Inventory management: Why inventory control is important
Surprisingly, despite this, many businesses don’t know what is in their inventory at any given time. This often means poor and slow business operations, and sometimes even losing customers to competitors when sales can’t be completed.
What is inventory control?
Simply put, inventory control is having complete oversight over an organisation’s stock. What there is, how much there is, where it is, where it’s going and how to maximise it.
Why is inventory control important?
The importance of good inventory control and management can’t be stressed enough. High visibility of stock means better control over business. Better control means lower costs, less stock loss, faster fulfilment and can even prevent theft.
Inventory control means better management of stock in the warehouse. Being able to fulfil orders quickly with stock on hand ensures you aren’t losing customers with order backlogs. Conversely, tying up assets and wasting warehouse space through overstocking can also be prevented.
Am I in control of my inventory?
The following questions can be asked to assess whether your organisation is in control of its inventory. It is an area that can constantly be assessed and improved on.
- Do you often have order backlogs?
- Does picking and packing often involve employees hunting for stock?
- Does stock often sit in the warehouse for ages?
- Do sales sometimes take ages to fulfil because you are waiting for stock?
- Are there many people handling stock from when it comes in to when it is sold?
- Do you often run out of warehouse space, or does your stock often just go wherever there is space?
- Do you have to enter stock data manually, often multiple times for different systems?
- Are you reactively ordering stock when because you are already running out?
- Are you manually tracking stock on paper?
If you answered yes to some of these questions, here are some guidelines to improving control:
Regular assessments of your processes can highlight problem areas and provide the opportunity to address them
2. Use the right tools
Warehouse management and inventory control tools can go a long way to ensuring that your stock is properly managed. Ideally your tools should integrate successfully with your ERP system to ensure that all your data is aligned.
3. Regulate stock counts
Regular, physical stock counts is important for improving inventory management. No matter what tools you use and how accurate your records, a stock count will highlight any losses that haven’t necessarily been reported or recorded. The key is to be aware of the difference between recorded stock and actual stock.
4. Digitise and automate
Utilising digital solutions and mobile devices on the warehouse floor to capture and automate data can simplify warehouse systems. Barcoding of each stock item and using these barcodes to track stock is an efficient way to improve the accuracy of your stock data.