Inventory control, also known as stock control, is all about managing your business inventory levels, be it in their warehouse or distributed throughout various locations. It involves management of products in inventory from their original purchase date to their ultimate destination (hopefully to customers), or disposal. The objective is to minimize the risk of lost sales due to inaccessibility of key products and to maximize productivity, profits, and customer satisfaction. It is important to maintain adequate levels of inventory so that when you do sell merchandise out, you are able to receive full credit for it. Controlling inventory levels becomes doubly important when you own a small business where merchandise mobility is an issue.

Small businesses face many unique challenges in terms of product accessibility and mobility. This includes product returns, stock control, storage needs, shelf life, and cost containment. Managing the whole of the physical inventory can become a cumbersome task without the assistance of a good software program. In order to effectively manage your inventory, you need a robust system that integrates physical, logical, and software aspects. Many companies choose to outsource their inventory management to a specialized company because of the advantages that they offer over the available alternatives. Inventory control is a crucial part of your overall business success and if managed properly can greatly enhance cash flow and minimize loss.

Most physical inventories are generally controlled on a weekly basis. Some businesses use a daily, monthly or quarterly schedule. For larger companies, who have an extensive inventory or who deal with thousands of products each month, the need for warehouse control on a more regular basis is essential. Warehouse inventory control involves an array of tasks that include movement, storage, pick, and pack, tagging, packaging, and record keeping.

An important factor in warehouse management is addressing stock outflow issues. There are two main categories of stock outflow: unplanned and planned. Unplanned stock outflows occur when there is a sudden increase in seasonal demand for particular goods and when a business adopts a new marketing strategy that causes an unexpected rise in demand for existing products. These instances are usually short-lived and only tend to affect sales at the most extreme levels. On the other hand, planned outflows are caused by poor planning, for example, if there are too many unplanned purchases by a small business that exceeds the amount of available inventory. Both of these categories require immediate attention from a company’s inventory manager, who should first identify the cause of the stock outflow before he attempts to remedy the situation.

A physical inventory management system that is complex and outdated may not be useful for a small business that has a small number of employees. For this type of business, it may make more sense to purchase a piece of software that can be easily integrated into the business’s accounting software. There are many available products on the market and it is advisable for businesses with a small staff look only at products that will fit their needs, and that are compatible with their business format. This allows small businesses to determine which product they need in order to enhance their inventory control.

Businesses often underestimate the importance of physical inventory management. Not only is it crucial to keeping the business’s resources in good working order, but it is also a vital tool in achieving efficient operations. In order to optimize its use, businesses need to access information about their warehouse capacity both on a daily basis and during different points in the business’s operations. This will allow them to plan and implement a strategy that increases warehouse productivity and reduces overall inventory costs.

In our years of servicing clients at ET Management, we have advised clients on how they can start paying attention to an item in the Profit and Loss statement which requires a lot of attention to. Without paying attention to inventory controls, companies could be forever be in a dire situation of the inability to convert stocks to cash or get out of debt due to funding stock balances that has no ROI. Contact us asap if you have issues with stock management in your company.