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Gain Inventory Control for Business Success

author-img By Arina Smith 5 Mins Read 11 September 2023

Inventory Control

Inventory control is an aspect of a business that should never be overlooked. This is applicable especially for companies whose business model is built on distribution. Often, both small and large retailers find it challenging to maintain or have internal control of stock. However, being able to effectively manage stock is imperative because it ultimately allows retailers and distributors to establish sale goals and estimate expected revenue.

What Is Inventory Control?

Believe it or not, inventory control is a broad topic. In fact, it involves the coordination as well as the supervision of supply, storing stock and distributing it. Effective inventory management accurately records quantities if the products available which enable retailers to be able to meet customer demand without having to deal with excessive oversupply which can result in profit loss

Why is inventory control critical to customer orders? Not having specific product results in a loss of sale. Frequent backorders and consistent inventory issues will eventually drive loyal customers into the of other stores who they can rely on to supply them with what they need.

On the other hand, excess inventory will take up space in your warehouse or stockroom in a retail location. Yes, too much of a specific product typically results in profit loss because the product can go out of season, depending on the item it can expire or is easily damaged.

Types of Inventory Control Techniques:

The key to getting a grip on inventory control is to employ the best practices to ensure efficiency and that ultimately the company is turning over a profit. Here a few common techniques that distributors use across they’re network:

Establish Stock Policies:

Of course, business managers need to decide the minimum and maximum stock levels that should be kept in the warehouse. They’ll also need to establish policies regarding reorder levels and stock safety levels which is the level at which stock level should not fall below.


No doubt, establishing an annual inventory budget is critical. Most distributors and supply chains set aside a budget of how much they are willing to spend on inventory well in advance. The annual budget should also include overhead costs such as storage, logistics (shipping and receiving), materials and redistributions all of which are related to ownership.

Turnover Ratio:

The inventory turnover ratio is used by managers to determine the rate at which products are being resold within a time period. A high turnover ratio means that products have a low shelf life which is good for business because this means that items are being quickly sold in high volume. Increased sales mean more profitability. Each item in the inventory has a lifecycle. There will be instances in which the demand for a product fluctuates. Closely monitoring the turnover ratio of products in inventory is instrumental in generating accurate product replenishment calculations in your next order to the supplier.

Evaluating Purchasing Patterns:

Implementing procedures that analyze purchasing patterns is necessary for inventory control. Purchasing procedures that align with sale history and demand data will provide insight into inventory turnover. Business managers will be able to determine what products are selling and what hasn’t been moving within an accounting period. Items that haven’t been sold within twelve months, should be considered an obsolete stock product and removed from the next inventory order.

Product Placement:

What are the hottest selling products in your inventory? These items should be located at the forefront where they are easily accessible. Over time as the demand for a particular product decreases it should be migrated towards the back of the warehouse to free up space for items that are regularly moving. Product placement is important because it makes it easy for your employees to pick and pack items as reduce the amount of time spent looking for items.

Using A Inventory Management Application:

Yes, having a sense of control of your business inventory helps managers gain an understanding of what products are selling and what is being left on the shelves. Therefore, the best way to do this is by implementing cloud-based inventory management software. For years, companies have been using spreadsheets to track and record the number of products that are in stock and when they sell. However, this method of inventory management is labor intensive and isn’t ideal for businesses that are expanding. The biggest drawback of manual inventory accounting is that business managers will have to constantly monitor spreadsheets to ensure the accuracy of every transaction accounted for.

These days more and more distributors are switching from manual methods of inventory control and opting to integrate inventory management software. Such applications automate inventory control which drastically reduces paperwork and the amount of time that managers have to spend tracking products. What are some additional benefits of utilizing inventory control software?

The advantages of using inventory management applications are vast. While there several types of software available its best to opt for software that offers the ability to integrate with the resource planning systems or business management enterprises that your company already has in place. The benefit of integration capabilities is that typically you’ll have the ability to set it up so it communicates with other devices such as barcode scanners, printers, and mobile applications.  In addition, most inventory control software is designed with tracking functions which means that the exact location of a product in the warehouse which is helpful when it’s time for picking and packing orders.

Simply put, inventory control is necessary for the survival of your business. In fact, without a good handle on your inventory, you’ll never really have a true account of your inventory which will result in frequent stock-outs, excess products, difficulty finding items in the warehouse and a host of other operational complications. In this competitive market, inventory issues can lead customers away from your business which will be your downfall. Managers need to work hard to optimize inventory flow. Therefore, using the available tools and applications to streamline inventory accounting can make a big difference.

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Arina Smith

I enjoy writing and I write quality guest posts on topics of my interest and passion. I have been doing this since my college days. My special interests are in health, fitness, food and following the latest trends in these areas. I am an editor at OnlineNewsBuzz.

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