’s time to put those measures into practice. Here are some tips to help you kickstart your inventory control process.
Explore our Free Inventory TemplatesSee how digital checklists simplify business processes with just a tap.View now
See how digital checklists simplify business processes with just a tap.
As an inventory control software, SafetyCulture assists warehouse managers in improving their inventory control system. It allows them to conduct warehouse audits to check if any product is lost, stolen, or in bad conditions. This platform also reduces human error through digitized inventory tracking systems.
With SafetyCulture, you can perform the following actions:
Get started using our selection of inventory checklists for your business needs!
Leizel Estrellas is a content writer and researcher for SafetyCulture. Her academic and professional training as a researcher allows her to write meaningful articles that create a lasting impact. As a content specialist, she strives to promote a culture of safety in the workplace through accessible and reader-friendly content. With her high-quality work, she is keen on helping businesses across industries identify issues and opportunities to improve every day.
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