Why Your Warehouse Needs an Inventory Control Management System

Inventory control management refers to the processes involved in stock product management. An inventory control management system is a set of procedures designed to maintain proper product inventory levels and smoothly and more accurately move them through warehouse transactions.

More and more, the inventory control management system relies on identification technologies such as bar codes and/or RFID (radio frequency identification) to integrate with other order fulfillment processes within the company. When the inventory control management system integrates with sales processes like forecasting and marketing, as well as production planning, then a company has the information necessary to most efficiently utilize its assets be they equipment, employees or materials.

Primary Functions of an Inventory Control Management System

The number one function of an inventory control management system is to provide accurate information related to inventory.

The information gleaned from the inventory control management system will be used in two ways: (1) determining and maintaining optimum inventory levels and (2) streamlining the order fulfillment process. If the customer is ready to place an order with the distributor, but the products are unavailable or are sitting in the warehouse rather than quickly accessible to the customer, a sale is probably lost. Lost sales often result in lost customers.

Strong sales forecasting is the essential groundwork needed in order to establish the most efficient flow of inventory. Properly identifying trends and customer demands will drive production, ensuring that the necessary materials, labor and capacity are in place. From there, economic and statistical methods can be employed to properly prepare for smooth-flowing order fulfillment processes.

Benefits Inventory Control Management Systems Deliver

You need to know what is in your warehouse and why it is there if you are to realize optimum profitability. When you couple efficient inventory practices with simplified work processes, you can improve your inventory accuracy while saving money at the same time.

Accuracy = Profit

You lose money each time you send out an inaccurate shipment. The cost of re-shipping the proper order added to labor cost mean that your costs have doubled on the order–not to mention the customer dissatisfaction associated with receiving the wrong order. Accuracy translates into profit.

A chief benefit associated with inventory control management systems is higher degrees of accuracy. Customers whose systems employ technology such as bar coding report 11 percent increases in sales revenue over non-bar code companies. Order fulfillment takes less time, and transactions are performed with fewer errors as a result of technology. These customers also report 10 percent return on investment (ROI) figures.

Standardization = Speed

It doesn’t require rocket science to figure out that when processes are standardized, they move more quickly and efficiently. Inventory control management systems that integrate the information between the warehouse (receiving, pick, pack and ship) and the office (accounting, ordering) allow those processes to flow faster and more smoothly than when that same information is handled manually. Furthermore, manual entry of information, such as serial numbers and lot numbers, provides numerous opportunities for human error by the warehouse and office staff.

Real-Time Visibility and Scalability = Appealing Components

Be certain to look for inventory control software that is industry-specific and offers the functionality that you require to make your operations effective and efficient. Buyer beware, however, as inventory control management systems may try to sell you functionality that you don’t require. Don’t buy what you don’t need.

On the other hand, do look for a system that can grow with your operation. Scalability is important when dealing with the dynamic environment of warehousing.

Real-time visibility is another appealing function. Systems that utilize scanning devices will provide up-to-the-minute accuracy and visibility for all of your inventory transactions. RFID technology, pushed strongly by Wal-Mart for example, has proven efficiency, but may still be too expensive for many operations. Bar code scanning can provide similar insight at less expense. Many predict a coming fall in the cost of RFID however.

An inventory control management system will help you to determine the optimal inventory levels, ensure that the information in the records accurately reflects what is in your warehouse, and help you execute with fewer errors. You need accurate information to maximize your order fulfillment potential and information is what inventory control management is all about.

Related Content
Warehouse Management: 5 Strategies to Achieve Inventory Accuracy

About the Author

Leave a Reply

If you want a picture to show with your comment, go get a Gravatar.