This system keeps continuous track of inventory balances, and provides complete details of changes in inventory through immediate reporting. You need a way to carefully soft and store this data from repeat counts. Inventory Control specifically refers to how you manage your stock, also called warehouse inventory. This is where we highly recommend using an inventory management system. Is the software product integrated with all your sales channels to track sales and adjust inventory levels accordingly? The main advantage of perpetual inventory system is that it demonstrates how much inventory is available at any given point of time and prevents stock outs. . Companies who wish to achieve better inventory management should first improve their inventory control. To sustain certain growth in business and tap sales through multiple channels, you will need to take a more disciplined and structured approach to inventory control. = √(2 X 400 X 10) / 6 The other number that’s used for inventory control is the reorder point. google_color_bg="FFFFFF"; Remember- accurate counting is only one half of the process. Through effective Inventory Control, you will be better prepared for unexpected supply outages or cyclical/seasonal spikes in demand and achieve better customer satisfaction. Too little inventory and you can find yourself going out of stock, leading to unhappy customers. N.p., n.d. Rigorous and transparent policies in selecting suppliers are needed in order to obtain the most suitable ones who will deliver quality goods on time as an when it is required. Inventory control is the processes employed to maximize a company's use of inventory.The goal of inventory control is to generate the maximum profit from the least amount of inventory investment without intruding upon customer satisfaction levels. N.p., 20 Jan. 2017. google_color_border="FFFFFF"; This type of budget helps the company to plan inventory effectively. When the inventory level reaches 1,160 units, the new order for raw materials should be placed. This includes information on calculations as well as examples to help you calculate reorder levels by yourself. Given the impact on customers and profits, inventory control is one of the chief concerns of businesses that have large inventory … control’ is still at the core of inventory management, but it has been enhanced by requirements planning and just-in-time, with e-commerce giving a fast and efficient … Inventory management is a higher-level term that encompasses the complete process of procuring, storing, and making a profit from your merchandise or services. By managing this aspect with more attention to detail, you can avoid losses in storage, sell more optimally and also prevent running out of stock when you most need it. When you plan for the right quantity of safety stock and the right reorder level of products, you avoid guesswork, human error, and business disruptions. However, the two terms mean different things and deal with different aspects of inventory. Keeping track of how much of your stock is being sold, shipped, returned or replaced is just as important for accurate inventory control within your warehouse. How can you decide what quantity of inventory is right for you? This method helps to track the expiration of inventory or trace defective items back to their original batch. Hence the demand (D) for your product is 400 units. Through inventory control, you will be able to maintain minimum inventory levels, ease your liquidity situation, keep costs down, maximize profits, and succeed in keeping your customers satisfied by delivering orders on time. google_color_link="000000"; N.p., 29 May 2015. This is because inventory control provides better insight into stock levels in the warehouse and the best way, and times, to replenish stock. In order to control your inventory accurately, you need to know how much stock you have on hand. Economic Order Quantity = Q=√(2 X DC) / H. Let’s say that you sell Printed T-Shirts. Country (required) (adsbygoogle = window.adsbygoogle || []).push({}); Copyright © 2010-2018 Difference Between. 10. Inventory management refers to the activity of forecasting and replenishing inventory which is focused on when to order the inventory, how much to … Thus. 29 May 2017. Let’s explore both calculations in more detail. google_ad_host="pub-6693688277674466"; Further, sufficient buffer stock (safety stock) should be maintained in order prevent stock outs. google_ad_client="pub-7868212705788236"; Inventory management and control software assists businesses with having the correct inventory, in the right quantities, and keeping it under control across one or multiple locations and channels. “Inventory Management vs. Inventory Management and Control system is a broad concept that deals with the process of acquiring (buying) materials from suppliers, handling (storing) it in a designated warehouse, and issuing it to production or retailers depending upon the nature of the bysiness. Inventory management represents a higher scope since effective relationships with suppliers should be maintained. Inventory Management encompasses the entire gamut of aspects related to your supply chain – right from tracking raw materials through to order fulfillment. See more of Primaseller’s inventory control features here. 3. Good inventory control helps avoid missed order fulfillment and lost business.