Posted on 29 January, 2020 | 3 mins
Inventory control focuses on improving customer services while reducing costs. It can protect your business from fluctuations in demand for products; it helps you to better manage your working capital and maintain healthy cash flow, maintain adequate stock to meet customer needs and minimise the cost of holding inventory
Let’s start with a clarification: inventory control is not the same as inventory management.
Inventory control is the regulation of the inventory that you have in your store or warehouse – i.e. managing the stock you have. Inventory management tracks inventory through the supply chain – from sourcing to order fulfilment, focusing on what stock to order when and in what quantities and from which supplier. Read more on inventory management.
Here, we’re going to focus on inventory control, consider some best practice and how it can help save your business some money.
What is inventory control?
Inventory control is essentially warehouse management and can be used to maximise profits without impacting customer satisfaction. It requires you to know your stock – how much of what stock is on hand, where it’s located and its quality – and to have appropriate procedures in place to ensure your business can operate effectively. Inventory control might include making comprehensive inventory lists and counts, syncing stock on hand with sales and purchase orders and recording product details, histories and locations, for example.
Whether your business is reaching its next growth phase, or launching or expanding its eCommerce capacity, you need to have savvy inventory control and management in place to build a sustainable, profitable and scalable business.
Improved stock control
The benefits of inventory control or manifold. Just think of the immaculate stockrooms and warehouses and the effective use of space, consider the reduction in admin and the quality of products in stock as you eradicate obsolete or damaged goods. All of which is good for your bottom line.
Businesses often incur unnecessary costs and even lose sales due to spoilage, deadstock, excess storage costs and excess stock, as well as losing and losing track of inventory. Inventory control decreases these issues.
Further, metrics such as product performance help ensure that you are purchasing the right inventory at the right time so that you can avoid costly mistakes, such as ordering too much of an unpopular item or not enough of another.
Knowing what you have in stock and where ensures that you can cater to a growing customer base. Having visibility of what’s available means that no customer order is left unfulfilled and customer satisfaction remains high.
Inventory control can also be used to forecast future purchasing trends and inform stock orders. SO, an overview of your inventory can ensure that you keep supply and demand levels in sync, ultimately increasing profitability.
The right tools for the job
Relying on manual record-keeping to track stock numbers, sales, inventory flows and cash flow is not sustainable as a business grows. However, there is a solution. Inventory management software – such as Unleashed, Vend and Shopify – can help you to monitor key metrics such as customer purchases, stock numbers and whereabouts, sales trends and more.
Implementing your inventory control A-game
The following are a good basis upon which you can build your inventory control procedures
Create an inventory control plan – this should address your orders from purchase to sale and will consider reducing wasted warehouse space, stock forecasting and supplier relationships.
Plan, implement, sleep, repeat – inventory control is continuous, and will need to be updated regularly. You should be tracking inventor metrics – such as product performance, sales revenue, average items per sale, etc. – and using these to inform your plan – making changes as required.
Ensure you have critical stock – You should have an inventory control process in place to ensure essential stock is always available.
Review your shipments – don’t make the mistake of accepting something at face value and being left to deal with the financial ramifications of inventory loss.
Strike a balance between inventory costs and the benefits of having stock on hand – this refers to the delicate balance of purchasing and storing inventory and avoiding being out of stock. Accurate forecasting can help you to achieve this.
Choose a scalable system – if investing in inventory management software, while it may be tempting to go for the cheaper or free system, if you plan to grow your business then it’s worth investing in a cloud-based system that can grow with you. The benefits will include valuable analytics that will even help you with that growth journey.