Inventory control techniques can be greatly beneficial for organizations. In this blog, we will know what are various inventory control techniques & how to improve the inventory process. So, without wasting any time let's begin!
What Is Inventory Management?
Inventory management is important for the organization. It is used to store, sell & keep track of inventory from raw material to production to selling product. Inventory management is an essential part of supply chain management.
One of the most important parts of keeping track of inventory because inventory can have a limited period of life in after which it will be no good for consumers. Inventory management helps in growing productivity and maximizing return on investment. Moreover, it helps in streamlining operations.
The market of inventory management software market is huge! According to Global Market Insights, “Inventory Management Software Market size crossed USD 3 billion in 2019 and is estimated to grow at a CAGR of over 5% from 2020 to 2026. The increasing manufacturing output due to the adoption of Industrial IoT (IIoT) is supporting the market growth.”
When you have professional inventory management you get lots of benefits such as your unnecessary inventory expenses decreases, effective stock management is also done.
In order to perform accurate tracking organizations, utilize asset tags and labels that are helpful in retrieving information about inventory quantity. It plays a crucial role in maintaining accuracy in inventory records.
It gives organizations peace of mind that decisions based on this information will be accurate and the result will be as expected.
What Are the Inventory Control Techniques to Improve the Inventory Process?
Various inventory control techniques are used to improve the inventory process are discussed below:
1. Just in Time
Just in time is a maintenance strategy that enables an organization to bring stock (raw material) directly & quickly & prepare goods and deliver them to the customer in a given timeline. This practice needs a highly skilled employee who can do work in a specific timeline & handle pressure as well.
Organizations do not have to stock raw material in advance so it saves expenses of keeping stock in hand & warehouse expenses. Expert of this inventory control technique can demand forecast accurately that can be amazingly effective for the inventory process.
2. ABC Analysis
This inventory control technique is extremely helpful in improving inventory management you can easily categorize inventory in 3 categories accordingly divide the inventory into categories A, B, & C.
In category A costly inventory is stored, in category B inventory which is less costly are stored & in category C inventory is stored which is less costly compared to category A or B.
In this technique, the whole inventory management is passed to some other venture. After which this organization takes care of the inventory & allows the organization to put resources into some other activities.
Employees can focus on growing a business it is a technique that has money but no time. With the drop-shipping technique, organizations will not have to worry about the inventory process as the inventory managing will be responsible for inventory management.
4. FIFO Method
The first in first out method is useful where time really matters a lot or food & consumption where the time window is small. It means that inventory needs to be finished in a particular period after that inventory will lose its effectiveness.
5. Use Automated Software
Inventory control techniques can be more helpful when they are utilized with automated inventory management software. It can work in an automated way so that inventory numbers are fetched in real-time.
Inventory that comes in & inventory goes out are recorded separately. Whenever the inventory goes below a certain level the system notifies the team and they start the process.
What Are the Benefits of Inventory Control Techniques?
The benefits of inventory control techniques are discussed below:
1. Inventory Control
Inventory control is very useful as an organization has useful inventory available & the right level of stock is maintained by the organization so that if customer demands then inventory is there to fulfill customer demand. With inventory management software you have all data so you can avoid extra inventory purchases.
2. Inventory Visibility
Lots of times occur that inventory is there in a warehouse but employees do not find it. When you have automated inventory management software you will have all records at your fingertips. It eliminates all inventory loss and increases inventory visibility.
3. Fewer Inventory Expenses
Organizations can save lots of money with automated software. As their unnecessary inventory expenses are saved organizations can invest this saved money in some other operation for inventory optimization.
4. Demand Forecasting
One of the benefits you can achieve with the proper inventory tracking and data is that you can calculate future demand of customer requirements.
The inventory control technique is significant for an organization especially when inventory is the main part of your organization. However, manual management of inventory is impossible specifically when inventory is located at multiple locations that are why keeping automated software is important.
It not only saves provides control over inventory but also increases productivity for the employees as they do not have to waste time looking for a specific type of inventory as with this software, they can get the precise location of the asset. This software can be very beneficial for organizations.
Frequently Asked Questions (FAQs)
1. What are the benefits of inventory management software?
The benefits of inventory management software are discussed below:
1. Alert team whenever inventory goes below the defined level. So that reorder process shall be started & business loss can be avoided.
2. Inventory management software optimizes inventory, increases productivity, and streamlines daily operation as well.
3. It systemizes the whole inventory purchase & selling process.
4. Eliminates overstock issue & out of the stock issue.
5. Better control & visibility of inventory.
6. Demand forecasting helps in better management of inventory.
7. It is also helpful in auditing for physical verifying inventory & you can do fast inventory count as well.
2. What are the other types of inventory control techniques?
Some of the main inventory control techniques we have discussed above & many others are discussed below:
1. Last in first out
2. Batch racking
3. Bulk shipment
4. Economic order quantity (EOQ)
5. Reorder point formula
6. Safety Stock
7. Minimum order quantity
3. What are the main issues that inventory management software eliminates?
Stock-out & too much stock are the main issues that inventory management software overcomes! Both of these issues are dangerous for business. However, when your organization is equipped with inventory management software you can avoid these issues.