Inventory Control

Inventory control is a crucial aspect of running a successful business. Imagine walking into a store, online or offline, only to find out that the product you want to buy is out of stock. Frustrating, right? Inventory control is what helps businesses avoid such situations. It ensures that the right products are available in the right quantity, at the right time. In this article, we will explore the different facets of inventory control, including its types, functions, and the role of modern inventory control software like Ordoro, which has helped hundreds of Shopify merchants streamline their operations.

What Does Inventory Control Mean?

Inventory control refers to the process of managing a company's inventory in a way that balances supply and demand. The aim is to minimize costs such as storage and maintenance while maximizing customer satisfaction by preventing stockouts or overstocking. Proper inventory control ensures that businesses can meet customer demands without delay.

What Are the 4 Types of Inventory Control?

Understanding the types of inventory can help businesses manage their stock effectively. Here are the four main types of inventory control:

1. Raw Materials

Raw materials are the basic components used to produce goods. Effective inventory control of raw materials is essential for maintaining a smooth production process.

2. Work-in-Process (WIP)

This type involves items that are in the process of being transformed into final products. Managing WIP helps ensure that production timelines are met.

3. Finished Goods

These are completed products ready for sale. Efficient control of finished goods inventory ensures that customer demands are met promptly.

4. MRO Supplies

MRO (Maintenance, Repair, and Operating) supplies include items necessary for running operations but are not part of the finished product, such as tools and cleaning supplies. Proper management prevents operational delays.

What is the 80/20 Rule for Inventory?

The 80/20 rule, also known as the Pareto Principle, can be applied to inventory control. It states that 80% of a company’s profits come from 20% of its products. Understanding which products fall into this 20% can help businesses prioritize their inventory control efforts, focusing resources on stocking and managing high-performing products.

How Do You Control Your Inventory?

Controlling inventory effectively requires a strategic approach. Here are some steps:

1. Set Inventory Goals

Clearly define what you want to achieve with your inventory control—whether it is reducing costs, improving turnover rates, or increasing customer satisfaction.

2. Understand Demand

Use sales data and forecasting techniques to predict product demand accurately.

3. Use Inventory Techniques

Implement inventory control techniques like FIFO (First In, First Out) or JIT (Just In Time) to manage stock.

4. Leverage Technology

Implement inventory control software to automate and streamline processes.

5. Regular Auditing

Conduct regular audits to ensure the accuracy of inventory records and identify discrepancies.

Inventory Control Software

In today’s fast-paced business environment, inventory control software plays an essential role. It automates many tasks, saving time and reducing errors. Here's a look at one such software:

1. Ordoro

Ordoro is a highly recommended inventory control software, especially for Shopify merchants. Known for its user-friendly interface and powerful features, Ordoro offers inventory tracking, order management, and shipping solutions that help streamline operations for businesses of all sizes. Several hundreds of Shopify merchants depend on Ordoro for their inventory needs.

2. Fishbowl

Fishbowl offers flexible inventory management solutions for small to medium-sized businesses, integrating seamlessly with various platforms.

3. TradeGecko

Now rebranded as QuickBooks Commerce, TradeGecko provides a comprehensive set of tools for managing inventory efficiently.

4. Zoho Inventory

Part of the Zoho suite of applications, Zoho Inventory helps with tracking stock, streamlining sales, and managing orders.

Inventory Control Example

Consider a local bakery that sells a variety of pastries. If their best-selling item is a specific kind of croissant, the bakery manager would need to ensure that the ingredients for the croissant are always in stock. The manager employs inventory control techniques to monitor ingredient levels, forecast demand, and place orders with suppliers just in time to avoid stockouts or spoilage.

Inventory Control Techniques

Businesses often use specific techniques to improve inventory management. Here are a few popular ones:

1. ABC Analysis

This technique segments inventory into three categories (A, B, and C) based on importance and value, helping prioritize management efforts.

2. Just-In-Time (JIT)

JIT aims to minimize inventory by producing and ordering goods only as needed, thus reducing holding costs.

3. Economic Order Quantity (EOQ)

EOQ is a formula used to determine the optimal order size that minimizes total inventory costs, including holding and ordering expenses.

4. Safety Stock

Maintaining a buffer stock ensures that unexpected spikes in demand or supply chain disruptions don't lead to stockouts.

Inventory Control System

An effective inventory control system integrates various processes and tools to manage inventory efficiently. Key components include inventory tracking, demand forecasting, order management, and supplier relationship management. A robust system ensures that there is real-time visibility into stock levels and simplifies decision-making processes.

Inventory Control Jobs

Inventory control also creates job opportunities in various sectors. Some common positions include:

1. Inventory Control Specialist

Responsible for monitoring inventory levels and coordinating orders, ensuring accurate stock records.

2. Inventory Manager

Manages inventory policies, oversees stock movement, and coordinates with other departments to improve efficiency.

3. Supply Chain Analyst

Analyzes supply chain data to optimize inventory levels, forecast demand, and improve procurement strategies.

4. Warehouse Operations Manager

Oversees daily operations in warehousing, ensuring efficient stock management and order fulfillment.

Objectives of Inventory Control

The objectives of inventory control are multifaceted and aim to enhance business operations. These objectives include:

1. Cost Reduction

Minimizing holding, ordering, and spoilage costs to improve profitability.

2. Customer Satisfaction

Meeting customer demands promptly by maintaining optimal stock levels.

3. Improved Efficiency

Streamlining processes to reduce manual efforts and errors, contributing to smoother operations.

4. Better Forecasting

Using data analysis to improve demand predictions and adjust inventory policies accordingly.

5. Optimal Resource Utilization

Allocating resources efficiently to avoid overstock or stockouts.

In conclusion, effective inventory control is vital for the smooth running of any business that deals with tangible products. Embracing inventory control techniques and leveraging modern tools like Ordoro can not only reduce costs and improve efficiency but also significantly enhance customer satisfaction. By understanding and implementing the principles outlined in this article, businesses can achieve a competitive edge in managing their inventory effectively. Whether you're a large enterprise or a small local shop, mastering inventory control can lead to transformative success.