What Is An Inventory Control System ?
What is an Inventory Control System: Types, Importance, and How to Choose the Best One
Learn what an inventory control system is and how it helps businesses efficiently track, manage, and optimize their inventory levels to reduce costs.
What is an Inventory Control System?
An inventory control system helps businesses manage stock levels, track goods, and streamline operations. It ensures companies maintain the right amount of inventory, avoiding stockouts or overstocking. Modern systems use real-time tracking to monitor quantity, location, and status of inventory, enabling efficient order fulfillment and cost reduction. From manual methods to automated tools, inventory control systems are now essential for managing stock in e-commerce.
How Can Inventory Control Improve Your Business?
An effective inventory control system enhances e-commerce operations by improving profitability and efficiency. Here’s how:
1. Cutting Costs and Improving Efficiency
With real-time inventory data, businesses can reduce excess stock and holding costs. For example, a brand like Gini & Jony optimized inventory using automated systems, simplifying stock adjustments and preventing overstocking..
2. Optimizing Working Capital
Automated systems help align stock with demand, reducing the risk of tying up working capital. They can trigger automatic reorders when inventory reaches predefined thresholds, avoiding overstock or stockouts..
3. Boosting Customer Satisfaction
Real-time tracking ensures products are always available, leading to faster order fulfillment and happy customers. For instance, advanced systems automatically restock popular items, ensuring consistent availability and improved customer loyalty..
4. Preventing Spoilage and Obsolescence
Perishable or time-sensitive products benefit from features like FIFO (First In, First Out) or FEFO (First Expire, First Out) tracking. Alerts for near-expiration items help businesses take timely action, such as offering discounts to move old stock..
Types of Inventory Control Systems
- Inventory is checked at set intervals (e.g., monthly or quarterly).
- Cost-effective but lacks real-time tracking.
- Best for smaller businesses or those with fewer transactions.
1. Periodic Inventory Systems
- Uses technology like barcodes to update inventory in real time.
- Provides accurate stock levels and reduces risks of overstocking or shortages.
- Ideal for businesses with high transaction volumes, like e-commerce and retail
2. Perpetual Inventory Systems
Choosing the Right System
- Business Size and Volume: High transaction businesses benefit from real-time systems.
- Cost: Automated systems have upfront costs but save money long-term.
- Integration: Ensure compatibility with existing platforms, such as e-commerce and accounting tools
To select the best inventory control system, consider these factors:
By choosing the right system, businesses can enhance efficiency, reduce costs, and keep customers happy, paving the way for long-term success.