• Accounting
Home Finance Entrepreneurship Inventory Control Methods – Ways to Keep Track of Stocks and Supplies

Inventory Control Methods – Ways to Keep Track of Stocks and Supplies

You can use various forecasting methods to keep a track of your stocks and supplies. Inventory control forms the crux of supply chain management and is of utmost importance for proper production planning. You can eliminate significant holding costs by maintaining your inventory at a significant level.

Inventory Control MethodsPHOTO BY FLICKR.COM/3059349393/

Inventory Control Methods - Effective Production Planning

In order to maintain your inventory at an optimal level you need to keep a check on the level of raw material in your inventory. You can use inventory control methods like Economic Order Quantity to keep a track on the desired level of inventory. You can calculate EOQ by multiplying two times order of the cost with demand and then dividing it by holding cost and then taking the root of the entire expression. You might slightly alter your calculations depending on the type of your inventory. For example if you are trying to maintain a just in time inventory you might use inventory control methods, which has allocations for storage of higher amounts of raw materials.

Inventory Control Systems - Developing Proper Systems

You need to develop sound and simple to follow processes for your employees in order to develop an efficient system to analyze your inventory requirements. You can write down everything you plan to do for implementing proper inventory control systems. Once you have chalked out what you want, you can use software for implementation or you may opt to implement it manually. You should also use secure check points for your warehouses and any entry and exit from your warehouse should be immediately reflected in your stock list. You can use radio scanning inventory control systems in order to implement such a system. You should also update the process documents for recording transactions on a regular basis.

Inventory Control Techniques - Analyzing Required Inventory

You can also use various techniques like ABC analysis for estimating raw materials. In ABC analysis you need to divide your product into three categories depending on their value. This is based on the assumption that 20% of a firm’s product is responsible for 80% of its resources. Therefore only resources for those products are kept at hand in inventory control techniques like these. You should also try to determine your nature of business and goods before carrying out with a technique. If your nature of business is such that there is a certain expiry date with your goods then you should opt for inventory control techniques like FIFO. If you are following techniques like LIFO then it is probably that there is no expiration date for your products.

Written by Lucy King

Your feedback on this article


Suggest a Topic

What topic would you like to read about here?