Types of Inventory Control

Inventory must be managed properly to keep expenses low and sales high.
Inventory must be managed properly to keep expenses low and sales high. (Image: white cardboard boxes image by leafy from Fotolia.com)

Inventory refers to all goods and supplies a business has on hand. Inventory is most often the merchandise that is sold to customers, which yields sales. Since this merchandise drives profit it is important that is properly controlled. There are several types of inventory control, including manual control, barcodes, radio frequency identification and the just-in-time system of inventory control.

Manual Control

Some businesses control inventory by manually monitoring stock and ordering additional inventory when necessary. This may be done by visually observing when the stock of a particular item is low. Tools such as spreadsheets may make manual control easier. Manual control of inventory does not have a built-in alarm for when inventory is running low, which is the most significant shortfall of manually controlling inventory. A lack of inventory when it is needed most could result in missed sales and lost customers.


Another type of inventory control is the use of barcode technology, which is most often used by larger businesses that do not have the time or ability to physically monitor their inventory on a regular basis. The use of barcodes involves scanning a printed label as inventory moves along the supply chain to customers. This information is stored electronically and can be examined by a person or computer, allowing inventory to be managed efficiently. Using barcodes to control inventory could be expensive for some businesses because they have to purchase the related scanners, labels and software to take full advantage of this type of inventory control.

Radio Frequency Identification

Radio-frequency identification is most often used by larger businesses. RFID uses microchips to control the flow of products and ensure property inventory levels are maintained. These microchips can be scanned at any point, and the information associated with inventory, such as time or location, is stored in a computer for analysis. This gives the business vast control over its inventory at any stage of its movement.


The just-in-time system of inventory control involves carrying only the amount of inventory necessary to meet customer demand for a particular day, week or month. While the manual or automatic systems mentioned previously may allow businesses to continuously have a steady supply of inventory, the just-in-time system adjusts the amount of inventory ordered to match anticipated demand. This could save a business money because they only have as much inventory as needed and can use leftover funds for other activities.

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