Inventory Control: Definition, Objectives, Types, and How It Works

Managing inventory in a warehouse requires proper monitoring and control so that companies do not face various obstacles that could cause losses. To manage inventory effectively, there is a process that needs to be implemented in warehouse operations, namely inventory control (inventory management).

The implementation of inventory control (inventory management) in warehouses can improve operational efficiency and accuracy in inventory data management. As a result, companies are able to provide services and products in line with market demand.

Definition of Inventory Control

Inventory control (inventory management) is a series of planning, management, and monitoring processes for inventory within a company’s warehouse to ensure optimal availability.

The objective of inventory control (inventory management) is to maintain a balance between customer demand and storage capacity, while avoiding excess or insufficient stock that can affect operational efficiency and business profitability.

Proper implementation of inventory control (inventory management) will help companies optimize warehouse operations, allowing them to focus more on business development and service quality.

Objectives of Implementing Inventory Control in Warehouses

Proper implementation of inventory control (inventory management) has several important objectives for company warehouses, including:

Improving Efficiency and Productivity

Effective inventory control (inventory management) can improve the efficiency and productivity of warehouse management, making storage and distribution processes more optimal. Through inventory control, companies can save time, reduce the risk of errors, and increase workforce productivity in managing stock.

Reducing Operational Costs

Proper inventory control (inventory management) helps companies avoid overstocking or stock shortages in warehouses that can increase operational costs. By optimally controlling inventory levels, companies can reduce storage costs, avoid waste, and improve resource utilization efficiency.

Increasing Customer Satisfaction

Maintained product availability can be achieved through effective inventory control (inventory management). This allows companies to ensure customers receive the products they need without delays. Product availability contributes to customer satisfaction and increases loyalty to the company.

Optimizing Cash Flow

With good inventory control (inventory management), companies can avoid excess stock and reduce capital tied up in inventory. This enables more optimal cost allocation for other strategic investments, such as product development or business expansion.

Types of Inventory Control in Warehouses

There are several types of inventory control (inventory management) commonly used in company warehouses, including:

Economic Order Quantity (EOQ)

Inventory control (inventory management) can be implemented through the EOQ method, which is used to determine the optimal order quantity so that ordering and holding costs are at their most efficient point.

Just-in-Time (JIT)

The JIT method can also be applied to the inventory control (inventory management) process, as this method minimizes inventory by storing only the stock needed by the company, thereby reducing storage costs.

Material Requirements Planning (MRP)

The implementation of MRP for inventory control (inventory management) is generally carried out in manufacturing industries. This system is used to calculate raw material requirements based on production schedules, allowing inventory to be managed more systematically.

ABC Analysis

This method makes it easier for companies to implement inventory control (inventory management) by categorizing inventory into three groups based on product value, such as:

Category A: High-value items with small quantities.

Category B: Medium-value items with moderate quantities.

Category C: Low-value items with large quantities.

Minimum and Maximum Stock Levels

The final type of inventory control (inventory management) commonly implemented is the “minimum and maximum stock level” method. As the name suggests, this method sets minimum and maximum limits for each type of item to prevent stock shortages or excess inventory.

How Inventory Control Works in Warehouses

The inventory control (inventory management) process in warehouses includes planning, ordering, storage, and stock monitoring to ensure operations remain efficient and costs are minimized. Below is an explanation of how inventory control works in warehouses:

Inventory Planning

Companies need to determine the amount of stock required for a certain period by analyzing historical data and market trends. Proper planning prevents stock shortages or excess inventory that can disrupt operations.

Inventory Ordering

Stock monitoring is conducted to determine the optimal timing and quantity for inventory orders. By implementing technology in warehouses, systems can automatically manage ordering to make it more efficient and timely.

Storage and Inventory Management

Companies need to organize warehouse layouts so that inventory storage and management become more efficient. The implementation of RFID technology can also be used to simplify stock tracking and prevent recording errors.

Monitoring and Evaluation

Regular stock audits are conducted to ensure data accuracy matches the physical stock conditions in the warehouse. With accurate data, sales and inventory analysis helps companies adjust their inventory control (inventory management) strategies to be more effective.

Challenges in Implementing Inventory Control

Despite its many benefits, the implementation of inventory control (inventory management) also comes with several challenges, such as:

1. Fluctuating demand, which is difficult to predict and can cause excess or insufficient stock in warehouses.

2. Supply chain constraints, such as delays in deliveries from suppliers.

3. High storage costs, especially for inventory that requires special storage facilities.

4. Human errors, such as inaccurate stock recording that leads to inventory discrepancies.

Use RFID and Prieds Inventory Management System to Optimize Inventory Management

The implementation of technology, such as RFID, in warehouse management processes can help companies improve stock tracking through inventory control (inventory management). RFID devices integrated with an Inventory Management System provide companies with the ability to automate warehouse management processes, improve tracking accuracy, and enhance control over all inventory in the warehouse.

Some advantages of using Prieds RFID in the inventory control (inventory management) process include real-time tracking and recording of physical inventory, reduced operational costs, improved efficiency and productivity in warehouse management, and maximized stock availability that directly impacts customer satisfaction.

You can learn more about effective inventory control (inventory management) processes using RFID technology and Inventory Management Systems through consultations with expert teams. Obtain software and hardware equipped with a wide range of features, top-level security, and ease of use tailored to your company’s needs with Prieds.