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Are you wondering about the difference between Inventory Control and Inventory Management?
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Inventory Control and Inventory Management may seem similar in a lot of ways! But in reality, both have their individual space. Where Inventory Control is all about controlling and handling the On-Hand stock, Inventory Management deals on a broader prospect of managing and maintaining stock, timely availability of products, appropriate quantity, and analyze the future demands.
Furthermore, we will discuss the difference between inventory control and inventory management, benefits of both the systems, types of systems, and a necessity for a company. To begin with, let’s understand the difference between the Inventory Control System and Inventory Management System. As said earlier, Inventory Control deals with In-house warehouse activities and Inventory Management deals with managing the warehouse and stock. Although they may seem similar, they do work on two very different aspects.
Importance of a Good Inventory Control System
How good it seems to have a complete Accountability of Goods – Inventory Control helps you know where your product is and how to find it in the warehouse. Through accountability, you are aware of the exact location of the product, size, quantity, and number of remaining inventory. This helps you speed up your process, save time and prepare a pick list at the earliest. Thus, when there are nearly 1000s of products to pick up from your warehouse, the Inventory Control system will help you organize your work.
Liberty to Track the InFlow and OutFlow of Goods – As the company makes numerous sales in a day, it is very important to know that all the orders are fulfilled. Also, the dispatched orders are accurate and going to the right buyer. Moreover, if a product is returned, Inventory Control tracks flow and feeds data for every incoming and outgoing product. Thus, all the product movements are tracked and are also recorded through the Inventory Control System.
Tired of Overstocking and Understocking – It is always a bad idea to keep your warehouse overloaded. This way, you not only have deadstock but also an unorganized warehouse; making it very difficult to manage the space efficiently. Many companies face trouble in properly stocking their warehouse and may end up completely exhausted while placing a new order. Through Inventory Control System, it gets easier to understand the exact and current stock figures and accordingly when to place orders. In other words, it minimizes the scope of overstocking and understocking drastically. This, in turn, saves the investment costs and the finances are not blocked due to real-time updates.
Optimum utilization of Warehouse Space – The accurate inventory counts help with the proper management of the warehouse. In other words, by reducing overstocking, the warehouse can be utilized in a much efficient manner.
What does the Inventory Management System do?
Forecast Requirements – On the contrary to Inventory Control which calculates the current stock data; Inventory Management works on collecting information to predict the futuristic requirement of products. Moreover, by using Just-in-Time theory the inventory is stocked as per requirement. Thus, to avoid overstocking and increasing the efficiency of the company.
Work on Stock Replenishment: Inventory Management helps streamline the warehouse and business activities. The main aim is to ensure the warehouse is having adequate products, moreover, utilize the products efficiently. It determines the product needed to order and when to order, determining the right vendor and the most competitive rates.
Automate Inventory with Real-time Changes – Let’s see how automation is your warehouse. Starting from the most basic automation – Barcoding products – The labels capture the product details, thus, inventory is calculated.
Software and Hardware Automation – An inventory cannot be calculated without complete information. Thus, through the warehouse management system, the inventory flow and orders are recorded.
Track Incoming and Outgoing Inventory – Moreover with automation, manual labor is reduced. Also, the product details can be registered in the system effortlessly.
Amazon and Nike have one of the finest warehouse automation systems. Amazon has one of the largest storage units and operates on complete automation. They use a warehouse management system to track incoming and outgoing products, tracking every shelved item, and flow. Also, Nike have automated their software and hardware with their 2 Million sq.ft distribution unit to monitor their inventories.
Integrate your Workplace – As discussed earlier, Inventory Management works on a broader aspect. Through this, you can easily integrate all your marketplaces through a single point of contact. Moreover, with all the channels integrated together, you can easily modify the inventory and the same will be displayed throughout the channels.
Types of Inventory Control System
There are different types of inventory systems based on a company’s requirements. Let’s compare the various inventory systems and understand their benefits.
How to decide?
Too many options and not yet able to decide. Ask yourselves these questions?
Do you have to maintain a large number of inventories?
What kind of business do you have – online stores or brick and mortar?
Are you running a big scale business or a small scale business?
What kind of investment are you planning to roll out?
Most of the queries will be answered immediately; thus, giving you a better idea of the kind of inventory system that is rightly suited to your objectives.
7T of the Techniques of Inventory Management System
Also, while we talk about Inventory Management System, there are various techniques that can be considered based on the company requirements. Let’s understand briefly how they are effective.
- ABC Analysis – The Inventories are classified based on three categories A – Most Expensive, B – Moderate Expensive, and C – Least Expensive
- Just in Time (JIT) Method – Company does not overstock products, they keep only the requisite products required during production. This way, they save on inventory and storage cost,
- Material Requirements Planning (MRP) Method – The value given to the products is based on sales forecast, thus, based on which an order is placed.
- Economic Order Quantity (EOQ) Method – Through this model, place an order only when the inventory has reached a minimum level.
- Minimum Safety Stocks – A minimum inventory threshold that a company maintains to avoid going out-of-stock.
- Vital Essential and Desirable (VED) Analysis – This model controls and maintains the spare parts of the inventory.
- Fast, Slow, and Non-Moving (FSN) Method – This method tracks the frequently used products and barely used products in the inventory.
Too much to grasp and too little time? Let’s see some real-life examples and statistics and understand how Inventory Control and Inventory Management have helped companies:
- According to a Wasp Business Report, 2017 early 43% of Small Businesses do not track their inventory or use manual tracking.
- Also, nearly 42% of small businesses plan to increase IT spending in 2017.
- Moreover, a report of a loss of $461.9 Billion per annum; according to the 2018 research report of IHL. This happens due to Overstocking and $634.1 Billion due to Out-of-stock in the eCommerce industry.
Popular store Ralph Lauren inventory system was so unorganized that even after making huge sales and revenues, they earned only 50% as profits for two consecutive years. It was the time when Mr. Stefan Larsson, the new CEO of Ralph Lauren stepped in to replace Mr. Lauren, that there was a credible growth in the profits. Moreover, his first steps as a CEO were to streamline and organize the inventory. Also, he worked on the inventory control system to achieve the desired goals. Not to mention, within 4 years of inventory control, the profits maximized exponentially.
In conclusion, for any business – big or small, the biggest threat is the poor management of inventory. This includes overstocking, understocking, and out-of-stock. It is very important to carefully obtain the most suitable inventory control system which can efficiently control the stock. Thus, through this, huge costs can be reduced and revenue can be mobilized effectively. Smart businesses plan ahead of their current situation; search for desired technical solutions and Orderhive can provide the inventory control solutions based on your requirements. Moreover, it can help you track your goods, display stock in the warehouse, and optimum utilization of the warehouse.