Inventory Control Techniques


There are several techniques a person can use to increase profitability and streamline workflow via proper inventory control. Through research, competitive analysis and experience, an effective business leader can balance costs versus benefits to storing and ordering the necessary supplies to ensure business vitality. The supply chain is made of all materials that help you to produce, market and supply your product. Inventory control means that you have identified every facet of your supply chain and its logistics.


If you deal in perishable items, FIFO (first in, first out) is an important concept to understand and maintain throughout the supply chain. If a grocery store did not rotate their stock, new stock coming in would get taken immediately and older stock would expire, causing great loss. Stock must be arranged by date received.

Cutting Edge Control

For a great deal of stock that needs constant management, consider bar codes or RFID (radio frequency identification) where hand-held readers can immediately tell you where valuable merchandise is. Many IT inventory programs on the market provide a wealth of features including tie-ins to USPS, Fed-Ex and/or UPS to track merchandise and provide real-time logistics.

Costs versus Convenience

A business owner must balance space available for extra stock versus speed of product turnover, fees for storage, cost in bulk versus regular ordering, and whether clients/end users would be willing to wait.

Stock Levels

Defining your minimum stock level will allow you to set up regular inspections and re-ordering of supplies. Take into account emergencies and vendors taking longer than average to replenish stock. This will aid you in arriving at JIT (just in time) ordering, where stock is held for a minimum amount of time before moving on to the next stage in the supply chain.

Your Security

Stock security is a necessary cost. Many experts recommend separating staff that is responsible for stock management from staff that has financial responsibility. Many times, shoplifting and thievery is committed by employees rather than a stranger. Security guards, cameras, bar codes and security devices are used by most businesses since the cost of security is minimal compared to the millions of dollars that U.S. businesses lose each year to stolen goods. Training staff in identifying potential security issues and having a clear method of reporting violations is important in reducing crime. Often, shoplifters and thieves use standard techniques to distract employees and take stock.

Stock on Hand

Having a great deal of stock on hand has both positive and negative consequences. Having an immediate supply means that end users get their product that much sooner. Speed and immediate gratification for a client can make the difference not only in a sale, but recommendations, repeat business and client loyalty. In the modern business environment where every business is a global business, an emergency or unforeseen circumstance anywhere in the world can render competition without resources you have on hand. Of course, one must take into account using capital in bulk buys, management and insurance costs as well as goods perishing or becoming obsolete.

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