Inventory Control: A Roadmap to Maximizing Inventory Efficiency
If a business isn’t prioritizing inventory control throughout their organization, they run the risk of having deliveries fail to arrive on time. Not only this but a company that fails to implement inventory control systems in their operations may also end up with a substantial amount of wasted inventory that sits in their warehouse for too long, ultimately costing the business money.
In this article, we’ll dive into what exactly inventory control is and where inventory control should be present in your business.
What is Inventory Control?
At the heart of inventory control is ensuring that you’re maximizing your company’s use of inventory. It goes beyond inventory management — where you’re keeping tabs on your inventory and making sure that orders are being met.
Inventory control goes beyond that. In addition to ensuring that inventory is being kept track of, inventory control works towards generating the highest amount of profits from the least amount of inventory investment but without lowering customer satisfaction levels.
First, let’s break down that first part — generating the highest amount of profits with the least amount of inventory. Essentially, this means that companies that are using good inventory control practices are matching the supply with the demand as close as possible to ensure that inventory is wasted and that the customers who want to buy and item are given a fair shot at purchasing them before the item is sold out.
That leads us to the second part, which is ensuring that customer satisfaction doesn’t dip as a result of your inventory control.
For example, let’s say an apparel company wanted to ensure that they didn’t have any leftover inventory for a specific sweatshirt they were selling. To do this, they ordered fewer sweatshirts than the demand called for. As a result, they didn’t have any leftover inventory but many customers who wanted to buy that sweatshirt were unable to. So, while this apparel company solved an issue with inventory control (excess inventory), they created another (unsatisfied consumers).
To make sure that you’re hitting all three factors of inventory management (max profits, min inventory investment, and high customer satisfaction), you have to find that balance.
Follow these tips and tricks to help you gain total control of your inventory.
Use Proper Classifications
Using classifications for your inventory will help you better manage your supply. When it comes to which type of classification you should use, the ABC method is one of the best options to maximize your inventory control.
With this method, you set your inventory up in accordance to its value. For example, inventory in classification “A” is carefully controlled and managed because it has the highest value. Meanwhile, “C” has a lower value and therefore isn’t managed as intensely as those in “A”.
Let’s say a company that sells dental hygiene products uses the ABC classification method for its inventory. For their “A” classification, they have their high-end electric toothbrush. For “C”, they have their small travel-sized toothpaste which doesn’t produce as much value as the electric toothbrush and because they are cheap to make, they are not overly worried about having excess toothpaste. Because of this, they put more attention and resources to ensuring that their electric toothbrush inventory is right and that they can meet the demand without having too many toothbrushes left over.
This leads directly to the next tip…
Be Attuned to Demand
Businesses that ignore trends in demand for their products and rely on old figures to control their inventory are businesses that are doomed to fail when it comes to the concept of inventory control.
Depending on the size of your operation, you may or may not be limited in the terms of how much effort you can put into calculating demand and forecasting. For example, Target is able to staff hundreds of inventory analysts to help predict how many of each product they need, where they look at last year’s sales and consumer trend reports maximizing their profits and limit inventory waste. Whereas a small to medium-sized apparel company may have to limit their forecasting to trends in sales from the last few years.
No matter how big your company is, however, you need to have some level of forecasting implemented in your operations.
Use Proper Inventory Management Systems
A high-quality, thorough inventory management solution can make your job much, much easier. But, not only will inventory management software simplify your processes, but it will also improve your inventory control.
With Scout Software’s topShelf — our cloud-based inventory management software — you’ll get a better understanding of your stock through detailed reporting functions, including lot recall, asset summaries, and cycle counts. All these are key factors that are extremely important for your inventory control. You’ll also easily be able to validate and verify receiving, picking, packing, and shipping transactions to ensure that orders are not missed — as well as save time by printing detailed product and bin barcodes.
topShelf provides real-time reports and analytics like:
- Current Inventory
- Lot/Serial Number Inventory
- User Productivity
We love helping businesses improve their inventory management. We create partnerships with our clients and will work with you to ensure that you’re getting the most out of our software.
Utilize Sales for Excess Inventory
If you are reaching the end of an inventory item’s time on shelves and have a lot of excess inventory, one way to combat what would be a wasted investment is to sell those items for a discount.
Sure, you may not be making as much money then if you sold them at the regular price, but you’ll be able to alleviate what would be a total loss by getting back some of that initial investment with a sale.
Businesses of all types utilize sales for this reason and it’s a great way to still make some money even when your initial inventory control strategies weren’t perfect.
Pay Attention to Your Suppliers and Their Performance
Your suppliers and the relationship you have with them will also affect your inventory control. So, in addition to the previous steps, make sure to pay close attention to these relationships and ensure that everything is going smoothly.
To do this, use your warehouse management system and track important metrics revolved around your contract with your supplier to make sure that they are hitting them to confirm that they are reliable and live up to their end of the agreement.
If a supplier is following through, then it can throw off your entire inventory.
Good luck with implementing these inventory control tips for the upcoming year!