As your small to mid-sized business grows, you may find your e-commerce, logistics, and stock becoming more complicated. It may not feel as easy to record inventory and restock as it did even a year ago, so you’ll need to implement processes and systems equipped to handle your new workload.
This is where inventory control comes in. Because with the right internal and production controls, you can be sure you’re controlling operational costs while simultaneously meeting your customers’ demands.
What is inventory control?
Inventory control, also known as stock control, is the process of managing your company’s inventory levels in one or multiple locations. Basically, tracking items and making sure your business keeps the optimal number of parts or products in stock, whether it’s online, on the shelf, or both. An inventory control system also watches your products’ usage, storage, and movement—from its stock room arrival up to customer shipment arrival.
While focusing on the removal of slow-selling products and increasing the number of high-selling, you’ll maximize your profits, while saving time, resources, and money with the least amount of inventory sitting in your warehouse.
The benefits of inventory control
Controlling your inventory is the end-all, be-all of your business yet almost half of small businesses don’t have inventory control. While it’s still possible to maintain a high sales volume, profitability will suffer almost immediately if you don’t have it. Customers typically will not wait for backorders or products with extended ship times, they will simply look to your competitors to fill their orders.
- Quality control. Track and manage all aspects of your stock, including quality, to ensure pieces are rotated through your warehouse.
- Organizational control. Ensure you have enough product to fulfill every order that comes through, as well as safety stock—stock that acts as a buffer to reduce an item being labeled “out of stock.”
- Accounting accuracy. Keeping an accurate record of your inventory is vital for managing your assets, especially in audits. Knowing your product quantities allows you to know how much of your product is being lost, destroyed, or spoiled and understand the value of your business.
Precise inventory tracking means orders are filled quickly and accurately, with increased efficiency and productivity, while offering business owners more time, money, and returning customers—with product all coming from an organized warehouse or stock room.
But to track your inventory, you must understand the basic nuances of control and management.
Inventory control vs. inventory management vs. fixed assets vs. warehouse management
These may sound similar, but they each help your business in different ways. While inventory control works with the inventory in your vendor’s warehouse, inventory management includes the processes of replenishing and forecasting. It ensures you always have the right inventory in place, in at the right time, and with the right number of products.
You’ll also need to manage fixed assets like machinery and equipment, as well as the possible rental spaces you’ll need to assist in the production of your products. Known as fixed asset accounting, keeping a ledger of all fixed assets used to create your product—but not actually a part of your revenue stream—helps in illuminating all hidden costs in the production process.
Warehouse management ensures your inventory is well organized across all storage locations. When inventory is easy to find and stored to optimize space your people can pick and ship customer orders faster.
These are all integral parts of your business: Inventory control focuses on the present while fixed assets and inventory management paint the picture of your future. Hand in hand, you’re sure to improve your inventory control when you achieve better inventory management.
How to start your inventory control system
To find the right system, you must understand the wants and needs of your company. Start by asking three questions:
What types of products and quantities do I need to track?
Your priorities will depend on your needs – if that means focusing on expiration dates for perishable items, limited supply part, or seasonal items, you’ll need to plan accordingly to the ebbs and flows while keeping an eye on your supply chain management.
What features do I need to manage my inventory?
Do you have stock in multiple warehouses or just one stock room? Will you need to integrate additional digital business solutions, and how will that affect your business? Taking note of current and future possibilities sets yourself up for having an inventory control system that will last for more than a year or two.
What is my budget for inventory control software?
Write down everything you’ll need now and for the future, including training and software expenses. Compare those costs to how much time and effort it will take to complete projects, as well as your estimated return on investment (ROI) from reduced man-hours, carrying costs, and estimated increase in customers.
After answering these questions, it should be obvious what’s important to you in finding an inventory control system. You always want to make sure your business is at the top of its game.
ERP as an all-in-one solution
In your quest to make sure you keep a competitive edge, a similar resource that might come up in your search for inventory control solutions is enterprise resource planning (ERP). ERP allows leaders to manage all aspects of their business on a single platform, including not only your inventory, but other items such as your finance, planning, logistics, and operations.
This all-in-one solution can seem enticing, as you’ll have the ability to manage multiple systems, but you have to make sure it will work for your team. It may seem costly as well, adding additional training time and manpower for your team. Inventory software can be flexible and can integrate into many different systems, giving you the flexibility to build your processes for your organization as you see fit. Dynamics 365 Business Central serves as an essential business solution to help optimize your operations.