Inventory as your current asset can significantly impact your company’s bottom line. Therefore, you need to manage and control it efficiently. Monitor Inventory control is a complex process and hence needs the best suitable solution to keep it simple and easy to handle.
Inventory control, also termed as stock control, is the process of ensuring the right stock in the right quantity is available in the company. In the manufacturing industry, proper internal and production controls are practiced to make sure you have enough stock for order fulfillment.
For successful inventory control, you need proper tracking and this requires accurate data from warehousing, shipping, purchases, storage, reorders, customer services, and turnover, etc. This is where you need to find and implement a scalable and dynamic stock inventory app that will automate the whole process and prevent stockouts.
Inventory control helps maximize net profit:
Inventory control enables the manufacturing companies to generate maximum revenues with least investment in inventory, and without compromising on product quality, and customer satisfaction. Moreover, it helps in evaluating a company’s current state of assets and financial reports. When you do it right, there will be no stockout events.
Adequate inventory control processes largely depend on supply chain and warehouse management. The supply chain allows you to manage the flow of raw and finished goods, while warehouse management synchronizes with the sales, and purchases to the available stock.
Inventory control differs from inventory management:
Both terms may appear similar, but they are quite different. Inventory management encompasses the processes of procuring, and storing the raw and finished goods to make the profit from the merchandise. While inventory control is a process that tracks, and regulates what’s already available in your warehouse and how the supply and merchandise get there, and then moved to their final destination.
Essential inventory control processes and techniques:
To overcome the complexity of inventory control, following procedures and techniques will help you a lot.
- Organizational control
- Quality control
- Inventory categorization
- Demand forecasting
- Reordering stock
- Minimum order quantity
- Economic order quantity
- Safety stock inventory
- Batch tracking
- Drop shipping
- Consignment inventory
- Just-in-time supply orders
- Perpetual inventory management
Several factors can influence your inventory control decisions:
Inventory control isn’t an easy thing but knowing the factors that can influence your inventory decisions will make it less challenging for you. Here you go.
- Nature of manufacturing system
The primary characteristics of any manufacturing system include product design, production plant layout, and production planning and processes. These all features will significantly affect your inventory control policies. - Characteristics of production plant
It involves manufacturing stages across the shop floor and production line and how various production processes are interrelated. For instance, inventory control is easier in a product-line system compared to unit or job type of production. Likewise, for multiple operational stages, inventory control should smoothly adjust early phases to prevent fluctuations in finished stock. - Storage facilities and production capacity
Your inventory control policies and decisions also depend on your production capacity, and the nature of storage facilities. For example, if your storage facility costs you more than expected for any product, then it will limit down your storage capacity. Similarly, the capacity of honing oils and coolants in a manufacturing plant is partially governed by the throughput capacity, and partially by its distribution system. It again affects your production capacity, and in turn your inventory control processes.
- Product transformation at various stages
The product diversity and its degree of specialization at different stages of transformation, let’s say from final assembly to packaging and transport determines the nature of inventory control. For instance, if the nature of your produced item remains nearly the same at different phases of production, then you can save your monetary and other resources by maintaining the accurate balance of stocks for semi-finished items.
- Unpredictable variations in stock availability
The demand and supply of any product often varies and therefore, there will always be some protection, barrier against the stock shortage. Stockout is an unfavorable factor when it comes to inventory control. Therefore, you must pay attention to protect your inventory from unexpected variations and use buffer stocks as a solution. - Organizational and other business-related factors
Some of the factors that impact your inventory control operations are related to your company’s policies, and environment and overall industrial setting of the region. Some of these include;
- Labor policies
- Capital investment
- Inflation rate
- Natural calamities
- Input/output variations
Best practices to improve inventory control:
With all the factors and essentials of inventory control in your knowledge, you can now bring improvement in your inventory control processes. Ultimately, it will protect you from stockouts and dead stock and thereby, lower the overhead and improve the cash flow ensuring increased profits.
- Implement management methodologies such as Kaizen, Lean Manufacturing and Six Sigma.
- Build better relationships with your suppliers by working closely with them. Negotiate with them on realistic terms.
- Optimize your stock purchasing processes by monitoring customer demand and forecasting the required stock quantity and adjusting reorder points.
- Create automated reports about current inventory status, future demand of supplies, stock logs, and inventory financials, etc.
- Perform regular inventory audits to make sure what actual stock you have in storage facilities – physical inventory cycle counting and spot-checking.
- Conduct risk assessments to determine the shortcomings of inventory control operations, and how you can address the unpredictable sales spike, miscalculated stock, discontinued or slow-moving products, warehouse space shortage, etc.
- Categorize your inventory stock for better management and forecasting and determine how it will affect your stock control and usability.
Finally, choose the right inventory control software that will bring all aspects of your inventory operations into one cohesive system, ensuring that you have the right quantity of raw goods, MRO supplies, and finished products. Now, you can improve your inventory control processes using manufacturing ERP Systems like MIE Trak Pro – featuring inventory management and control modules.
