Inventory management is a crucial element of any business that relies on e-commerce. Making the right choice can ensure that you have everything you need at the time you require it, so you don’t wind up in a bind trying to complete orders. With a precise inventory count system installed, you can do two things. It will reduce expenses and increase sales because you have the proper stocks on hand. An inventory control system is essential to simplifying the process and automating your stock control system to replenish your stock.
Inventory control can make or break your company. It’s not only about tracking items. For those working on supply chains, this method can be quite useful in making better choices regarding components, resources, and maintenance. But with numerous methods available and each offering its own strengths, the choice lies with you to find one that best meets your business requirements. What works for one business may not necessarily suit another business’s requirements. We’ll look into the inventory control systems and help you make this choice.
What Is an Inventory Control System
The inventory control process is the physical tracking of a company’s inventory. An inventory control system is a technological solution that helps businesses manage and track their goods across their supply chains. It integrates shipping, purchasing and receiving, storage, and returns. The greatest benefit is that it can automate the majority of the manual work, which makes the inventory management more efficient.
Also read: What is Walmart Inventory Checker? A Complete Guide
Key Features of the Inventory Control System
Here are the key components of an inventory control system:
- Demand Forecasting: Makes use of past information as well as trends and models to forecast the future demand and help avoid shortages or stockouts.
- Stock Replenishment: This ensures that you can order your stock by using methods like EOQ, reorder points, and security stocks.
- Visibility and Inventory tracking systems: This utilizes technology such as RFID, barcodes, and IoT for inventory monitoring systems that provide real-time updates throughout the entire supply chain.
- Stock Classification: ABC analysis prioritizes stock according to both value and demand frequency.
- Analytics and Reporting: Provide real-time data on the stock’s performance to aid decisions and improve inventory management.
Types of Inventory Control Systems
Inventory control systems have advanced from spreadsheets that were merely basic to the incorporation of machine learning to improve automation. Two main types of inventory control systems: periodic and perpetual. Each offers distinct advantages according to your business requirements and inventory types.
Perpetual Inventory Control System
A permanent inventory control system offers real-time monitoring of inventory. Every time an item is received or sold, it is scanned immediately and updated in a central database. This system allows every business department to have access to current inventory information. It also provides an accurate overview of changes in inventory without the requirement for manual counting.
If your company has a high volume of sales or multiple locations, managing inventory using this system is the best option for you. It gives you a precise snapshot of the levels’ inventory at any moment. But, it is expensive to maintain and cannot detect issues such as scan errors or theft.
Periodic Inventory Control System
A system for periodic inventory control relies on periodic, scheduled counts of the goods rather than continuous monitoring. Companies that use this method can manually count their stock every month, quarterly, or annually, according to their requirements. This method does not require the latest technology or equipment. But it means that the inventory figures are accurate only following the actual count. If you’re trying to complete orders in the interim during the count period, you may encounter issues because the stock levels aren’t constantly updated in real-time.
It is easy to use and is suitable for small-scale businesses with a limited inventory. But for big enterprises or ones with a large variety of items, it may be time-consuming and vulnerable to human errors. The periodic systems are best suited to smaller businesses or those that deal with specific products or more granular items that are easy to manage manually.
Also read: 5 Best Ecommerce Business Insurance Providers in 2025
Best Inventory Control Methods
Controlling inventory relies on a variety of methods to monitor and control inventory movements effectively. The most popular methods are ABC analyses, LIFO and FIFO, Just-in-Time (JIT) techniques, and the Three-bin and Two-bin Systems. Other examples of inventory control are Economic Order Quantity (EOQ) and security stocks. In the next section, we’ll look at the ways these strategies perform and how they will help your business’s operations.
ABC Inventory Control System
ABC analysis is a useful method for managing inventory that can help prioritize items according to their importance to your company.
Last In First Out (LIFO)
Last In Last Out (LIFO) is an effective method to manage inventory, where the latest items added are first sold or used.
First In First Out (FIFO)
First In First Out (FIFO) is a technique to manage inventory in which older stock is disposed of or used before the more recent items.
Just-In-Time (JIT) Inventory Control System
“Just-in-time” (JIT) can be described as an inventory-management method that allows companies to receive supplies from suppliers only as needed. The aim is to reduce storage costs and to ensure inventory is moving quickly.
Three Bin System Inventory Control
A three-bin arrangement is a method of inventory management that stores products in three bins. If one of the bins is empty, the system serves as an easy signal to replenish stocks, thus ensuring a consistent supply. This simple, yet efficient system coincides closely with Lean Manufacturing and Kanban principles to improve streamlined inventory control.
Two Bin System Inventory Control
Two-bin systems are a simple inventory control technique for managing replenishment of stock. It works by splitting things into 2 bins. When the first one is empty, it indicates the need for an order for a new one. The second bin has enough inventory to cover the time needed until the order is ready for delivery and ensure no delay in the supply.
Final word
An Inventory Control System is essential to businesses of all sizes. By employing effective systems and methodologies, companies can maintain stock levels and reduce costs, improve operational efficiencies, and make data-driven decisions. Whether you choose manual or automated, the key to effective inventory control lies with consistency and real-time tracking to make sure it serves its intended purpose, rather than hindering it.
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