Before I tell you what tips to follow when out for fishing a good inventory control system, it’s necessary for you to understand what exactly it does, and why exactly do you need it.
What is an Inventory Control System?
An inventory control system simply helps you to manage and run your warehouse efficiently. It is a tool that monitors and controls the goods that you receive, store, and ship.
Now, why do you need it?
Managing the inventory is very crucial, but there are certain stages for every business owner when s/he should make smart decisions. Let’s take for example if you are a small business owner, dealing with a couple of products (probably through an online marketplace), you really do not need an inventory control system. This is important – don’t simply jump into making unnecessary investments.
“Inventory represents one of the most important assets for a company because the turn-over represents revenue to the company. In the balance sheet, inventory is classified as a current asset.”
You need to have an inventory management software onboard the moment you realize that yes, the stock that I am inwarding in my warehouse needs to be monitored. Monitored in a way that as soon as the stock level reaches a particular point, the inventory management software should alert the inventory manager about the same and thus call in for replenishment.
The example mentioned above is just a small instance that can happen only when you are having a small-scale business. You certainly are not willing to carry the tag “small-scale” forever and plan for (if nothing) a bit of expansion in your business, maybe sell some more innovative products, right?
Now, let’s talk about what tips can help you decide which inventory control system is the best out there, amongst the list of hundreds that you find online.
#1 LIFO vs FIFO – select an inventory control methodology
“Last-in-first-out versus first-in-first-out” is the best strategy that can be implemented in the warehouse management system A.K.A inventory control system. Both of these (LIFO and FIFO) approaches yield certain advantages and disadvantages to inventory control and management. But when it comes to choosing one, it totally depends on your business and preferences.
The first-in-first-out approach – as the name says, the product that is inwarded in the warehouse first, will be the first one to be shipped – is mostly used in large-scale businesses, which are mostly dealing with perishable items. Sometimes, even the companies which are much more into the logistical activities, consider this approach.
The last-in-first-out approach – as the name says, the product that is inwarded in the warehouse at the end, will be the first one to be shipped – is mostly used by the businesses which manufacture their own products. The main reason to adopt this approach is to make the entire process cost-effective.
This clearly is an inventory control methodology, but can certainly help you select the best software, as you know how you will be using it.
#2 The system should ‘automate’ your inventory operations & control.
Automation is the key to any inventory management software now. This is the very reason for every sort of business to consider before opting for any inventory control system or a warehouse management system. The products or goods inwarded in the warehouse are scanned and automatically included in the inventory, in a similar fashion, are scanned when outwarded.
Why exactly is automation needed in an inventory control system that you are trying to choose?
Well, there are a number of reasons why businesses are opting to automate their entire process and inventory management. They can simply forecast their sales in a better way, track in a better way, and carry out the entire process of replenishment in a better way, and much more.
Barcodes – why are they an integral part of inventory automation?
Barcodes, undoubtedly provide the most accurate details of any particular product. The below statement says it all, “If you are not using barcodes in your inventory management operations, you are in for wasting a lot of time, effort, and most importantly, your money.”
Manual processes will make it nearly impossible for you to optimize your inventory control or warehouse operations. Barcodes are plain, simple codes that encode a wide range of alphabetic and numeric symbols using real-time technology which helps a retailer to transmit the data on every transaction. Thus making your entire inventory control system ‘perpetual’.
#3 Your inventory control system must know what is where.
It’s simple – you have to create a virtual warehouse. A blueprint of your entire warehouse has to be in your inventory control system or your warehouse management system. This will enable you to easily figure out the best way to reach out to a specific product. And as the system will understand on which shelf you have placed what product, it will easily generate the required picklists.
If you have a large-scale business and there are more than one warehouses that you have to manage, your inventory control system should possess the quality to monitor them.
When you are using a perfect item placing set-up in your warehouse, your business will definitely find efficiencies and will keep you way ahead in the competition.
#4 The Kanban inventory control system – what is it, and why needed?
Kanban inventory control system is a visual scheduling system related to just-in-time (JIT) production that tells you ‘what – when – how much’ to produce or take in. The Kanban system visualizes both – the workflow and the actual work passing through the flow. In this way, it helps avoid supply disruption and overstocking of stock or raw materials at any stage in the value chain.
So there is no incoming of the stock unless & until there is a space for it. The Kanban inventory control system gradually improves the existing process, rather than changing everything from the core.
Why does your warehouse management have a Kanban Inventory System?
Reduced Inventory Costs
There are possibilities when you do not have much inventory to store, and there is a lot of unused space; that additional space can be occupied by workstations. This way you can save money as the profit gained out of your business is not invested in purchasing any extra stock.
Customer Demand is an Alarm
You will easily be able to identify the restocking threshold as per the customer demand for a specific product (by the analytics & reporting). As per the Kanban system of inventory management, there is no need to replenish the stock unless there is an empty slot for the incoming volume. If you can pinpoint a particular product that is selling off amazingly, only then can there be a plan for another stock for the same.
Streamlined Order Fulfilment
The Kanban inventory control system acts as a watch-tower over the entire order-flow process, from the point of receiving an order from different channels to confirming the order to shipping and completing the order fulfillment, one can set orders on priority as per the demand or any concurrent conditions and fulfill them accordingly in a streamlined manner.
Access to Progress Reports
A Kanban inventory control system is based on the idea of continuously keeping track of the entire stock (the perpetual system). The same idea when applied to your efficient inventory management system enables you to get an accurate record of the sales and inventory. This helps the management to plan, organize and improvise the business workflow.
There are cases when companies wrongly estimate the demand for a specific product, only to end up stocking it unnecessarily for months. Overstocking then compels them to either dispose of that stock or sell it off at discounted rates. In such cases, it eventually becomes hard to keep the right track of stock. The Kanban system helps to avoid this at the earlier stage itself.
Choosing an inventory control software to manage your warehouse is not really complicated, all it needs is a bit of understanding and knowledge of the methodologies and the strategies that are implemented.
If you are eyeing for an inventory control system for your retail business,