How can a company manage their inventory in an effective way through inventory control procedures?
A company’s inventory investment is typically substantial, and it may be made up of numerous goods items that can be easily stolen and resold.
If the inventory is primarily made up of raw materials, maintaining track of it is critical to ensure that the manufacturing processes that rely on it do not run out of materials.
This implies that you’ll need to set in place a variety of controls, either to prevent theft or to ensure the manufacturing activity doesn’t run out of materials.
We’ll go through a few of the main controls to think about for your inventory investment down below.
What is Inventory Control?
Inventory control or management refers to the process or procedures of ordering, storing, and utilizing a company’s inventory.
These include the storage and processing of raw materials, components, and completed products, as well as the administration of raw materials, components, and finished products.
Inventory management systems (which come in the form of software) are used to help streamline the process of inventory management.
Inventory management systems, in particular, assist with everything from front-end buying and receiving to tracking and shipping inside the organization, managing inventory across various locations, and tracking turnover.
Parts of inventory control procedures should ideally be automated, allowing personnel in charge of inventory management to execute jobs as quickly and efficiently as feasible.
5 Inventory Control Procedures
Here are 5 inventory control procedures to help you manage your stock or inventory
- Prioritize Location and Accessibility
It’s critical that not just your warehouse (or other inventory storage area) is simply accessible, but also that the stock inside is well-organized and accessible.
Otherwise, instead of focusing on more essential responsibilities, your staff would be searching for items that should be easily accessible.
It will help your business run like a well-oiled machine if you design the location and organization of your warehouse correctly.
- Choose A Good Layout and Floor Arrangement
As a business owner or manager, you should be familiar with the fundamental structure of the inventory storage area. This ensures that if you or an employee require an item, it may be found in a quick and orderly manner.
Furthermore, drawing out a floor plan or referring to one that has already been drawn up will aid you in determining the best location for your merchandise.
After the warehouse or other inventory space has been in operation for a few months, evaluate its efficiency. Make a note of any issues you find with the storage, spacing, or inventory process, and adjust the method as needed.
- Optimize Your Inventory
The next step in inventory control procedures is having an optimum inventory implies having the proper amount of products, not too few or too many.
There’s no risk of running out of inventory and committing the cardinal sin of business: leaving money on the table owing to a failure to satisfy demand if the minimum and maximum stock levels are set.
Try to make a list of high-priority items that sell faster than others, regardless of the season, these things should always be in the warehouse.
It will be much easier to prepare for future supply and demand difficulties if sales rates are monitored and market trends are followed.
Here’s a few ways how you could optimize your inventory as a part of the control procedures:
- Count all incoming inventory. Before registering the inventory as received, count it. This prevents inventory records from being tainted with mistakes.
- Inspect incoming inventory. Check that every incoming inventory is of the right type and isn’t damaged. All things that fail inspection should be returned right away, and the accounts payable department should be informed that the items should not be paid for.
- Label all inventory. A tag with the part number, description, unit of measure, and amount should be attached to every piece of inventory in the warehouse. Inventory items will almost certainly be misidentified if this is not done.
- Separate customer-owned inventory. If consumers own goods on-site, the warehouse employees will most likely count it as if it belonged to the company, therefore have a mechanism in place for designating these products as customer-owned when they arrive and storing them in a distinct area of the warehouse.
- Get Rid of Unneeded Stock
Imagine you have a product on hand that didn’t sell well. It’s pointless to keep it occupying space in your warehouse or storage facility; get rid of it!
To get rid of items that have been in stock for an extended period of time, run promotions or offer discounts. Such offers increase customer satisfaction, make inventory replenishment easier, and keep business going forward.
Make sure your sales activities are well-timed and executed. If you do them too often, the events will lose their attraction, and customers will learn to wait until you discount your things before buying from you.
- Schedule A Count-Cycle
Despite the fact that cycle counting is a vital part of inventory management, many firms just cycle count once in a while. Inaccurate results emerge from such haphazard cycle counts.
Cycle counting should, as a result, become an important part of your weekly, if not daily, routine.
Establish a cycle count timetable to adequately monitor product flow rather than waiting for a chance to count your inventory is part of the inventory control procedures that you’ll need to pay attention on.
How to Choose the Right Inventory Management Software for Your Company
Finally, the inventory management software you select will have a significant impact on your inventory control procedures.
Good software streamlines the process and helps you with the inventory control procedures. You can save costs, time, and energy because it is processed properly.
Jurnal by Mekari is an online accounting software that will help you manage your business finance with so many features to enjoy from producing accurate financial statements, controlling inventory, monitoring cash and transactions in your company.
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