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Storage and Inventory Control Best Practices

Storage and inventory control processes include activities related to holding material and the processes of counting and transacting it as it moves through a fulfillment or distribution center.

The layout of a facility supporting an adjoining manufacturing operation will have different requirements than one supporting distribution to stores or consumers. Some operations place emphasis on replenishment, others on picking and order fulfillment.

Regardless, best-practice companies have designed storage systems to meet the needs of the current and planned mix of storage types. This includes optimization of storage locations and layouts to fit product without the need to restack or re-palletize once received. The warehouse management system (WMS) will track storage location profiles and properly assign items to the optimal storage location. As a result, top performers have excellent cube-fill rates.

In addition to optimizing the cubic fill of storage locations for better inventory control, another best practice is to minimize travel time. If a particular SKU is in high demand, it should be placed closer to its next point of use. In this case, demand is based on the number of times the SKU is required, not on the number of units sold. The difficulty of retrieval should also be considered in terms of travel time. Higher-demand product should be placed on the most easily accessed storage space in a “hot zone,” typically at floor level for racking and between waist and shoulder level in pick racks.

Not all companies need to track product by lot or serial number, but if required, best-practice companies have integrated that capability into their DC or FC and and shipping processes, using the system of record to manage the lot and serial number data.

Most companies put a lot of effort into the initial facility layout. However, industry surveys will tell you that as many as half of companies don’t have an ongoing process to review their layouts. Reviewing how storage areas are configured and having processes in place to reconfigure them as product mix changes is considered a best practice and is critical to maintaining high levels of space utilization and efficiency. Making continuous small adjustments to racks, shelving or other storage equipment can greatly improve space utilization.

All warehouse software runs on data, so product and storage locations must be kept current and accurate. Best-practice companies maintain all information on a single system of record and keep it current and accurate. Product data should include all characteristics including cube, lot/serial number information and special requirements so it can be directed to special storage areas. Special storage areas may be used to segregate items with odor transfer or fire risk, or that require temperature control. High-value product might require caged or controlled-access storage.

Kate Vitasek is the founder of Supply Chain Visions

This article was originally published in 2007 and is frequently updated

Inventory Control Guide: Definitive Plan for Business Owners

Inventory control is one of the key ways a business can keep its costs low. This in turn can lead to higher profit margins and increased sales.

If you're an inventory control manager or looking to become one, understanding how to control inventory is paramount. We'll walk you through all aspects of inventory control and management. But before that, you can also check out our article on what is inventory .

Let's start with a brief overview of what inventory control is.

Inventory Control Overview

Inventory control is the maintenance of a business's inventory level to fulfill orders and minimize costs. It involves managing inventory storage, movement, and maintenance. It also includes using data to make decisions that can increase the profit you make off this inventory.

The Purpose of Inventory Control

The primary purpose of inventory control is to protect inventory from damage or theft and to track inventory in the financial statements. Inventory control ensures a warehouse operates smoothly while keeping costs low and meeting customer demand. All stock must be recorded and this data can be used to make a variety of decisions.

The Application of Inventory Control Data

Using inventory control in your business requires investing time and money. This is done through either physical inventory counts or investing in a perpetual inventory management software. Both result in the accumulation of data regarding inventory levels and trends to plan for purchasing, controlling, and shipping goods.

The Value of Inventory Control

Inventory control is a vital part of any business' ability to make a profit. The major reasons it is valuable to control inventory are that it increases warehouse efficiency, ensures the accuracy of inventory data, can lower costs and increase revenue, and keeps your customers satisfied.

Without inventory control, a business's warehouse can quickly become a liability. If inventory is allowed to move about with no control, a manager risks running into skyrocketing costs and plummeting profits. This in turn will lead to the loss of their job and possibly the closure of the business.

Invest in Automated Inventory Control Systems

One of the best ways to take control of your business's inventory is to purchase a subscription to an inventory management software. This software tracks inventory levels, sales trends, and inventory cycles. Most of these programs can also be hooked to your POS system to provide a perpetual inventory count. This updates your inventory levels each time a sale is made. This feature is built into some of the best inventory control software and allows you to take a more hands-off role.

The other major component of inventory control is inventory management.

Inventory Management Process

Inventory management is the act of reducing inventory costs and optimizing the ability to meet demand. This is done using a variety of methods like reducing dead stock or calculating optimal reorder points.

This most important part of inventory management is that it requires a dedicated focus on inventory tracking.

Inventory management requires creating and following a simple set of processes to limit the chance of improperly managing your inventory.

There are eight steps in the inventory management process. These are: Receiving product, inspecting and sorting product, monitoring inventory levels, receiving orders, picking and shipping product, updating inventory levels, and placing reorders.

These eight steps can be done more efficiently with a properly managed inventory process flow. Each step can be optimized by tracking and reviewing each step. You can eliminate inventory shrinkage , discover flaws, and reallocate resources to any step that needs it to increase your profit and limit your costs.

How to Improve Inventory Management Process

There are many ways you can improve your inventory management and get the most out of your inventory. A few of the most common including communicating inventory needs to your suppliers, tracking product lead time to plan for reordering, hiring an inventory control manager, and using inventory management software.

The two major tools we recommend are the creation of an inventory management process map and the purchasing of an inventory management system.

Inventory Management Process Map

An inventory process map is a flowchart that shows every step in your inventory program. Though the eight steps are fairly standard, there are many variables that are specific to your businesses. By mapping out all steps and options, you can always be prepared for any changes in supply or demand.

Inventory Management System

An inventory management system is a program that tracks and manages all aspects of a company's inventory. This includes purchasing, shipping, tracking, storage, turnover, and reordering. This type of all-in-one inventory management software can be integrated into your POS system to provide a perpetual inventory count.

Now that you understand inventory control and management, let's dive deeper into the individual methods you'll need to know. We'll start with the most obvious, inventory tracking.

Inventory Tracking

Inventory tracking is one of the most important inventory control methods. Inventory levels influence all decisions you make and can quickly increase or decrease your revenue. They can be tracked manually or perpetually.

How to Track Inventory

The basic way to track inventory is to manually count your inventory every two weeks and compare the numbers versus sales. That's known as periodic inventory.

The other option is a perpetual inventory, where an inventory management app or software is integrated into your business's POS. This gives you access to live data at all times and lets you have more control over inventory tracking.

Inventory Tracking Best Practices

There's no single way to track inventory, but there are a few best practices that all businesses should adopt. The six main practices are to establish specific goals for your inventory, use ABC inventory analysis to bucket your products by value, keep safety stock, optimize inventory turnover ratio , increase packing efficiency, and adopt the FIFO method .

These practices can all be applied by manually tracking inventory or by using inventory tracking software.

How to Track Inventory Manually

To track inventory manually you need to physically take inventory at least twice. The first to establish baseline stock levels and again to determine usage. These two inventories are usually taken on the first and last days of the month.

Manual inventory tracking is much more labor-intensive than using tracking software, but can still make use of technology. This is by making use of a spreadsheet to track the data you collect. Still, inventory software offers a much less labor-intensive inventory tracking program.

Inventory Tracking Software

Inventory tracking software is a digital program or application that provides a perpetual inventory count. It is generally integrated into your POS and updates instantly every time an item is scanned as it's sold or shipped. It offers many long-term benefits to a business and eliminates the need for full, physical inventory counts every month.

Whether you use physical or perpetual inventory counts, the next important step is to perform inventory audits to ensure all information is correct.

Conducting an Inventory Audit

An inventory audit is when a business cross-checks its financial records against its inventory records. It is a vital part of inventory management and is done to ensure all records are accurate. These audits also uncover any discrepancies in inventory count or financial records.

How to Conduct Inventory Audit

Conducting an inventory audit requires pulling current data from a variety of sources. This may include inventory counts, sales records, shipping manifests, or other records.

Though there are many forms of inventory auditing, the workflow is mostly the same. You acquire at least two records that should reflect the same inventory numbers. Then check them against each other to discover if they do match. If not, flag the areas with issues and look into any problems that arise like missing inventory, damaged product, or inaccurate sales figures.

Inventory Auditing Procedures

Inventory audits can be completed by using a variety of auditing procedures. Some of the most common include performing a physical inventory count, performing a series of smaller cycle counts, or matching shipping invoices to financial records. In addition, a number of analyses may be conducted including an ABC inventory analysis, cutoff analysis, overhead analysis, finished goods inventory analysis, or freight cost analysis.

All of these procedures are intended to help you verify the information in your records is correct and to uncover any areas where you may be losing money. They are conducted according to strict inventory auditing standards.

Inventory Auditing Standards

Inventory auditing standards must be established by the business if they expect to achieve results. There are two rules that make inventory audits easier and more accurate.

First, audits need to be performed regularly and in the same method each time. If not, the data uncovered will not be particularly helpful as it could be incorrect. Second, inventory control needs to be practiced at all times, otherwise audits will become overwhelming and difficult for the team.

Now that you have a better grasp of the different ways you can audit your inventory, you can start working on limiting waste. One of the biggest issues uncovered during audits is dead stock.

What Is Dead Stock?

Dead stock is a form of surplus inventory that a business is unlikely to sell in the near future. It is a drain on warehouse resources and actively prevents a business's ability to increase its profits.

These products are not to be confused with buffer stock as they were not ordered with the intention of storing them for a long time. Dead stock continues to depreciate in value and may eventually expire or become obsolete and have to be written off as a loss.

Dead Stock Management

Dead stock inventory control consists of selling what you can and finding ways to minimize the expenses associated with dead stock. The key is that the inventory control manager needs to determine the causes of their dead stock.

Two major causes of dead stock are poorly managed lead times and reorder points. They can cause customers to cancel their orders and result in stock that was expected to be sold left sitting in the warehouse.

Inventory tracking is also a vital part of managing and eliminating issues with dead stock. It helps create inventory forecasts so you only order the correct amount of goods in the future and recognize sales trends and inventory cycles.

How to Get Rid of Dead Stock

Getting rid of dead stock can be very difficult, but it is important to limit losses. Some of the most common ways to offload dead stock is through kitting , limited-time sales, internal store transfers, selling to wholesalers, or returning the goods to the manufacturer.

Not all options are available to all businesses, so an inventory control manager needs to be flexible with dead stock. You can also find more customers for your products by listing them on an online marketplace .

Going forward you should also try to avoid running into issues with dead stock entirely. The first thing that needs to be controlled is product lead time.

Lead time is the amount of time that goes by from the start to finish of any given process. Lead time is one of the most important measures in inventory control.

Calculating, understanding, and acting on changes in lead time allows a business to prevent losses and fulfill orders quickly and efficiently. This is true for both retailers and manufacturers. It affects all businesses within a supply chain and can cause major issues if it gets out of control.

Lead Time in the Supply Chain

Total lead time is affected by every step within a supply chain. Production takes time, shipment takes time, and all other intermediary steps take time. As such, lead time in inventory management needs to be monitored and planned for regardless of business type.

Lead Time Is Bad

Long lead times can cause many problems that interfere with a business being able to fulfill orders.  

For retailers, long lead time means a loss of sales and angry customers. For manufacturers, long lead time can cause production to halt entirely. It also leads to increased lead time for the retailers and strains relationships. Every additional day that goods are delayed, money is lost so you should always try to reduce it.

Lead Time Reduction

Lead time reduction can take a lot of time, but will help your business improve its sales and fulfillment capability. The most important factor when trying to reduce lead time is to look at your historical data.

There are a few ways you can use this information to reduce your lead times. These include switching suppliers, sharing data with your suppliers, and increasing reorder frequency.

Before you can try any of these methods, you need to know how to calculate your lead time.

Lead Time Formula

Calculating lead time requires a simple formula. There are two versions of the formula depending on if you're a manufacturer or a retailer.

For manufacturers, the lead time formula is:

Total Lead Time = Manufacturing Time + Procurement Time + Shipping Time

For retailers, the lead time formula is:

Total Lead Time = Procurement Time + Shipping Time

Using the inventory tracking tools and formulas above, you can keep your business operating smoothly and focus on increasing sales and revenue by calculating optimal reorder points.

Reorder Points

The reorder point is the level of standing inventory on-hand that alerts you to reorder. Essentially, when you hit this particular number, you should place an order to ensure you can continue to meet demand without any gaps.

Reorder point is not a stable number, but is flexible based on sales trends and the demand cycle of a given product. This means you need to have an understanding of each product's inventory levels and sales to optimize its reorder point. This is easily done using inventory management software that tracks everything you need to know about your inventory.

Reorder Point Formula

Uncovering the reorder point for a product can be done using a very simple formula.

Here's that formula:

Reorder Point = (Average Daily Usage x Average Lead Time) + Safety Stock

How to Calculate Reorder Point

To calculate the reorder point for a given product first requires that you determine a product's average daily sales, lead time, and amount of safety stock. Daily sales information can be pulled from your POS system if you have one. If not, you can look at inventory numbers and divide by the number of days between taking inventory. Safety stock can also be found in inventory counts.

Lead time can also be calculated for the product using the formula listed in the previous section. With these three numbers in hand, it's as simple as plugging them into the formula above to determine that product's reorder point.

Reorder Point Problems and Solutions

There are a number of issues that can hamper your ability to make the most informed reordering decisions. Here are just a few of the issues you may encounter.

Safety Stock and Reorder Point

Safety stock is additional stock you keep on hand in the event that demand suddenly increases. The issue here is that you may go through it more quickly than anticipated. This means you need to reorder earlier as well. Luckily, that is exactly why you keep safety stock on hand.

To combat any sudden shifts in demand and safety stock usage, track daily sales and recalculate your reorder points regularly.

Lead Time and Reorder Point

Lead time is the other major issue that may interfere with calculating your optimal reorder point. Unfortunately, you don't have much control over lead time as it is dependent on the supplier and shipper. However, this can be mitigated by keeping an adequate safety stock on hand. You should also calculate your reorder point daily to notice any changes in lead time as they occur.

Reorder point calculations are also a very important part of determining the correct amount of product to order. This is known as economic order quantity.

Economic Order Quantity

Economic order quantity is the ideal amount of product a company should purchase to minimize inventory costs. Essentially, it is the amount of product you need to order to meet demand without having to store any excess inventory.

Finding your optimal order quantity for a product is the goal of calculating its EOQ. However, it is very difficult to achieve as any slight variance in demand, cost, or price will throw the numbers off.

Economic Order Quantity Value

Managing economic order quantity can help avoid issues like excess stock or dead stock and keep avoidable losses to a minimum. It also helps establish goals for inventory KPIs, informs inventory forecasting decisions, and helps increase the company's sales and revenue. It is also a vital part of the just in time inventory model.

Advantages and Disadvantages of EOQ

Utilizing EOQ for your business has both advantages and disadvantages. On the plus side, economic order quantity allows you to minimize all costs associated with inventory and can easily be adapted to your business model. This will lead to higher profit margins and a streamlined workflow in the warehouse.

However, there are also a few drawbacks that you need to be aware of. Calculating EOQ can be difficult. You'll see the formula used for EOQ calculations below, and it's safe to say it isn't the easiest to use. The calculation is also based on assumptions, so your number will not be completely accurate if any of the numbers you use are not perfectly steady.

Economic Order Quantity Formula

Calculating the economic order quantity for a product can be done using a slightly complicated formula.

EOQ = √ (2 x Demand x Order Cost / Holding Cost)

Calculating the economic order quantity for your products can help you make the most out of your warehouse space, minimize costs, and increase revenue. It also allows you to make the most out of your inventory forecasting.

Inventory Forecasting

Inventory forecasting is used to predict future inventory levels needed to meet demand. This is done by combining historical data with future assumptions on demand cycles and sales trends.

Collecting data is the most important part of inventory forecasting. This requires a strong inventory management program. Sales trends, stock issues, and dead stock are just a few of the issues that can be uncovered by taking regular inventory.

How to Forecast Inventory

To forecast inventory levels, you must first take inventory at least twice. This can be done through physical inventories, cycle counts, or the use of a perpetual inventory program. Next, determine what products are selling well and if they are nearing their reorder point. This lets you predict future sales trends based on historical sales.

Each new inventory taken will provide further insight into inventory trends. You can use any shifts in sales or stock levels to make more informed forecasts.

Keys to Inventory Forecasting

There are many ways any business looking to forecast for inventory management and control can achieve their goals. There are three best practices you should use to get the most of your forecasting.

First, consistently track and record your inventory levels. If you don't, all of your forecasts will be based on faulty data and can lead to wasted money. Second, include all key players in decision-making. People not involved in inventory management are still affected by the decisions and have points of view that can be very helpful. Third, investing in inventory management software can pay dividends. Forecasting can be updated in real-time and you can minimize the chance of flawed forecasting.

Now that you know all of the major tools of inventory control, you're set to become a star inventory control manager.

Inventory Manager Salary and Job Description

Inventory control managers are in charge of all aspects of a business' inventory management and inventory control programs. They are a vital part of a company's management team and are responsible for warehouse operations and inventory tracking.

Inventory control managers are responsible for everything from inventory tracking to inventory auditing to inventory maintenance and more. They must also manage and direct warehouse personnel.

Inventory Control Manager Skills and Responsibilities

Due to the importance and varied nature of this role, inventory control managers must have a wide variety of skills. These skills include the ability to lead and direct others, solve complicated problems, use data in their decision-making, and have a sense of organization and attention to detail.

These skills are all used when meeting their responsibilities. These include managing and monitoring all inventory counts, performing inventory audits, forecasting inventory needs, tracking shipments, and training and leading warehouse staff.

Luckily, using the tools listed above, you can be prepared to become a talented inventory control manager.

Now, you're ready to take control of your inventory.

Get It Under Control

Whether you are an old hand at inventory control or you're new to the field, we can help. Just request a BlueCart demo, and we’ll get you on top of your inventory control. Warehouse inventory control is a vital part of all businesses and can help you spend less on inventory and increase profits. ‍ ‍

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A Guide to Inventory Control

Learn more about inventory control: definition, methods, types, and ways to maximize your inventory.

What is Inventory Control?

Also called stock control, inventory control consists of systems and procedures for managing inventory items in a company’s warehouse. It monitors the movement and storage of goods in a warehouse to help businesses maintain a sufficient supply in good condition. Establishing an inventory control system enables them to satisfy customer demands and maximize profits.

Inventory control is a key element of an inventory management system . Warehouse managers and production planners should adhere to the following activities and procedures in controlling their inventory:

• Receiving, storing, and transferring goods
• Placing items in strategic locations
• Tracking inventory items and their locations in the warehouse
• Documenting product details and histories
• Monitoring the condition of items in stock
• Fulfilling purchase orders with stock on hand
• Integrating barcode scanners
• Forming reorder reports

Difference Between Inventory Control and Inventory Management

Although these two concepts go hand in hand, there are slight differences between inventory control and inventory management. Inventory control handles existing stock in a warehouse, while inventory management involves the overall movement of goods across supply chains.

The table below compares the two processes against their scope, goal, areas of concern, and actions.

Types of Inventory Control Systems

There are two main types of inventory control systems: the periodic and the perpetual system. Choosing the right inventory control system will depend on the business type, size, and kind of inventory. This section discusses these two types in detail, covering their pros and cons, as well as what they’re best for.

Periodic Inventory Control System

The periodic inventory control system pertains to a recurring count of goods at specific intervals. In this system, warehouse managers manually count their inventory on a monthly, quarterly, or annual basis. The exact period depends on an organization’s needs and business activities .

Pros: It’s relatively simple and easy to manage for smaller inventories. It doesn’t require any specialized technology and equipment, making it easier to train individuals in.

Cons: It becomes a lengthy process for companies with expansive inventories. The manual counting process is also highly prone to human error.

Best for: The periodic system is ideal for small companies with minimal inventory. It also works best for businesses selling niche products and counting larger-sized goods.

Perpetual Inventory Control System

The perpetual inventory control system provides an accurate count of inventory levels in real-time . It utilizes technology, such as barcodes and Radio Frequency Identification (RFID) tags, for tracking products. The information is then logged in a centralized database that warehouse managers can easily access.

Pros: This method removes the need for manual counting. It gives warehouse managers a snapshot of their inventory counts over a specific period of time. Doing so drives data-driven decision-making for sales, ordering, and inventory management.

Cons: An inventory control software can be expensive to maintain. Moreover, it might not capture discrepancies due to product theft, loss, damage, and scanning errors.

Best for: The perpetual system works best for companies with multiple locations. It’s also great for businesses maintaining large inventories.

Inventory Control Techniques

Inventory control involves various techniques for monitoring how stocks move in a warehouse. Four popular inventory control methods include ABC analysis ; Last In, First Out (LIFO) and First In, First Out (FIFO) ; batch tracking ; and safety stock . This section explains how each of these methods functions and how they can support your business.

Inventory Control Techniques | SafetyCulture

ABC Analysis

ABC analysis in inventory control classifies stocks based on their importance, price, and sales volume. These criteria determine the number of items a company will bring to the market.

Just as its name suggests, it consists of the following categories:

• A class – expensive, high-class items with tight controls and small inventories
• B class – average-priced, mid-priority items with medium sales volume and stocks
• C class – low-value, low-cost items with high sales and huge inventories

Applying the ABC analysis of inventory control allows businesses to minimize the costs of carrying products while maximizing their stock returns.

LIFO and FIFO

Both inventory control techniques organize how inventory items move in and out of the warehouse based on their arrival date. Priority will depend on the type of products available in the storage facility.

Using the LIFO method , the warehouse puts out the most recent batch of items to the customers first. Doing so prevents products from going bad when delivered to the market.

But with the FIFO technique , the warehouse prioritizes older stocks for processing and shipping. This way, they can keep the products fresh when the customer receives them.

Batch Tracking

Batch tracking is also a great way of organizing stock items in a warehouse facility. In this method, goods of the same production date and materials are grouped together. Doing this helps warehouse managers keep track of the following information:

• Where the items come from
• Where the goods are heading
• When the items might expire

Safety Stock

Safety stock involves having an additional set of goods on hand as a preventive measure for the market’s volatility. The amount should be over the average demand or use of the product.

It acts as a safety net, should customer demand go above the projected amount. It also covers them for any uncertainty in supply performance, such as shipping delays.

Tips on Getting Started

After discussing the types and techniques employed in an inventory control system, it’s time to put those measures into practice. Here are some tips to help you kickstart your inventory control process.

• Start with an inventory control plan – This plan should address the movement of goods from production to sales and removal from the inventory database.
• Put it into practice – Carrying out the inventory control plan includes establishing metrics and forecasts for succeeding months. You can also adjust your stock management strategy as needed.
• Consistency is key in labeling products – Find a system that works for your company and stick to it. Consider looking into barcodes, RFIDs, and Stock Keeping Units (SKUs).
• Establish reorder points – This practice systematically replenishes your stock items at set periods so you can take better control of your lead time . The ABC analysis method is a helpful tool for carrying this out.
• Always keep critical items in stock – Identify which goods are critical for your business and ensure they never go out of stock.
• Review product shipments – Read over the packing slips and check products for any damage to prevent inventory loss.
• Perform warehouse audits regularly – Warehouse personnel can run through their stocks for spoilage, theft, and potential human errors. Doing so ensures that the accounting team receives accurate information about the counts and costs of your inventory. It’s best to use a digital inventory checklist to simplify this process.

Explore our Free Inventory Templates

See how digital checklists simplify business processes with just a tap.

How Training Can Help You Implement Best Practices

Apart from having clear and comprehensive operational manuals for inventory control in place, it’s vital that they’re effectively communicated to your workers. This is where the need for training comes in.

With good inventory control training, you can effectively reinforce the best practices outlined in your operating manuals and Standard Operating Procedures (SOPs). And on top of higher quality work and better productivity, it can also help your workers become more aware of potential issues and more proactive in preventing mishaps along the way.

Say goodbye to the days of boring training and operating manuals. With SafetyCulture (formerly iAuditor)’s Training feature, you can easily transform your work instructions into training slides that are interactive, visually appealing, and easy to understand.

But that’s not all – you can also make this training accessible to your team using their preferred devices. And with SafetyCulture Training’s offline access, they can brush up on their skills even without an internet connection.

Maximize Your Warehouse Inventory with SafetyCulture

Safetyculture as an inventory control software.

As an inventory control software , SafetyCulture assists warehouse managers in improving their inventory control system. It allows them to conduct warehouse audits to check if any product is lost, stolen, or in bad conditions. This platform also reduces human error through digitized inventory tracking systems.

With SafetyCulture, you can perform the following actions:

• Edit and fill out pre-made digital checklists for your warehouse checks
• Schedule regular warehouse inspections automatically
• Track goods in your inventory using a handheld mobile device
• Monitor trends in inventory controls with the powerful analytics dashboard
• Proactively fill in missing, damaged, or spoiled stocks using Actions
• Train employees on effective inventory control practices and standardize best practices in the organization.
• Manage your organization’s assets to ensure their safety and quality for warehouse operations

Get started using our selection of inventory checklists for your business needs!

Leizel Estrellas

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What is Store Inventory Control?

Resources / What is Store Inventory Control?

Table of contents +

• Inventory Management: Process, Examples, Tips & Techniques -->
• Accounting for Inventory: Periodic Inventory Management vs Perpetual Inventory Management -->
• Effective Inventory Management in Retail -->
• Multichannel Inventory Management -->
• Inventory Forecasting Best Practices -->
• What is Inventory Tracking? Top Tips for Tracking Inventory -->
• What is Inventory Planning? Challenges & Best Practices -->
• What is lead time and how do you shorten it? -->
• Pipeline Inventory -->
• What is Inventory Control? -->
• Dead Stock: Causes and How to Get Rid of it -->
• Perpetual Inventory System -->
• Inventory management in warehouses -->
• What is Store Inventory Control? -->
• Automated Inventory Management -->
• What is Inventory Turnover? -->

Inventory management can be a challenge, especially when you’ve got store inventory control to consider, with several warehouses and retail stores to maintain. It often involves a stock-take day, when you count each item of stock in your warehouse and record the results.

Although store management and inventory control can sometimes be tedious, it’s vitally important for a business to stay on-track with its inventory levels.

Holding onto too much stock can disrupt your cash flow, which is bad for business. But not having enough to meet customer demand is equally damaging. 

That’s why effective inventory management is vital for a growing business. Luckily, nowadays, there is plenty of  useful inventory management software available that can help with stock control, making the process smoother and easier than ever.

So, read on to learn more about t he meaning of store inventory control and how it can impact your business.

Store inventory control is the process of keeping track of stock levels across your retail stores. This can relate to both physical and ecommerce online stores. It encompasses everything from purchasing right until the point it reaches the retail store.

That means monitoring incoming and outcoming stock, as well as the stock being held in the warehouse. Inventory control gives you a complete overview of your company’s inventory, including what the products are and where they can be found in the warehouse.

The goal is to minimize the costs that can be incurred through holding onto stock. You’ll also have a better idea of when to replenish stock, sell old stock, and buy new products. Good inventory control techniques will free up space in your warehouse as well as money in your cash flow, and ensure you’re not keeping hold of old or unsellable stock.

According to Shopify , mismanaging inventory has cost businesses nearly $2 trillion. These are mostly hidden costs associated with overstocks, out-of-stocks, and preventable returns.

Why Store Inventory Control is Important

Inventory control  gives a business owner a better understanding of their stock levels. It ensures that dead stock is taken care of (or avoided entirely), and that the warehouse is running at optimum efficiency. Here are some other reasons as to why inventory control is important for your business:

• Helps with quality control –  Inventory control allows you to keep an eye on your products, wherever they are. That means that every now and again when you conduct inventory counts, you’re also able to monitor quality control at the same time. If you do find stock that falls below your company standards, there is then the opportunity to act. Especially in the event of a product recall.
• Keeps count of stock –  Part of the inventory control process is conducting regular stock takes. This involves counting every single item of stock you have. It allows you to monitor stock levels and organize your warehouse. This is important because it means you know where each unit is located, and the quality and condition of each product. You’re also able to see where you may be falling short on some products and bring in additional stock where necessary.
• Helps with inventory accounting –   Inventory accounting is a key part of inventory control. It measures the value of physical inventory and costs of goods sold over time. This means you control dead stock that no longer has value, which reduces waste and makes it easier to calculate your inventory value. This also means you can help your bottom line by only holding the products you need.
• Ensures you don’t oversell –  Once you know how many products you have, you can be sure that you don’t accidentally oversell an item to your customers or sell out of your most popular product. You can also list your stock levels in real-time on your website, and keep your POS (point of sale) system  updated with in-store stock availability. When items are sold out, customers can grow impatient and look elsewhere to find the same product. Similarly, when a customer buys an item only to find out it’s been oversold and they’ve been refunded, this can also leave them frustrated with your quality of service. Overall, it can decrease customer satisfaction ratings for your store. Given that customer experience goes hand-in-hand with loyalty, it’s important that you deliver the best service possible.

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The 4 Types of Inventory

There are four main types of inventory. Let’s take a look at what they are and how they impact businesses.

Raw materials

These are the materials used to manufacture product components or finished products. In some cases, these materials are kept by the supplier and then shipped directly to you. However, sometimes the materials may be produced by you for easy, quick access. This means they may be part of your warehouse inventory. For example, if your business sells notebooks, the raw materials you need to make them include the paper, ring binders, and covers.

Unfinished products

This type of inventory includes products that are eventually going to be for sale, but are unfinished or not yet ready to hit the shelves. This may include products that are still being made or are waiting for packaging to complete the item. These will be stored in a separate part of the warehouse to ensure everything is categorized and an unfinished product never makes it into a store.

In-transit inventory

This refers to the inventory that has been shipped from the supplier but has not yet reached the warehouse. It’s also referred to as pipeline inventory . This transaction is still included in inventory management, even though it’s not reached the retailer yet. It’s also where the transfer of ownership takes place. When goods arrive with the purchaser, they now own those goods.

Cycle inventory

Cycle inventory is when a business sells a portion of its stock. This stock is then swiftly replenished. Safety stock is used to cover surges and dips in demand, while cycle stock is used to cover the majority of purchases. This means that some small businesses only use cycle stock because they don’t have the capacity for safety stock.

For larger businesses that have safety stock, they may still avoid dipping into it unless it is needed to meet increasing customer demands. Keeping cycle stock as low as possible saves money on shipping and storage, which can be useful for smaller businesses.

Challenges of Store Inventory Control

Inventory management can be challenging for retail businesses for several reasons. The biggest challenges are:

Issues with supply chain

The  supply chain  goes from the manufacturing stage right through to the warehouse, and the products on the shelves. Below are some typical  supply chain  issues.

When there is an issue at any of these stages, it can affect the whole chain. One of the challenges of inventory management is to be prepared when a problem arises. You must act quickly to fix it.

For instance, you should re-order your best-selling product frequently so that you can keep large quantities in your warehouse. So, if there’s ever an issue with sourcing raw materials or delivery of the products, you’ll have enough stock in the warehouse to prevent stockouts until new stock arrives.

Managing warehouse space

Inventory control techniques aim to minimize the stock levels in your warehouse. Sometimes, this is out of your control – like when there are issues in the supply chain, for example. Your warehouse may only have enough space left for your incoming products, but a problem with the  supply chain  may mean some products are delayed.

Therefore, they could all arrive at the same time. It’s important to ensure you’ve got excess space for eventualities such as this.

Planning and designing efficient, effective warehouse spaces isn’t easy, but you can better control the timing of new stock deliveries when you organize your warehouse spacing.

Customer demand

It may also be the case that you bulk buy products because of demand, but then trends change and they fall out of fashion. You’re then left with thousands of products in your warehouse taking up space that could potentially house new, more successful ones.

On the other hand, you may buy small quantities of a certain product but then find out that it’s growing in popularity. If you haven’t got enough stock in your warehouse, then this may cause delays in getting products to the customer. Let your supplier know when you’re generating a lot of purchase orders so they can ramp up production. Ensure you’re using a fast and reliable supplier that can do this for you.

Forecasting trends can be difficult, so it’s important that you use  demand forecasting . This is when you analyze data to predict how many products are going to sell within a certain time-frame. You can ensure you have enough for peak times like the holiday season.

Poor communication

Retail managers should be highly-skilled communicators. If communication between suppliers or manufacturers breaks down, it can cause issues for inventory levels. Good communication is particularly necessary if your business operates on a large scale and has both physical and online stores.

Managers need to be able to implement the company’s inventory management techniques, as well as  train other employees in the warehouse . It’s important to document lead-times and supplier information. To ensure this is available across multiple warehouses, the information needs to be digitized. Sometimes a warehouse management  software system can be the easiest solution.

Poor communication can affect your bottom line, too. Here’s why:

Increasing competition

Increasing competition can present a couple of problems. One being that you need to keep your product in stock at all times, because if repeated stockouts affect the loyalty of your customers, they won’t be afraid to shop elsewhere for the same thing.

Another issue is that the demand for raw materials or for your products from suppliers may increase in line with supply and demand. You can compete for high-demand materials, but this will come at a cost.

Changes to packaging

As consumer tastes change, so do products and their packaging. If ingredients change or there’s a limited edition product, you can expect the packaging to change with it. This can be tricky for inventory management, as you’ll have a lot of products that are suddenly out-of-date.

This may mean some of your products have a shorter shelf-life than you were expecting, and you may make a loss if you aren’t able to sell them on. Of course, the product inside may be exactly the same as it always has been—but the customer will want the shiny new packaging design!

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8 Inventory Management Techniques and Examples

If you’re wondering how to control inventory in retail stores and warehouses, keep reading!

Depending on the business, there are various types of inventory control techniques. Here are eight examples of inventory management systems in business:

1. First in first out (FIFO)

As the name suggests, this technique means that your oldest stock gets sold first. It’s a good way to keep track of the re-order point for stock, and avoid the issue of dead stock. For food and beverage retailers like Starbucks, this is a particularly important technique needed in order to keep products fresh. Even if you’re not selling perishable products, it can still be a good idea to use the  FIFO  method. If for no other reason than to ensure packaging is always in good, up-to-date condition.

A FIFO system only really works well with an organized warehouse. One where you know the location of each product in order to keep replenishing stock.  Warehouse management software  like Brightpearl can be useful for this. It enhances warehouse visibility so you can stay on top of your inventory. It also eliminates costly warehouse human errors thanks to its barcode scanner and automation options.

2. Last in first out (LIFO)

This technique means that the inventory you’ve most recently received will be sold first. The reason for using this method is all about pricing. If prices rise, this means the inventory you most recently bought will be the highest cost. When you sell these items, you’ll generate lower profits and therefore, have a lower taxable income.

One of the downsides of this technique is that you’re more likely to generate dead stock. If it’s left for too long, it may be unsellable.

3. Economic order quantity (EOQ)

Economic order quantity is a formula used to calculate the ideal order quantity a company needs. It includes total costs of production and consumer demand. This technique is used by businesses to see the minimal amount of inventory they can buy, while keeping the business ticking over. It helps to free up cash when it’s needed most.

The formula is:

EOQ = √(2DK / H), or the square root of (2 x D x K / H)

D = Order costs (per order)

K = Demand rate (per year)

H = Holding or carrying costs (per unit, per year)

The graph below demonstrates the EOQ equation:

Image: Medium.com

4. abc analysis.

This inventory management technique splits products into three categories to help better organize your stock, and identify those items that cost the most to store. It also helps you manage the profitability of the items based on their category.

• A  – The most valuable products that you generate the most profit from.
• B  – Products that aren’t the most valuable, but also not the least valuable. They fall somewhere in-between.
• C  – The least valuable products that help to generate a small, steady profit.

5. Minimum order quantity (MOQ)

The minimum order quantity technique is the smallest amount of stock that the supplier is willing to sell. For example, if you’re trialing a new product, you may not want to invest in large quantities until you know how much demand there is from the consumer.

Higher-priced items usually have a smaller MOQ because they are typically more complex to make. Smaller, cheaper items usually have a high MOQ because they’re cheap to make.

6. Just in time (JIT)

The JIT method is all about minimizing the amount of space your inventory takes up in the warehouse. One of the downsides is that it is risky, because if the product doesn’t arrive on time, you’ll be left with some unhappy, frustrated customers.

The car giant  Toyota experienced this first-hand . They first adopted a JIT inventory control model in the 1970s, but in 1997 the manufacturer of their brake valves was hit by a fire that destroyed all their stock. This meant Toyota had to find an alternative supplier quickly. They were forced to shut down for two days which cost them $15 billion and 70,000 cars.

If you can find a balance between waiting until the last minute to replenish products and avoiding a stockout situations , then JIT can be effective. However it may not be possible for certain products with a long lead time .

7. Radio frequency identification (RFID)

RFID allows a business to track products as they make their way through the supply chain. Using radio waves, products can be located via a tag and a reading device. The tag is a small microchip, so it’s easy to install and lightweight.

The tags are then fixed to the pallet or truck as it makes its way from manufacturing to the retailer. The tag can then emit radio signals that the reader collects. The reader is kept at the warehouse for management teams to keep an eye on incoming inventory.

When asked ‘What challenges do you face helping your retailer customers with cross-border ecommerce?’,  29% of supply chain managers  who deliver goods across borders felt that tracking deliveries was challenging. RFID helps with this, which is why it can be such a vital part of inventory control.

8. Bulk shipments

Bulk shipments can be preferable for large businesses that typically have a high turnover of stock. It’s often cheaper to buy in bulk, and you also need to buy less often because you have everything you need in the warehouse until stocks run low.

However, one of the downsides can be that it costs more to keep stock in the warehouse as it takes up more space. If the product is selling fast, though, it may not stay in the warehouse for long.

How Will You Manage Store Inventory Control?

Inventory control is vital for keeping your business running smoothly. When there are issues with your warehouse or inventory levels this can cause delays, which is bad news for your customers.

By investing in smart software like Brightpearl, you’re able to  optimize your workforce and manage inventory right through from purchase to sale. It also includes automated multi-location inventory tracking so you know when to expect your next shipment. So, if you’re implementing any new store inventory control procedures in your business, be sure to use the best software to support you and your employees.

Home » Inventory Management » What is an Inventory Control System? Types, Methods & Best Practices

What is an Inventory Control System? Types, Methods & Best Practices

Rohit Rajpal

Senior Writer

Efficient inventory control is non-negotiable but daunting for multichannel retailers, ecommerce brands, and wholesalers. In fact, 46% of SMBs either manually track inventory or skip it altogether. Shifting to a robust inventory control system is a wise choice to gain a competitive edge over such businesses.

But what is an inventory control system? We’ll discuss that today with its importance, types, techniques, and best practices. We’ll also cover the difference between inventory control and inventory management system, plus 7 tips to get started with an inventory control management system.

What Is Inventory Control?

Inventory control is a set of systems and processes used to maintain appropriate stock amounts in a business . This is done to always be at the top of meeting customer demand without any delay and minimizing the expenses of holding stock.

Fill your warehouse with the right stock to enhance customer satisfaction, improve profitability, and eliminate the need to place backorders. Having better control over your inventory and the right stock identification is possible with an efficient stock control system. It automates laborious inventory control procedures, furnishes real-time inventory levels, and streamlines your logistic workflow.

Right from movement to storage of goods in a warehouse, inventory control tracks it all to maintain a pipeline of goods. Proper inventory control process not only ensures fulfilled customer demand , but also maximized profits.

Why Are Inventory Control Systems Important?

By automating stock management, inventory control systems make maintaining optimal stock levels possible without much manual effort. Let’s delve deeper into the importance of inventory control systems –

1. Access to Inventory Levels in Real-time

The inventory system updates the inventory levels when a product manufacture, purchase, sale, or return happens, allowing you to gauge the inventory flow and set up reorder points. When you have clear visibility into the inventory level, excess or out-of-stock inventory situations wipe out. This enhances customer relationships as you always fulfill customer demand on time.

2. Logistic Workflow Optimization

Organizations usually have a multi-step supply chain, which is quite challenging to monitor individually. An inventory management software lets you track your goods at each step while giving you access to tools to spot inefficiencies in the logistics. You then have a clearer picture and time to improve. 

3. Cost Saving

An inappropriate stock level can cost you a fortune. How? If you’re low on stock, you won’t be able to fulfill customer demands, leading to losing customers to competitors. In contrast, excess stock adds to storage costs, insurance costs, and taxes. So, you see how having full knowledge of inventory level can help you save tons of money.

4. Reduced Manual Labor Errors

Manually tracking inventories is bound to cause errors and fraud. With an inventory control system, tracking goods is automated, eliminating human error and theft. 

5. Enhanced Customer Satisfaction

60% of customers expect 2 days, next, or same-day delivery , a major factor in purchase decisions. In such a scenario, listing stocks inaccurately will cause more unfulfilled orders, resulting in order cancellations and dejected customers. 

Here’s when inventory management software comes into play. It keeps your inventory level up-to-date, eliminating such situations and enhancing customer satisfaction . 

Difference Between Inventory Control and Inventory Management

Inventory control and inventory management are often used interchangeably, but both have distinct meanings and scope. Let’s gain in-depth knowledge about inventory control vs inventory management .

Types of Inventory Control Systems

Inventory control systems are of two types–periodic and perpetual. However, you must choose the one that aligns with your business size, type, and inventory kind. Let’s gain a better understanding of both –

1. Periodic Inventory System 

As the name suggests, a periodic inventory system involves manual counting of goods by warehouse managers at pre-decided intervals–monthly, quarterly, or annually. The interval is decided as per your business’s activities and needs. 

• Easy process with no technicalities.
• No technology or equipment requirement in this kind of inventory tracking
• Your information about stock levels remains un-updated until the next counting, which may lead to low stock, higher demand, unfulfilled orders, and loss of customers.
• This type of inventory tracking involves manual counting, which requires a lot of hours and human power and is prone to errors.

This system is recommended for small businesses with limited inventories and companies with niched products, as only they can manually count their stock. It is not feasible for larger organizations dealing in large amounts of stock.

2. Perpetual Inventory System 

Perpetual inventory system aims to give you a real-time picture of your inventory level. How? By tracking stock via advanced technology like barcodes and Radio Frequency Identification tags. After tracking, this system logs and centralizes the stock data in the database for warehouse managers to analyze and access. 

• No manual effort is required.
• Clear inventory level overview over time, facilitating data-driven decisions regarding orders, sales, and online inventory management.
• Relies on high-maintenance inventory management software
• Un-equipped to log inefficiencies due to product loss, theft, damage, and scanning issues.

This system is highly recommended for all sizes of businesses operating at multiple locations or dealing in large-scale inventories.

Interesting read: What Is Inventory Optimization? Techniques and Challenges

Different Inventory Control Techniques

Inventory control techniques are ways to monitor the stock movement in the warehouse. Having control over the stock is extremely important for manufacturing organizations, so they tend to apply multiple inventory control techniques .

Let’s understand the most popularly used inventory control techniques –

1. ABC Analysis

This is one of the most applied inventory control techniques . It involves categorizing the inventory according to its sales, importance, and price. Based on this classification, the company decides the volume of inventory they’d like to make available in the market. 

Here’s what the categories look like –

With this technique, businesses eliminate the need to stock up on unnecessary products, minimize the cost of storage, streamline the supply chain , and maximize stock returns.

Interesting read: ABC Analysis in Inventory Management: Benefits and Examples

2. LIFO and FIFO

LIFO and FIFO are inventory control techniques that focus on streamlining the stock circulation in and out of the warehouse. It decides how an inventory comes into the warehouse and goes out based on its arrival date. The stocks are prioritized based on the type of inventory stored in the warehouse. 

• Last In First Out (LIFO) – the recently received stack of products is sold to customers first, ensuring the quality remains intact when it reaches the market or end customer. 
• First In First Out (FIFO) – the first purchased goods are the first to be sold. So, the warehouse intentionally puts out older items for processing and shipping, reducing inventory waste. 

3. Batch Tracking

Batch tracking is another effective inventory control technique that groups various goods with similar production characteristics–expiry date, manufacturing date, location, or raw materials used. 

Doing so enhances inventory level accuracy and allows quick tracking while supporting various inventory control methods–LIFO and FIFO.

Allow us to explain how it facilitates quick tracking with an example. Suppose a customer reports a defect in a purchased item, requesting a refund/exchange. With batch tracking, you can –

• Track back the product’s source and materials instantly
• Run a quality control test for other items of the same lot
• Remove defective items
• Identify the issue
• Reduce returns and exchanges

4. Safety Stock 

Safety stock is a safety net that ideally covers the additional demand beyond the average demand. This stock is a log of goods kept in the warehouse as a preventive measure considering the market’s uncertainty. This tock backs up the businesses when there are unforeseen supply delays. 

Top Inventory Control Best Practices

For best inventory control, choose and adopt a method, clearly explain it to the employees, and define the policies and procedures.

Note : Adopting and blending inventory control and management software into your inventory control methods can significantly improve your stock control game. You can expect more accuracy, efficiency, and fewer errors. Choose the one that has features that fulfill your business needs. 

Now let’s discover the inventory control best practices -.

1. Commit to a Management Improvement Methodology

Management improvement methodologies like Six Sigma, Kaizen, or Lean go beyond inventory control and focus on improving your entire business, including inventory processes. 

2. Purchase Process Optimization

The next best practice of inventory control is optimizing the purchase process. Ideally, inventory management involves buying new inventory after analyzing past data and forecasting the stock requirements. 

You can also base your purchase decision on customer demands, aim to remove old stock, safety stock adjustment, and reorder points. 

3. Supplier Relationship Management

Inventories can be best controlled by maintaining cordial relationships with your suppliers. Why? Because you can solve inventory problems by collaborating with them. 

For instance, if you are on good terms with the supplier, they will take back products that are no longer in demand or help in instant restocking in case of a sales surge. 

4. Automated Report Creation

Inventory control and management systems involve heaps of data that can inform business decisions. But to use this data, businesses must work towards its analysis and reporting. Manually creating reports will lead to hours of labor and might have errors. 

Choosing software that automatically generates reports–historical stock, inventory status, inventory financials, stock logs, and aging inventory is a wiser option. After report creation, decide the point of report generation in the supply chain to furnish it to the suppliers well in advance. 

5. Risk Assessment 

Inventory control is prone to unforeseen risks–unexpected rise in sales, inadequate cash, insufficient warehouse space, wrong inventory requirement calculation, and discontinued/slow-moving goods. To be safe, assess probable risks, and determine how to tackle them beforehand.

6. Regular Audit 

Conducting regular audits ensures better inventory control. You can regularly audit your inventory in three ways–physical goods, cycle counting, and spot check. 

Let’s quickly walk through these three ways –

7. Selective Inventory Control 

Inventory control is a process that involves a huge amount of stock. So, auditing the stock after classifying it makes the process more organized. Selective inventory control involves techniques like ABC analysis, LIFO, and FIFO.

Interesting read: Inventory Management Process: Definition, Application & Limitations

Tips and Expert Advice for Getting Started with Inventory Control

Controlling inventory is best done with an effective stock control plan and system. Here are some tips to start the inventory control process –

1. Develop a Holistic Inventory Control Plan

A holistic inventory control plan monitors your orders throughout their circulation–from production/purchase to sale and removal from books. On top of this, your control plan should aim to reduce warehouse space wastage, set up a forecasting formula to order supplies and build great vendor relationships. 

Note : An inventory control software can do all this seamlessly without much manual effort.  

2. Update Your Plan Regularly

Today’s effective inventory control plan might lose effectiveness in a month, leading to haphazard online inventory management . So, updating your plan and forecasts with changes in business and market needs is essential. 

3. Stock Up on Critical Products

No matter how good your inventory control plan is, it’ll not be as useful if you run out of critical products like machine parts. That can hamper your sales, causing you to lose customers and money. In fact, inventory managers intend to increase their critical product inventory by 47% .

4. Double-check Your Shipments

You must never stock up on your products in the warehouse without reviewing it. If any inventory is absent or damaged in your stock, you can identify it beforehand to avoid a loss of sales. 

5. Adopt a Scalable Inventory Control System

Getting an inventory system that fits your current business size and needs is great but insufficient. You must invest in a cloud-based system capable of scaling and fulfilling your growing business needs. Such a system can furnish analytics that add to your business growth. 

6. Balance Inventory Costs and Benefits of Stock Backup

To create a fool-proof inventory control system, find the perfect balance between the cost of having stock backups and avoiding running out of stocks. This balance can be found only by analyzing your business and selecting the right method or forecast technique. 

Wrapping Up

Seamless and profitable business operations originate with optimal stock levels ready to be sold off the shelves on customer demand. When starting with stock control , keep this guide handy so you don’t miss out on advice we’ve given you, like regular plan updating and double-checking shipments. 

But the fact is that manual operations are quite exhausting and prone to errors. An automated inventory control system or i nventory management system can solve this for you. It eliminates the need to manually record data to monitor stock levels and other related operations. Invest in the best inventory control systems today!

You can customize your inventory control system as per your inventory performance optimization and business profitability needs. Doing so will help you control inventory better.

You must be well-versed with certain technicalities like working and integrating stock control systems and their customization techniques to align with your business needs.

You can track inventory across multiple locations with robust multi-location management systems.

Rohit Rajpal is an accomplished writer and data enthusiast passionate about unraveling the intricacies of information and data. With a deep understanding of the subject matter, Rohit strives to simplify complex concepts and make them accessible to readers. Rohit’s expertise in the field and his knack for clear and concise communication make his blog an invaluable resource for those seeking clarity in the data-driven world.

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What is the Inventory Control Process?

Inventory control is the process of managing and tracking the inventory levels, orders, sales, and deliveries of a business. It can involve manual or automated processes to ensure that the right amount of stock is available at all times, while also keeping costs low by preventing over-ordering or under-ordering. The goal of effective inventory control is to maintain cost-effective levels of stock, avoid stock shortages or surpluses, and maximize customer satisfaction with on-time orders. Automated inventory control systems are increasingly used for their ability to track stock in real time, plan for future needs based on historical data, and quickly generate reports.

Types of Inventory Control Systems

Inventory control systems are a set of technologies, processes, and procedures used to monitor and manage the ordering, storage, and use of materials within an organization or business. They help companies keep track of their inventory in real-time, make sure it is available when needed, and also help monitor inventory cost and quality control.

There are three main types of inventory control systems: manual record keeping, automated inventory management systems, and enterprise resource planning (ERP) software. Manual record keeping involves tracking inventory by hand-written records or spreadsheets while automated systems use computer hardware and software to track stock levels. ERP software integrates all aspects of a company’s operations into a single system that allows for the automation of many processes such as order management, production scheduling, supply chain management, and more.

Benefits of Inventory Control Systems 

Improved accuracy and productivity .

A proper inventory control system helps improve accuracy and productivity by managing and tracking the movement of goods and products. It accurately records product information, such as quantity, availability, location, and price, allowing for better forecasting of inventory needs. By automating processes like stock counting and ordering, it eliminates manual errors and reduces the time needed to manage inventory. This ultimately leads to more accurate record-keeping, improved efficiency in operations, and increased cost savings.

Reduce Costs and Overstocking/Understocking Issues 

An inventory control system helps reduce costs and overstocking/understocking issues by allowing for more accurate tracking and forecasting of inventory needs. These control techniques can help a business achieve its goal of holding the least amount of inventory necessary to meet customer demand while increasing inventory turnover. Automated processes (stock counting, ordering, invoicing, etc.) help to optimize inventory levels and eliminate manual errors, while regular reporting provides visibility into the performance of current stock levels. This information can be used to optimize purchasing decisions, reducing the chance of costly excess inventory or understocking issues. Additionally, inventory control systems can help identify waste and inefficiencies in operations.

Data and Supply Chain Visibility with Real-Time Updates & Tracking Capabilities

An inventory control system increases data visibility with real-time updates and tracking capabilities. Data is automatically updated when goods are received and shipped, providing an accurate overview of current stock levels and inventory availability. Additionally, tracking capabilities enable the monitoring of product movements across multiple locations in real time. This provides greater transparency into the performance of the supply chain, allowing for faster decision-making and improved customer service.

Increased Customer Satisfaction & Better Business Decisions 

An effective inventory control system helps achieve customer satisfaction by having the right products available in the right quantity at the right time. Good stock control also helps businesses make better decisions about production, when to purchase inventory, and sales, and helps ensure they don't carry too much inventory relative to customer demand. Inventory control is the process of managing the availability, storage, and use of products in a business. A periodic inventory system requires a physical count of stock at certain intervals. A perpetual inventory system keeps a continuous record of stock on hand. Inventory control requires careful management of ordering and stocking levels, accurate tracking of stock, and efficient use of resources. 

More Efficient Warehouse Operations with Optimized Inventory Control Methods

An inventory control system makes warehouse operations more efficient by automating processes such as stock counting, ordering, and invoicing. It also provides visibility into current stock levels and product movements across multiple locations in real time. This helps to ensure that the right products are in the right place at the right time, allowing for faster order fulfillment and improved customer service. Additionally, it eliminates manual errors, eliminates redundant tasks and reduces wasted effort, ultimately leading to a more efficient warehouse operation.

Major Inventory Control Challenges

Manual processes can wreak havoc with your inventory.

Man ual processes for inventory control can be extremely difficult and time - consuming . Without automation , it is difficult to keep track of all the changes in inventory data , such as stock levels , ordering , and pricing . Manual processes are prone to errors and can be difficult to scale as inventory needs increase . In addition , without real - time updates , manual processes are often not as efficient as automated solutions , making it difficult to ensure accurate inventory control .

Inventory Control is Important, TOO Important to Rely on Outdated Technology

In addition to inefficient and error-prone manual processes,  older systems may lack the capabilities to track items in real - time . T he use of outdated technology can also result in slow response times , difficulty accessing data , and siloed information . To overcome these challenges , organizations must invest in modern and efficient technologies that enable them to accurately track and manage inventory , while also providing visibility into their supply chains .

Communication Breakdowns are Significant Challenges of Inventory Control

Without accurate information and efficient communication, it can be difficult to know when to restock or replenish items, leading to inventory shortages or overstock. Poor communication can also lead to incorrect orders, delayed shipments, and other issues that can disrupt the inventory process. To avoid this, businesses must ensure that communication between departments is clear, concise, and up-to-date, to effectively manage and maintain inventory control.

Disorganized Systems Make Inventory Control Impossible to Fully Achieve

Dis organized systems can be a major challenge to maintaining inventory control . With no clear structure   in place , it can be difficult to track inventory levels, locations, and to know when items need to be re - ordered . A lack of  accurate tracking can lead to over st ocking or stock - outs , both of which can create costly problems for businesses . To ensure proper inventory control , it ’ s important to create and maintain an organized system that can easily be managed and updated .

Different Types Of Inventory Control Software Solutions 

Warehouse inventory control software solutions.

Warehouse inventory management software solutions provide businesses with the tools they need to effectively manage their inventory. These solutions allow businesses to track stock levels, optimize order fulfillment, automate replenishment, and analyze data for insights into inventory performance. Warehouse inventory control software helps businesses save time and money by streamlining the inventory process.

Enterprise Resource Planning (ERP) Software Solutions

Enterprise resource planning (ERP) software solutions provide businesses with the tools they need to manage their operations effectively. These solutions allow companies to integrate and streamline their processes, from accounting and finance to human resources and operations. ERP software helps businesses save time and money by simplifying the management of their operations.

Cloud-Based Warehouse Management Systems (WMS)

Cloud-based warehouse management systems (WMS) provide businesses with the tools they need to effectively manage their warehouse operations. These solutions allow businesses to automate and optimize their processes, from inventory control to order fulfillment. Cloud-based WMS helps businesses save time and money by streamlining their warehouse operations.

Radio Frequency Identification (RFID) Technology

Radio frequency identification (RFID) technology is a cost-effective solution for businesses to track their inventory in real time. RFID technology uses radio waves to transmit data from tags attached to items, helping businesses automate the identification, tracking, and management of their inventory. By automating their processes, businesses can save time and money with RFID technology.

Barcode Scanning Technologies

Barcode scanning technologies are an efficient and cost-effective solution for businesses to track and manage their inventory. This technology uses scanners to read barcodes on items, helping businesses automate the identification, tracking, and management of their inventory. Barcode scanning technologies help businesses save time and money by streamlining their processes.

Automated Data Collection (ADC)

Automated data collection (ADC) is a technology used by businesses to collect data in real time from various sources. ADC technology uses sensors to detect and collect data from items, helping businesses automate the identification, tracking, and management of their inventory. ADC helps businesses save time and money by streamlining their processes.

Automatic Identification and Data Capture (AIDC)

Automatic identification and data capture (AIDC) is a technology used by businesses to automate the identification, tracking, and management of their inventory. AIDC technology uses scanners, barcodes, and RFID tags to collect data from items, helping businesses save time and money by streamlining their processes.

Mobile Devices/Mobile Computing Technology

Mobile devices/mobile computing technology is a cost-effective solution for businesses to manage their operations on the go. This technology uses smartphones, tablets, and other devices to access data and applications from anywhere, helping businesses automate their processes. Mobile devices/mobile computing technology helps businesses save time and money by streamlining their operations.

Steps for Implementing an Inventory Control System For Your Business 

Analyze existing processes to identify areas for improvement or automation.

A business should analyze existing processes to identify areas for improvement or automation. This can be done by collecting and analyzing data to identify areas where processes can be simplified or automated, determining which tasks can be outsourced or automated, and evaluating how technology can be used to improve efficiency. Doing so can help the business reduce costs, improve customer service, and increase profitability.

Select a System to Control Inventory that Suits Your Needs

A business should select the right type of inventory control system that suits its needs. This can be done by assessing the business’s current inventory needs and processes, researching different inventory control systems, and comparing features and costs to determine which system best meets the business’s needs. This will help the business stay organized and ensure that the right amount of inventory is available at the right time.

Train Employees in Using the New Inventory Control Management System

To train employees how to use a new inventory software control system, the business should provide clear instructions and demonstrations, create a user manual and other training materials, and offer support and guidance as needed. It is also important to give employees time to practice using the system and to provide feedback so that any issues can be addressed. Doing so will help the employees gain confidence in the system and ensure successful implementation.

Monitoring Usage and Performance of the New System is a Critical Control Technique

To monitor the usage and performance of an inventory control system, the business should regularly review reports and data, track user activity, and assess key performance metrics. This will help the business identify possible issues and areas for improvement, and ensure the system is being used effectively. Doing so will help the business optimize the system and maximize its benefits.

Adjust Settings as Needed

To adjust settings as needed, the business should review user feedback and data, assess the impact of any changes, and make necessary adjustments. This will help the business ensure that the settings are optimized for the business’s needs and that the system is running as efficiently as possible. Doing so will help the business get the most out of its inventory control system.

Explore Options for Expanding the Use of Your Current System

To explore options for expanding the use of your current system, the business should research new features and capabilities, determine if they are compatible with the existing system, and assess the cost and potential benefits of implementing them. Doing so will help the business get the most out of its current system and ensure that it meets its evolving needs.

Advantages Of Using An Inventory Control Management System For Small Businesses

Process of inventory control saves money with improved accuracy & fewer errors.

An inventory control system helps to improve accuracy and reduce errors by tracking the movement of goods and materials, monitoring stock levels, and providing real-time visibility into inventory on hand. It also helps to streamline processes and optimize workflow, resulting in more efficient stock replenishment and better inventory management. Additionally, it can generate automatic alerts for low stock levels and provide reporting capabilities to help businesses better manage their inventory and maximize profits.

Enjoy Easier Tracking and Auditing Capabilities

Control over your inventory enables easier tracking and auditing capabilities by providing real-time updates on stock levels, inbound and outbound shipments, and stock location. It also records and stores detailed information, such as product serial numbers, expiration dates, and lot numbers, to help businesses keep a complete inventory audit trail. This helps to prevent errors, reduce theft, and ensure accurate reporting for compliance purposes.

Effective Inventory Control Best Practices Help Streamline Workflow Processes

An inventory control system streamlines workflow processes by providing automated alerts for low stock levels, generating automated purchase orders, and helping to optimize order fulfillment. It can also help to reduce labor costs by automating manual processes, reducing the need for manual data entry, and enabling more efficient inventory management. This ultimately helps businesses to save time and money, while ensuring accurate inventory tracking and improved customer satisfaction.

Cloud-Based Storage Means You Can Manage Inventory Anytime, Anywhere

An inventory control system is accessible anytime, anywhere due to cloud-based storage. This allows businesses to access all aspects of inventory records and data from any device with an internet connection, enabling real-time visibility of stock levels and inventory movements. Additionally, cloud-based storage ensures data is secure and backed up, allowing businesses to easily access their inventory information whenever and wherever they need it.

Real-time Information Access Informs Inventory Decision-Making

An inventory control system provides effective decision-making via real-time information access. By providing up-to-date data on inventory items and movements, businesses can make informed decisions about when to order more stock, when to restock shelves, and how to optimize their supply chain. This allows them to maximize their profits and ensure that customers always have access to the products they need.

Provide Better Customer Service Through Accurate Order Fulfillment

An inventory control system improves customer service through accurate order fulfillment. By providing real-time visibility into stock levels and inventory movements, businesses can ensure that orders are fulfilled quickly and accurately. This helps to reduce wait times and improve customer satisfaction, resulting in increased sales and customer loyalty.

Improved Team Collaboration Helps Everyone in Your Company

A system for controlling a business's inventory improves team collaboration by automating tasks and providing shared access to inventory data. This allows teams to work together more efficiently, by sharing data and insights in real time. Additionally, automated tasks help to streamline processes, ensuring that inventory management tasks are completed quickly and accurately.

Automated Stock-Level Alerts Ensure Enhanced Security

A physical inventory control system enhances security by providing automated stock-level alerts. By keeping track of stock levels in real-time, businesses can be alerted when stock levels are running low, protecting against theft and loss. This helps to ensure that stock levels are always accurate and up-to-date, resulting in improved efficiency and more secure operations.

Never Wonder About Your Inventory Again with SkuNexus

For eCommerce brands of any size, an array of challenges exist at the intersection of inventory, order management, and warehouse fulfillment, and even the slightest disorganization has the potential to devolve into chaos. To counter this, the establishment and maintenance of an inventory control system is mission-critical.

Sk u N ex us   offers a suite of powerful  tools that can help e Commerce companies identify any in effic iencies in their  processes and maintain tight inventory control . Our integrations with major eCommerce platforms automatically synchronize product data and inventory levels across channels, so companies can ensure accurate and up-to-date information is available at all times. With these tools , merchants  can also gain insight into their product performance and make informed decisions about their inventory .  

At SkuNexus, control is at the center of the management software solutions we design. Helping eCommerce businesses take, and keep, control over all their backend operations is a core element of what we do. If you would like to learn more about how we can help your business optimize its inventory control and reap a host of other benefits, please contact our team to schedule a thorough product demo .

SkuNexus is an order management system that allows users full access to the source code, allowing complete control.

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17 Essential Inventory Management Techniques

Updated: Jun 3, 2024, 8:57pm

Table of Contents

What is inventory management, essential inventory management techniques, bottom line, frequently asked questions (faqs).

Inventory management is the act of ordering, tracking, storing and selling inventory across the entire supply chain. It’s essential if you want the right mix of products available to sell to your customers. There are many inventory management techniques that help you better manage your inventory and run a more profitable business. In this article, we discuss the top 17 techniques.

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Inventory management is a supply chain function that tracks inventory from the manufacturer to point-of-sale. This includes forecasting demand, procuring raw materials or finished products, storing inventory, tracking sales and then reordering when inventory levels are low. The goal of inventory management is to ensure you have enough product to meet demand while reducing costs associated with your inventory.

Why Is Inventory Management Important?

Effective inventory management is important because it can help increase revenue, reduce cost and improve customer service. Specifically, inventory management is important due to the following reasons:

• Increases Revenue : Effective inventory management ensures that you have the right products on hand at all times, allowing you to meet customer demand. This helps you avoid supply shortages that can eat into revenue.
• Reduces Cost : The longer you hold inventory, the more it costs due to holding costs, handling costs and costs resulting from obsolete or spoiled inventory. Effective inventory management reduces these costs by minimizing the inventory you hold.
• Improves Customer Service : Having the right inventory to meet customer demand results in happier customers with fewer frustrations.

The benefits of inventory management are numerous. If you do it right, you’ll be able to increase sales, lower costs and better serve your customers. With this in mind, let’s take a look at the top inventory management techniques to help you manage your inventory more effectively .

There are many inventory management techniques, each with its own benefits and drawbacks. When choosing the best techniques for you, make sure to consider the type of product you sell, the size of your business, your overall budget and the level of accuracy needed to run an effective supply chain.

Here are the top 17 inventory management techniques and why they’re important:

1. Demand Forecasting

Demand forecasting is the act of accurately predicting future demand for your products and is something every business should do. If you forecast demand well, you ensure that you’ll have the right amount of inventory on hand to meet customer demand.

Some of the top ways to forecast your demand include a moving average, exponential smoothing, time series analysis and judgmental forecasting. The right technique will depend on your unique business. Regardless of the technique you choose, it’s important to note that demand forecasting will never be exact, which may lead to stockouts or overstocks.

2. ABC Analysis

ABC analysis is an inventory management technique that ranks inventory items based on their importance to your business. This is most helpful when a business needs to prioritize which items to order and store, allowing for more oversight on certain inventory items. When conducting an ABC analysis, divide your inventory into three categories:

• A Items : The most important items that account for 20% of the inventory items but up to 80% of the inventory value.
• B Items : Items with medium importance to the business that account for 30% of the inventory items and roughly 15% of the inventory value.
• C Items : The least important items that account for 50% of the inventory items but only around 5% of the inventory value.

3. Safety Stock

Safety stock represents the amount of extra inventory you keep on hand to cover unexpected demand or delays in future deliveries. Safety stock is important if you want to avoid stockouts. Safety stock is determined based on demand variability, delivery lead time, the cost of stockouts and the cost of holding inventory.

4. Reorder Points

Reorder points represent the inventory levels at which new orders should be placed. Reorder points are specific to individual inventory items and are based on that item’s average daily usage, order lead time and the amount of safety stock you have on hand. Reorder points are an essential part of inventory management and help you avoid stockouts.

5. PAR Levels

Periodic automatic replenishment (PAR) levels track the minimum and maximum levels of inventory maintained for an inventory item. When inventory quantity reaches the minimum level, a new order should be placed. However, inventory shouldn’t exceed the maximum level.

Implementing the PAR levels inventory management technique can therefore avoid both stockouts and overstocking and is best for businesses with perishable items, such as restaurants. PAR levels are based on an item’s average daily demand, lead time and amount of safety stock.

6. Just-in-Time (JIT) Inventory

Just-in-time (JIT) inventory is a management method that reduces the amount of inventory you have on hand by only ordering and delivering products at the exact time you need them. To do so, you’ll need to closely track inventory levels and work closely with suppliers. While JIT can reduce inventory costs, it can also result in stockouts and isn’t suitable for all businesses.

7. Dropshipping

Dropshipping is an inventory management technique that doesn’t require the seller to keep inventory items in stock. Instead, the seller works with a third-party supplier who ships the product directly to the customer when a purchase is placed.

This is most popular with online businesses and is great for reducing inventory costs and upfront investments, but gives the seller less control and can also result in lower margins depending on the dropshipping fees.

8. Cross-Docking

Cross-docking is the act of receiving inventory from suppliers and then immediately shipping those products to customers without spending time in a warehouse. This technique can reduce handling and holding costs while improving fulfillment times, and is most commonly used for perishable products. However, it requires a lot of coordination with your suppliers and isn’t a good fit for companies selling non-perishable products or products with low turnover.

9. Inventory Management Software

Inventory management software is a supply chain management tool that helps you track inventory levels, forecast demand and place orders based on current levels. The best inventory management software will depend on your specific business needs but is something everyone should consider using since it helps increase efficiencies and reduce costs.

10. FIFO and LIFO

First in, first out (FIFO) and last in, first out (LIFO) are two inventory management methods that dictate which inventory is sold first and why. With FIFO, you sell the oldest inventory first, while with LIFO, you sell the newest inventory first.

The FIFO method is most common when you’re selling perishable goods that may go bad quickly. The LIFO method is most commonly used in industries where the cost of inventory rises over time, since it can better match costs with revenues and also help defer taxes.

11. Consignment Inventory

Consignment inventory is a technique where a supplier—known as the consignor—gives goods to a retail business —known as a consignee—but retains ownership of the goods until they’re actually sold. The benefit is that the consignee doesn’t actually pay for the goods until they’re sold and the consignor is responsible for shipping costs.

However, the consignee has to cover any holding costs and is responsible for selling the products, which means they can lose money if they don’t sell.

12. Economic Order Quantity (EOQ)

Economic order quantity (EOQ) is an inventory management technique that helps determine the optimal order quantity for a product that minimizes total inventory costs. EOQ is a calculation that takes into account the annual demand, ordering cost and holding cost of a specific product to arrive at the optimal quantity. This technique reduces cost while also ensuring there is enough inventory on hand to meet customer demand.

13. Perpetual Inventory Management

Perpetual inventory management is the act of continuously updating inventory levels as products are sold or received. Perpetual inventory management provides the most accurate view of inventory levels, improves inventory turnover and avoids inventory stockouts.

However, it can be more time-consuming, expensive and complex than other inventory management techniques, such as periodic inventory management. With the periodic technique, inventory levels are only updated periodically rather than continuously.

14. Minimum Order Quantity (MOQ)

Minimum order quantity (MOQ) sets the minimum number of inventory that must be ordered from a supplier at one time. MOQs are typically set by the supplier so they can reduce costs associated with shipping inventory. While beneficial to the supplier, it reduces the ordering flexibility of sellers and can increase costs if you need to order more than you need.

15. Six Sigma and Lean Six Sigma

Six Sigma is an inventory management methodology that focuses on reducing variations and defects in your inventory management process. With Six Sigma, you use data-driven methods such as statistical analysis to identify and remove issues in your process. For example, you might use it to better track and manage inventory levels.

Lean Six Sigma combines the Six Sigma methodology with lean manufacturing to increase efficiencies within your inventory management process. For example, you may use it to streamline your process by eliminating unnecessary steps.

16. Bulk Shipping

Bulk shipping is the act of purchasing and shipping inventory in large quantities. This helps reduce shipping costs and can also result in discounts from suppliers. However, bulk shipping can result in overstocking and is potentially harmful if you’re selling perishable items.

17. Batch Tracking

Batch tracking is an inventory management technique that helps businesses track groups of similar items throughout the supply chain. Batch tracking is most commonly used for perishable inventory items as well as items that can be recalled.

Businesses using batch tracking will typically use barcodes or RFID tags to track items. This especially helps with quality control and compliance for items with an expiration date.

Effective inventory management is crucial for any business that buys and sells goods. There are many inventory management techniques that can help you increase revenues, reduce costs and improve customer satisfaction. Ultimately, the best techniques depend on your specific business. It’s important to test various techniques to find the best combination for you.

What are the benefits of inventory management?

The benefits of inventory management are numerous. If you effectively manage your inventory, you create a more efficient supply chain that helps you better meet demand, reduce inventory costs and improve overall customer service.

What are the four types of inventory?

The four types of inventory include raw materials, work-in-process (WIP), finished goods and maintenance, repair and overhaul (MRO). Understanding each type will help you better optimize your inventory management operations and account for each step in the production process.

What is the inventory management process?

The inventory management process is the portion of supply chain management that handles the recording, tracking, ordering and selling of products. Each business’s inventory management process differs, but most include the receiving, stocking, selling, fulfilling and reordering of goods.

What’s the difference between FIFO and LIFO?

With FIFO (first in, first out), you sell the oldest inventory first—and with LIFO (last in, first out), you sell the newest inventory first. The FIFO method is common for those selling perishable goods.

• Best Inventory Management Software
• Best Restaurant Inventory Management Software
• Best Supply Chain Management Software
• Best Retail Inventory Management Software
• How To Manage Inventory
• Inventory Sheet Template
• How To Calculate Inventory Turnover
• Retail Inventory Management Best Practices
• What Is The FIFO Method? FIFO Inventory Guide
• What Is Just In Time Inventory (JIT)?
• What is LIFO?

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What Is Inventory Management?

Accounting for inventory, the bottom line.

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Inventory Management: Definition, How It Works, Methods & Examples

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Inventory management refers to the process of ordering, storing, using, and selling a company's inventory. This includes raw materials, components, and finished products, as well as the warehousing and processing of these items. There are different methods of inventory management, each with its pros and cons, depending on a company's needs.

Key Takeaways

• Inventory management is the entire process of managing inventories from raw materials to finished products.
• Inventory management tries to efficiently streamline inventories to avoid both gluts and shortages.
• Four major inventory management methods include just-in-time management (JIT), materials requirement planning (MRP), economic order quantity (EOQ), and days sales of inventory (DSI).
• There are pros and cons to each of the methods, reviewed below.

Investopedia / Alex Dos Diaz

The Benefits of Inventory Management

A company's inventory is one of its most valuable assets. In retail, manufacturing, food services, and other inventory-intensive sectors, a company's inputs (such as raw materials) and finished products are the core of its business. A shortage of inventory when and where it's needed can be extremely detrimental.

At the same time, inventory can be thought of as a liability (if not in an accounting sense). A large inventory carries the risk of spoilage, theft, damage, or shifts in demand. Inventory must be insured, and if it is not used up or sold in time it may have to be disposed of at clearance prices—or simply destroyed.

For these reasons, inventory management is important for businesses of any size. Knowing when to restock, what quantities to purchase or produce, and when to sell and at what price can easily become complex decisions. Small businesses will often keep track of stock manually and determine the reorder points and quantities using spreadsheet (Excel) formulas. Larger businesses may use specialized enterprise resource planning (ERP) software. The largest corporations use highly customized software as a service (SaaS) applications. Companies are also calling on artificial intelligence to optimize these processes.

Appropriate inventory management strategies vary depending on the industry. An oil depot is able to store large amounts of inventory for extended periods of time, allowing it to wait for demand to pick up if necessary. While storing oil is expensive and risky—a fire in the U.K. in 2005 led to millions of pounds in damage and fines—there is no risk that the inventory will spoil or go out of style. For businesses dealing in perishable goods or products for which demand is extremely time-sensitive—2024 calendars or fast-fashion items , for example—sitting on inventory is not an option, and misjudging the timing or quantities of orders can be costly.

For companies with complex supply chains and manufacturing processes, balancing the risks of inventory glut and shortages is especially difficult. To achieve these balances, they may call on several methods for inventory management, including just-in-time (JIT) and materials requirement planning (MRP) .

Some companies, such as financial services firms, do not have physical inventory and so instead rely on service process management.

For accounting purposes, inventory represents a  current asset  since a company typically intends to sell its finished goods within a short period of time, usually no more than a year. Inventory has to be physically counted or measured before it can be put on a balance sheet. Companies often maintain sophisticated inventory management systems capable of tracking inventory levels in real time.

Inventory can be accounted for in several ways: first-in-first-out (FIFO) costing; last-in-first-out (LIFO) costing; or weighted-average costing . An inventory account typically consists of four separate categories: 

• Raw materials represent the various materials a company purchases for its production process. These materials must undergo significant work for a company to transform them into a finished good ready for sale.
• Work in process (also known as goods-in-process ) represents raw materials in the process of being transformed into a finished product.
• Finished goods are completed products readily available for sale to a company's customers.
• Merchandise represents finished goods a company buys from a supplier for future resale.

Inventory Management Methods

Depending on the type of business or the product involved, a company may use various inventory management methods . These include just-in-time (JIT) manufacturing, materials requirement planning (MRP), economic order quantity (EOQ) , and days sales of inventory (DSI) .

While there are others, those are the four most common methods used to manage inventory. Here is how each one works.

1. Just-in-Time Management (JIT)

This manufacturing and inventory management model originated in Japan in the 1960s and 1970s. Toyota Motor ( TM ) is credited with contributing the most to its development. JIT allows companies to save significant amounts of money and reduce waste by purchasing and keeping on hand only the inventory they need to produce and sell products within a certain time frame. This approach reduces storage and insurance costs, as well as the cost of liquidating or discarding excess inventory.

JIT inventory management can be risky. If demand unexpectedly spikes, the manufacturer may not be able to source the inventory it needs to meet that demand, damaging its reputation with customers and driving business to competitors. Even the smallest delays can be disruptive; if a key input does not arrive "just in time," a bottleneck can result.

2. Materials Requirement Planning (MRP)

This inventory management method is sales-forecast dependent, meaning that manufacturers rely on detailed sales records to anticipate their inventory needs and communicate those needs to suppliers in a timely manner. For example, a ski manufacturer using an MRP inventory system might ensure that materials such as plastic, fiberglass, wood, and aluminum are in stock based on forecasted orders. Inability to accurately forecast sales and plan inventory acquisitions will result in the manufacturer's inability to fulfill orders.

3. Economic Order Quantity (EOQ)

This model is used in inventory management by calculating the number of units a company should add to its inventory with each batch order to reduce the total costs of its inventory while assuming constant consumer demand. The costs of inventory in the model include holding and setup costs.

The EOQ model seeks to ensure that the right amount of inventory is ordered per batch so a company does not have to make orders too frequently and there is not an excess of inventory sitting on hand. It assumes that there is a trade-off between inventory holding costs and inventory setup costs, and total inventory costs are minimized when both setup costs and holding costs are minimized.

4. Days Sales of Inventory (DSI)

This financial ratio indicates the average time in days that a company takes to turn its inventory, including goods that are a work in progress, into sales. DSI is also known as the average age of inventory, days inventory outstanding (DIO), days in inventory (DII), days sales  in  inventory, or days inventory and is interpreted in multiple ways.

Indicating the liquidity of the inventory, the figure represents how many days a company's current stock of inventory will last. Generally, a lower DSI is preferred as it indicates a shorter duration to clear off the inventory, though the average DSI varies from one industry to another.

Inventory Management Red Flags

If a company frequently switches its method of inventory accounting without reasonable justification, it is likely its management is trying to paint a brighter picture than reality would indicate.

Frequent inventory write-offs can mean that a company is having issues with selling its finished goods or with inventory obsolescence. This can also raise red flags regarding a company's ability to stay competitive and make products that appeal to consumers going forward.

What Are the Four Main Types of Inventory Management?

The four main types of inventory management are just-in-time management (JIT), materials requirement planning (MRP), economic order quantity (EOQ), and days sales of inventory (DSI). Each method may work well for certain kinds of businesses and less so for others.

How Does Tim Cook Use Inventory Management at Apple?

Apple CEO Tim Cook is known for his focus on inventory management. "Inventory is like dairy products," he has been quoted as saying. "No one wants to buy spoiled milk." Among other innovations, Cook brought just-in-time manufacturing practices to Apple, reportedly reducing its inventory turnover time from months to as little as five days.

What Is an Example of Inventory Management?

Let's look at an example of a just-in-time (JIT) inventory system. With this method, a company aims to receive goods as close as possible to when they are actually needed. So, if a car manufacturer needs to install airbags in its cars, it arranges to receive those airbags as the cars come onto the assembly line instead of having a stock of them on supply at all times.

Inventory management is a crucial part of business operations. Proper inventory management depends on the type of business and the products it sells. There may not be one perfect type of inventory management because there are pros and cons for each. But taking advantage of the most appropriate type of inventory management can go a long way toward ensuring a company's success.

IBM. " 3 Ways AI Can Help Solve Inventory Management Challenges ."

Toyota. " Toyota Production System ," Pages 1-2.

Chartered Institute of Procurement and Supply. " Material Requirement Planning (MRP) ."

Global Journal of Finance and Economic Management. " Economic Order Quantity (EQQ) Model ."

The Atlantic. " Wow! Apple Turns Over Its Inventory Once Every 5 *Days* ."

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11 Inventory Control Procedures To Manage Your Inventories Efficiently

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Inventory control is always a hard process but a very essential aspect of any business. No one can operate a business well unless they know what they have in stock, what has been sold, and what is the cost of goods. In this article, we will introduce 11 inventory control procedures that you can apply to manage your inventories more efficiently.

What is inventory control?

• 11 Inventory control procedures and techniques

How inventory control can affect your business?

What are the types of inventory management systems.

Inventory control , often known as inventory management , is the process of monitoring a company’s warehouse stock to make sure that it is at the most sufficient level. It includes the process of managing items from the time they are ordered, through storage, movement within a warehouse or across different warehouses as well as to their final destination or disposal. Inventory management is a critical part of every retail business. Wondering how important the inventory movement report is? Read here .

An inventory control system is a technological approach that helps businesses maintain and track commodities through the supply chain. This technology will integrate and manage purchasing, shipping, receiving, warehousing, and returns into a single system. Practicing good inventory control procedures can help businesses reduce many manual operations which are costly and time-consuming. It will show you exactly how much inventory you have, where it is, and when you need to reorder to maintain ideal stock levels. For SMEs that want to learn how to manage inventories efficiently, this ultimate infographic guide is highly recommended.

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11 inventory control procedures and techniques.

Every business will apply its own way of inventory control. However, at the end of the day, managing stock efficiently is the target that everybody wants to achieve. There are a few common procedures and inventory management best practices that can instruct you on how to manage inventories more efficiently.

1. Prioritize location and accessibility

Make sure that your warehouse and stock are well organized and accessible since it will reduce much time for staff to look for the location and find the products. As a result, all other following steps can run smoothly.

2. Establish the floor and layout arrangement

This will help the owners and staff have all the product locations on their minds so it will be much easier and faster to find any items when needed. Besides, creating a floor plan will assist you in determining the best location for your merchandise.

3. Optimize and forecast your inventory

Try to optimize and forecast your inventory by ensuring an adequate amount of goods, not too few or too many. It’s also a good idea to make a list of hot items that sell faster than others. Regardless of the season, these things should always be in the warehouse. It will also be much easier to prepare for impending supply and demand concerns if sales rates are monitored and market trends are followed.

4. Get rid of unneeded stock

Try to get rid of items that have been in stock for an extended period of time by running promotions or offering discounts. It will create more space for you to put other needed items. Besides, such offers can also increase customer satisfaction, make inventory replenishment easier, and keep business going forward.

5. Set a cycle count schedule

Establish a cycle count timetable to adequately monitor product flow rather than waiting for a chance to count your inventory.

6. Check stock quickly after delivery

After each inventory order arrives, spend a few minutes checking to see if your delivered merchandise is correct or there are any problems with the product’s quality and refuse any items that are not ordered or spoil. This step will help you avoid the case that the real stock is not enough or excess the inventory data from the system.

7. Label all products

Labels should have enough data such as product name, number, quantity, and description. Labeling all products makes it much easier and faster to recognize them.

8. Keep an eye on expiration dates

When you pay attention to the product’s expiration dates, you can get rid of any remaining merchandise before it goes out of date by reducing prices or offering special deals.

9. Make sure you’re keeping track of your inventory

You will need to know how much stock you have, where the stock is coming from, or when the items are leaving the warehouse to run your business. So, it is essential to keep track of your inventory frequently. Nowadays, almost all businesses use inventory management software to help them keep track of inventory. 

10. Assign inventory management responsibility

When you assign separate inventory management responsibilities for an individual, they are more likely to do the task better. It is because they focus more on the process, spend more time, and are more familiar.

11. Create back-ups of your inventory data

You must also ensure that you have data backups so that critical information is always available, accessible, and never lost. And, in the unlikely event that data is lost or erased, you’ll have backups ready to restore, ensuring that your business and customers aren’t harmed.

Incorporate an adequate inventory management process with your system can help businesses ensure their financial health and stock level that satisfy customers’ needs and expectations. According to netsuite.com, 62% of customers have stopped buying from a company because of bad customer service. Frustration over out-of-stock or back-ordered items is at the top of the list of customer service complaints. In fact, according to research on convenience stores, out-of-stocks can lead a store to lose one out of every 100 consumers. Furthermore, 55% of buyers at any store would not purchase a substitute item if their preferred item was unavailable. 

Besides, a good stock control system also can help businesses acquire real-time information on items, reduce spoilage, and reduce inventory holding costs . As a result, business owners can store, track, deliver, and order inventory or stock by practicing standard inventory control procedures to avoid losses and optimize earnings.

There are two main types of inventory management systems: 

Perpetual inventory system

The perpetual inventory system requires businesses to implement supporting software and equipment so it is more costly than a periodic inventory system. On the other hand, it helps to update inventory statistics on a regular basis and in real-time. This inventory control method uses point-of-sale and asset management software to determine inventory based on sales and purchases. Therefore, you’ll always have precise stock-on-hand accounting whenever you need and continuous tracking also helps the business avoid stockouts.

However, there are still some drawbacks with the system since it is run by equipment and software. Equipment with errors and improperly scanned items can affect the inventory records. Besides, there are some cases that can not be recognized by the system such as breakage, stolen goods. 

Periodic inventory system

The periodic inventory system is suitable for small businesses since it does not require complex software. It relies on physical counts of inventories on a regular or irregular basis. Business owners just keep track of all transactions in the purchase account. Once the physical inventory is completed, the balance in the purchase account is transferred to the inventory account. Finally, you match the cost of the ending stock to the inventory account. There are 2 methods of calculating the cost of inventory: FIFO means the first stock is the one sold first, and LIFO means the last stock is the one sold first.

The disadvantages of a periodic inventory system come from the physical count of stock. It will obviously increase the cost of labor because businesses have to hire more staff and pay more working time. In addition, there is a huge chance of inventory discrepancies and fraud.

Read more: What is a physical inventory count? Definition and 5 best practices

In general, inventory management can affect the success or failure of a business. Having proper visibility into your stock at any required moment is essential for success. In order to get real-time and informative inventory reports to make the plan for the business, it is important to apply the right inventory control procedures, together with suitable support tools and software.

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I wanted to express my sincere gratitude for sharing your perspective on types of inventory management. In my experience, inventory management is a critical aspect of supply chain optimization, and various types cater to diverse business needs. Just-in-Time (JIT) inventory focuses on minimizing excess stock, ensuring materials arrive precisely when needed. This method enhances efficiency and reduces carrying costs, exemplified by companies like Toyota, which pioneered JIT to streamline production processes. On the other hand, ABC analysis categorizes inventory into classes based on value, allowing businesses to prioritize items for control and focus efforts on high-value products. This approach is exemplified by Amazon, utilizing sophisticated algorithms to prioritize the storage and retrieval of items based on demand patterns. Striking a balance between these and other inventory management types is essential, as businesses aim for optimal stock levels, cost-efficiency, and enhanced customer satisfaction. The diversity in inventory management approaches allows companies to tailor strategies to their unique operational requirements and industry dynamics.

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Inventory Control Software Business Plan

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Royal's Software

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Royal’s Software has embarked on an ambitious plan to create a new software product, Royal’s Inventory Basic–a scalable inventory software product. The new product is scheduled to be released in May and will be sold by Pursuit Solutions.

Pursuit Solutions, a $50 million company hardware integration reseller, will distribute Royal’s Inventory Basic to over 1,100 Valued Added Resellers (VARs). The product will sell for $2,499. Royal’s Software will receive $1,250 on each unit sold. It is projected that Pursuit Solutions will sell 250 units by month six. It is projected that Royal’s Software will gross $313,000 from sales the first year.

A critical component of software sales will be tech support and product modifications. Royal’s Software projects $63,200 in product modification by the end of six months.

In addition, Royal’s Software has entered into a business agreement with Pursuit Solutions and Johnson and Roe (CPA firm) to create a MAS 90 portable data collection interface that will be sold to accounting firms. The software product has been in development over the past ten months.

John Royal and Dan Whiteaker have been an integral part of the product development. MAS 90 is not a packaged product, rather it is bundled with software customization services ($2,000-$3,000) that will be performed by Royal’s Software. This software product will sell for $2,500.

Royal’s Software will receive 1/3 of gross sales ($833). It is projected that Royal’s Software will gross $500,500 by May of next year from product sales and customization services.

The two co-owners of Royal’s Software, John Royal and Dan Whiteaker, will each invest $50,000. In addition, the company will obtain a $100,000 short-term loan.

1.1 Objectives

The objectives of Royal’s Software are as follows:

• Establish the company as a leader in inventory software products.
• Increase sales by 20% each year.
• Develop one new inventory product per year.

1.2 Mission

The mission of Royal’s Software is to create inexpensive inventory software that will be scalable, so customer modification can be easily added.

1.3 Keys to Success

The ability to produce products on time and on budget, that meet the user’s needs and specifications.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Royal’s Software creates scalable inventory software products that can be customized to meet customer’s needs. Royal’s Software is unique in that it sells a product that can be used in any inventory environment. The engineers can then add enhancement to the product that will tailor the product features to the customer’s specific needs.

2.1 Company Ownership

Royal’s Software is owned by John Royal and Dan Whiteaker. The company will be set up as a C Corporation. It is expected that this form of incorporation will allow room for growth and an exit strategy of selling the business in five to seven years.

• John Royal has ten years of experience as an application software developer for Rogue Wave Software. John was the Lead Developer for New Products for the last four years. He was the principal designer of Rogue Wave’s Ace Software Suite.
• Dan Whiteaker has seven years of programming experience with Rogue Wave Software. Dan assisted the Ace Software Suite Development Group. He lead the Customer Modifications Group for the past two years.

2.2 Start-up Summary

The following is the start-up summary for Royal’s Software. As is typical for software companies the largest portion of start-up funds will go towards product development.

Royal’s Software products and services include the following:

• Royal’s Inventory Basic.
• MAS 90 portable data collection interface.
• Custom Modification Royal’s Inventory Basic.

In addition to selling software, the company will provide extensive customization services to meet the unique needs of its business customers.

Market Analysis Summary how to do a market analysis for your business plan.">

Software products for inventory management are a $1 billion dollar industry. The lions share of the sales are with the largest companies with billions of dollars of inventory. This is where there is the greatest competition between inventory software products.

This category of the industry also faces competition from the enterprise resource planning software vendors. At the low end, with small and emerging businesses, there is very little competition.

Usually, the smaller businesses will spend no more than $5,000 on an inventory solution which will include software and hardware. Royal’s Software believes this a tremendous opportunity for a software product with a $2,500 price tag.

Another opportunity area is the growing demand for software interfaces that improve the portability of data. The interface improves the ability of businesses to move data between systems. In an age where new management products are introduced each year, a company’s ability to move its data quickly and efficiently is becoming essential to a successful business.

MAS 90 portable data collection interface is designed to be used by accounting firms to improve the portability of data the firms stores for customers.

4.1 Market Segmentation

Royal’s Software is targeting small- and medium-sized businesses. Specifically it will focus on these two target groups:

• Smaller businesses that will spend no more than $5,000 on an inventory solution, including software and hardware.
• Accounting firms demanding MAS 90 portable data collection interface.

Strategy and Implementation Summary

During the first two months of operation, the company will focus on completing and testing beta copies of Royal’s Inventory Basic and the MAS 90 portable data collection interface. Sales will begin in May and grow steadily for the next 10 months.

5.1 Sales Strategy

Royal’s Software will not do any direct selling, instead it will work closely with Pursuit Solutions’ VARs to sell and service Royal’s Inventory Basic. The two owners have existing relationships with a number of VARs through their existing positions, and since this product is unique in its price range, it is not expected that it will be difficult to find VARs to represent it.

MAS 90 customers will be developed by the CPA firm, Johnson and Roe. It is projected that the MAS 90 product will have over a 100 customers by June of 2003. A large number of small- to medium-sized businesses use MAS 90 in their dealings with Johnson and Roe, and it is expected that sales will be healthy through this channel.

5.1.1 Sales Forecast

The following is the sales forecast for the next three years.

Personnel Plan

The current staff of Royal’s Software are the two co-owners of the company. The owners have been working on developing the product on their own time over the past year, are beta testing the product and now feel that they are only a couple of months away from having a final product. It is envisioned that Royal’s will need to ramp up significantly as sales take off and they are pulled away from product development and support in order to run the company. Three new hires are planned in March to meet the anticipated demands of software sales. The following positions will be filled:

• Application Engineer (1)
• Support Engineer (1)
• Technical Support Staff (1)

To keep fixed costs to a minium and to keep existing technical staff committed to the development of new products, much of the customization will be done by outside consultants. This expense is illustrated in the profit and loss table.

In addition, we will not have large sales and marketing costs, because VARS will take on this role on our behalf, and their large commissions shall reflect this.

Financial Plan investor-ready personnel plan .">

The following is the financial plan for Royal’s Software. The plan includes:

• Break-even point;
• Projected profit and loss;
• Projected cash flow;
• Projected balance sheet.

7.1 Break-even Analysis

The estimated monthly fixed cost and monthly break-even point are shown below.

7.2 Projected Profit and Loss

The following table and charts highlight the projected profit and loss for the next three years.

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for the next three years.

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for the next three years.

7.5 Business Ratios

Industry profile ratios based on the Standard Industrial Classification (SIC) code 7372, Prepackaged Software, are shown for comparison.

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Optimizing Your Inventory Storage: Tips & Strategies for Small Businesses

Has your small business been growing to the point where your office is bursting at the seams with inventory? If so, it might be time to find a new inventory storage solution. 

But how do you choose the right inventory storage solution ? In this blog post, we’ll break down the types of inventory storage available, tips for increasing efficiency, and how to use regular audits and inventory management software to streamline your business operations. 

Understanding Inventory Storage

Inventory storage systems are the backbone of any retail, wholesale, or e-commerce business, encompassing item management, organization, tracking, and storage. 

A well-organized inventory storage system can increase cost-effectiveness, allowing warehouse personnel to move a considerable volume of inventory while reducing the likelihood of errors.

Inventory Storage Solutions for Small Businesses

Optimizing inventory storage can be particularly challenging for small businesses due to limited resources and space.

There are three primary options for business owners looking to store their products. Your choice will depend on how much inventory you have or plan to have. 

Home-Based Storage Options

Many entrepreneurs or small business owners use home-based storage for their goods, purely because it’s the affordable option.

Spare rooms, closets, and garages can be economical solutions for small businesses looking to store inventory. Home storage is flexible, cost-efficient, and easy to access. Plus, in some cases, setting up a single shelving unit in your office or garage might be all you need to run your business effectively.

However, if you have a larger stock of inventory, home storage might not be the best option for your business for a few reasons:

• You might have difficulties distinguishing between your inventory and personal items. (For example, if you’re storing personal boxes and boxes of inventory in the same section of your basement, you may struggle to keep these boxes separate)
• You might lack cool, dry storage space in your home that maintains consistent temperatures. ( Note: If the only available storage space in your home is an unfinished business, temperatures will fluctuate too drastically ).

When storing inventory at home, you’ll also need to ensure your home or renter’s insurance will cover the cost of your stored inventory if it becomes damaged. If you run your small business from home, lines may be blurry in the eyes of your insurance provider.

Storage Units or Self-Storage

Storage units are the step between home storage and warehouse storage. They are more affordable than renting a warehouse, but will lend more room for inventory storage than your garage or spare bedroom can provide. 

Storage units vary in both size and price point, starting with 5’x5’ lockers on the low end and stretching to 10’x25’ units on the high end.

Typically, most retail or e-commerce businesses can get away with storing inventory in a 10’x10’ storage unit . 

Before you get a self-storage unit, consider the following:

• Storage units involve monthly or yearly payments
• Storage units may not be as secure as a privately owned warehouse
• You’ll need to install additional shelving to maximize storage unit space 
• Facilities might impose time restrictions for when you can access your inventory

Despite these pitfalls, renting a storage unit is often a great option for anyone looking to maximize efficiency and take their operation to the next level.

Need More Space? Learn How to Turn a 10’x25’ Storage Unit Into an Organized Warehouse.

Warehouse Storage

The other storage option is renting, leasing, or purchasing a warehouse . Warehouses are an integral part of a large inventory operation. 

If you’re running a retail operation, a warehouse can also store extra shelving or product displays that clutter up your storefront. Plus, if you receive shipments from suppliers, you can easily direct them to the warehouse in lieu of a storefront. 

However, warehouse storage comes with a few added stressors, which can include:

• Securing the funds to cover rent or mortgage payments (depending on whether you choose to buy or rent a warehouse)
• Preventing security breaches and setting up a security system
• Covering the costs of shelving, equipment, and an inventory system
• Transporting goods from the warehouse to other locations

Warehouses and other storage facilities help define a clear line between home and work, as your goods aren’t stored in the attic or garage of a residential property. While this bleak separation between work and play may tame stress, you’ll need to weigh the pros and cons of home-based storage, self-storage, and warehouse storage to find what’s right for your business. 

How to Utilize Vertical Space in Your Storage Solution of Choice

If your inventory storage location doesn’t have a lot of square footage, it’s important to make the most out of your vertical space. To maximize the storage space in the small warehouse or self-storage unit, leverage vertical shelving, hanging racks, and step ladders .

Larger operations might require specialized equipment, like picking machines or forklifts. 

Items stored above eye level should be properly labeled or stored in clear containers, so you can quickly locate units of inventory, even if they’re stored on 12-ft shelves.

To improve visibility and streamline workflows, you’ll need to map out an optimized layout of your warehouse, designating walkways and order-picking access points.

Strategies for Reducing Inventory Costs

Paying for your inventory storage can get expensive, especially if storing excess inventory.  With the right strategies in place, you can reduce your overall costs by keeping a maximum of 4-6 months worth of inventory and auditing regularly.

Just-In-Time Inventory Management

The Just-in-Time Inventory Management System (JIT) allows businesses to cut storage costs, predict demand, and downsize by only ordering what is needed to meet short-term demand . Forewarning, JIT systems run on very tight schedules.

You’ll also need to be aware of the potential risks associated with just-in-time inventory management , such as inventory shortages if suppliers can’t meet the demand. 

To ensure successful Just-in-Time Inventory Management, businesses should have reliable suppliers and plan ahead for seasonal demand. By implementing this strategy, businesses can save on storage costs and space while still maintaining a competitive edge.

Minimizing Excess Stock

Reducing surplus stock can decrease the risk of inventory obsolescence and free up much-needed space .

When downsizing, you’ll need to frontload products that sell quickly and order less popular products in much smaller quantities. Failure to minimize excess stock could clutter your valuable floor space and make it harder for you and your staff to complete routine inventory tasks. 

To prevent excess stock from accumulating, businesses can:

• Invest in inventory management systems that provide accurate forecasts of demand
• T rack inventory levels in real-time
• Maintain a lean and efficient inventory that minimizes costs and maximizes profitability.

Conducting Regular Audits and Cycle Counts

Employing regular audits and cycle counts helps verify the accuracy of records and identifies opportunities for improvement in inventory management processes. 

This is where an inventory management software program like Cin7 Orderhive or inFlow can be useful. With the ability to track trends, you can make informed decisions about your inventory, aka, what you plan to store in the long-term and short-term.

Conducting regular audits can also help businesses refine their JIT system to better stand up against supply chain issues. 

Find Inventory Storage Solutions That Work for You

As your business grows, you’ll become more pressed for space. You might not have the funds to purchase a warehouse nor the space at home to store inventory.

Thankfully, peer-to-peer storage marketplaces like Neighbor make finding affordable inventory storage easier. Thanks to Neighbor’s extensive host vetting system, you can rest easy knowing that the cornerstones of your small business (aka your product) will remain safe and secure. 

Related Posts

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7 Inventory Control Techniques For Your Business 

Renting a warehouse cost and other considerations, 7 warehouse storage systems: their differences and advantages, ecommerce storage 101: the smart strategies you should adopt, are storage units a good investment during a recession, the ins and outs of mini storage.

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Why Is Inventory Management Important?

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Effective inventory management affects every aspect of your business—from your warehousing costs to your ability to fulfill orders accurately and on time. You want to be on top of everything from raw materials to finished goods. Unfortunately, inventory management is a difficult business process to do by hand. It takes time, and if you make a mistake, it could have ripple effects that negatively impact your business for months or years.

Good inventory management software is designed to help business owners by automating their inventory tracking, inventory planning , and manufacturing. So let’s break down the benefits.

Why use inventory management software?

Inventory management software increases your profit, inventory management software improves customer satisfaction, inventory management software makes it easier to run your business.

Inventory management is an overarching term that refers to your tracking system for every phase in the product life cycle. It can include your sales forecasting, product ordering, supply chain management, warehouse management, and customer fulfillment solutions. To find out more, check out our article, “What Is Inventory Management?”

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Inventory is a bit like the stock market—it’s a risk. If you invest in risky ventures (like new product lines or niche items) and don’t diversify your portfolio (e.g., pour all your working capital into manufacturing a single item), you run the risk of losing everything.

Fortunately, inventory management software can help you minimize risk and streamline your costs, which ultimately means a healthier bottom line for your business.

Minimize storage costs

Any inventory management software worth its salt should include basic economic order quantity (EOQ) calculations. EOQ helps you identify the most cost-efficient method for ordering new products by weighing the costs of storing your products versus the cost of ordering your products —it compares product stock level with cash flow.

Inventory management software can do this for you automatically so you can minimize your warehousing fees and save money .

Minimize losses

Products that don’t sell are essentially losses to your business—you’ve already spent the money to make the items, but you can’t recoup that capital by selling the product. Inventory management software helps minimize this risk because many solutions include forecasting. This inventory management process checks your inventory level and ensures proper inventory management for your business.

Forecasting involves tracking the number of units you’ve sold and estimating the number of units you’ll sell in the future —basically it conducts a process called inventory control . Even with an automated, computerized tool, forecasting isn’t 100% accurate.

But using inventory management software to do the math for you is still a heck of a lot more accurate than trying to crunch the numbers yourself.

Inventory management software can also integrate with your point-of-sale (POS) system to update your stock numbers in real time. That gives you more accurate projections, which lowers your risk of investing too heavily into products that won’t sell. Plus, your software can calculate the exact number of units you need to order and recommend the ideal time to place your order (so you don’t overspend on warehouse storage for your items, but you still have enough stock on hand to meet customer demand).

Sell more items

Imagine, for a moment, that you’re trying to buy a brown leather wallet as a birthday gift. You go to a store you expect will carry that item—only to find out they don’t have any brown leather wallets in stock. Depending on the situation, you may stick around and simply choose another item at the store. But if you’re really set on getting your friend a brown leather wallet, you’re probably going to leave and shop around elsewhere until you find the product you’re looking for.

Chances are, your customers are the same. If you don’t have enough product in stock to meet demand, your customers probably won’t just come back later—they’re just going to shop somewhere else. And if that happens repeatedly, they may stop coming back to your store altogether. Even a single lost sale may represent thousands of dollars’ worth of lost potential sales, so it’s important to have enough stock to meet customer demand.

With inventory management software, you’re more likely to have the right products on hand at the right time to meet customer demand. This helps you sell more in the here and now, but it also helps you secure customer loyalty so you can sell more items in the future.

Have you ever tried to buy something only to find that the product you want is out of stock? Or waited for weeks for a product to arrive? Or opened a package only to discover that the item was damaged or the wrong item altogether?

None of these experiences paint your business in the best light, and they can all negatively impact customer loyalty (making your customers less likely to choose your product in the future).

But again, inventory management software can help minimize these mistakes and deliver the best possible experience for your customers.

Boost product availability

As we’ve mentioned already, many inventory management tools include forecasting and automated reorder protocols. This improves the likelihood that you’ll have enough product on your shelf when your customers want it, which in turn improves the chances that your customers will find the exact items they need (in their size, color, or other preferences).

Improve order accuracy

Some inventory management solutions also integrate warehouse management. This feature helps you maintain an organized warehouse, which reduces the risk that you’ll simply shove new inventory into a random spot, forget it’s there, and lose track of your merchandise. It also helps warehouse employees pull items for customer orders with greater accuracy, so your customer actually gets what they ordered.

Inventory management software may also include logistics features that help you track order fulfillment time. That way, you can give your customers an accurate delivery estimate (and avoid falling short of those promises).

Balance multiple sales channels

If your business runs a brick-and-mortar location, an online store, a pop-up location, and an Etsy store, it can be difficult to make sure every customer order gets processed accurately while also ensuring your physical store locations have enough inventory on hand.

Inventory management software makes this process a lot easier. It can integrate with your POS system to track sales and stock across multiple channels—all in one place. That way, you can manage your business’s inventory as a whole instead of on a case-by-case basis.

Promote brand loyalty

Reducing your order processing time helps you keep the products your customers want on the shelf. Combine that with improved order accuracy and product quality, and you get customer loyalty.

If your customers have a positive experience with your brand—where they’re able to buy what they need and get it quickly without jumping through hoops—they’re more likely to choose your business next time. They’re also more likely to recommend your business to other potential customers.

Inventory management software may also include other tools to make your business run even more efficiently. Here are a few examples.

Improve warehouse management

We already mentioned that inventory management software often includes warehouse management features, which can help you improve order accuracy. But it may also help you streamline efficiency within your warehouse.

Some inventory management tools help you map your warehouse space, factoring in pallet sizes and the cost per square foot of storage space to help you find the most cost-efficient, easy-to-use system. You may also be able to integrate radio frequency ID (RFID) or barcode scanning so your inventory management system gets real-time updates on stock levels and inventory movement.

All that helps you minimize guesswork and get a more accurate picture of your inventory situation when you need it.

Manage multiple locations

As we mentioned above, inventory management software can help you juggle your inventory when you’re overseeing multiple sales channels. But some software can also help you manage inventory storage and stock levels between multiple warehouses or brick-and-mortar locations.

These solutions usually integrate supply chain logistics features, allowing you to order product for all your locations in bulk (thereby saving on manufacturing costs) while moving products between locations based on need—never losing track of where any item is at any given moment.

Integrate with other tools

Finally, inventory management software can integrate with any number of other business processes:

• Point-of-sale (POS) systems : To track sales and stock levels in real time and assist with product forecasting
• Bookkeeping systems : To analyze working capital your business has available and plan inventory orders
• Accounting systems : To gain more accurate forecasting metrics and find the most economic order quantities for product stocking
• Customer relationship management (CRM) systems: To link order fulfillment with service requests and customer interactions (so your customer service rep can accurately tell customers the status of their order, for example)

And if your solution doesn’t include warehouse management, supply chain logistics, forecasting, RFID or barcode scanning, or any of the other features we’ve mentioned already, you should be able to find a third-party service that can integrate with your inventory management software.

The takeaway

There’s a lot that goes into your inventory management, and it has a big impact on your business’s bottom line. Using an inventory management software solution reduces errors in your inventory management, which makes your business more efficient, more profitable, and better equipped to serve your customers.

Want to ramp up your business’s success? Check out our top picks for inventory management solutions to get started.

Related reading

• The 14 Best Inventory Management Software for Small Businesses of 2023
• The Ultimate Guide to Small-Business Inventory Management
• Types of Inventory Management
• The Best Inventory Apps of 2023

Inventory management FAQ

Good inventory management practices increase your profit , improve customer satisfaction , and overall, make it easier to run your business . If you want to build brand loyalty while also increasing your sales, using inventory management software will be highly beneficial.

If you don't take inventory using inventory management software, it is possible to become disorganized and make inaccurate projections when it comes to ordering new stock. Luckily, most inventory management software includes forecasting to help you estimate how many items will sell in the future.

Taking inventory helps to manage the supply chain properly, and automating processes with inventory management software helps to ensure order accuracy and improve your business operations.

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How to Develop Inventory Stock Plans

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How to Design an Inventory Control System

Advantages & disadvantages of just-in-time inventory, importance of warehousing & inventory control.

• Why Is Inventory Control Important?
• Elements of Inventory Control

Because it costs money to store inventory, businesses tend to be upset when items gather dusts on shelves instead of being purchased by customers and creating revenue. However, while it takes extra work to dust the shelves, that’s not as bad as dealing with a customer who’s angry that you’ve run out of his favorite product. Inventory stock plans are designed to prevent either situation from happening.

Determine Demand

The first rule of a good inventory plan is to stock items that customers want, and that your data indicate are likely to be purchased. You can base this on historical sales data by tracking sales over time and logging the results into a database. If you know you sell an average of 30 cartons of milk a day, with consistent demand each day of the week, your inventory control plan should let you meet that demand while also ensuring that you don't have a lot of excess inventory. There are times when you might also want to keep select items in inventory under certain circumstances even if demand is lower or less regular. For example, if there’s a critical spare part to an appliance that you sell that’s hard to acquire quickly, keeping a small quantity on hand can be a good business decision. If it costs too much to order that part at the last minute, and if its absence leaves customers angry enough to change providers, the storage costs may pale in comparison to the costs of not having it when needed.

Develop Replenishment Plan

Supply chain management is a critical part of any inventory control plan. Know what your reorder points are, how long it takes inventory to arrive, and what the potential roadblocks are. A just-in-time inventory system, for example, works best when you know you can get needed materials quickly if needed. Set a general replenishment plan for items you’ll need on a regular basis. This could range from daily deliveries for perishables to monthly shipments of other items. Also, develop options for when you need stock replenishment at an irregular schedule, and how much that will increase the costs.

Track Your Inventory

An inventory system is only as good as its tracking mechanisms. Catalog your inventory and record its changes in real time, ideally via a point-of-sale software system, and instruct employees to use it at all times. This can be tricky at a small business that uses ingredients from a central inventory base to prepare finished products, like a restaurant, but is no less essential. Document which ingredients go into a dish, or what goes into a finished cabinet, and deplete those from your inventory every time a customer places an order.

Monitor and Adjust

Re-examine your inventory control system periodically to make sure the initial assumptions still hold true. If you suddenly find yourself running out of corn chips during each inventory cycle -- but carrying more salsa than you need -- your initial demand forecasts may have been mistaken. Changing the order quantity of each can restore the optimum balance to your inventory levels. Developing a liquidation strategy for inventory that isn’t selling can at least get it out of storage and allow you to use the space more effectively. For example, markdown sales at the end of each season can clear out stock in a retail business that's otherwise likely to linger in inventory for a long time.

• USPS: Develop, Finalize, and Implement Inventory Control Plan
• Bain & Company: 10 Ways to Improve Inventory Management
• F. Curtis Barry & Company: How Well Are You Managing Your Inventory?

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Approved Storage and Inventory Control Best Practices for F&B

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Effective storage and inventory control are paramount in the food and beverage (F&B) industry to ensure smooth operations, minimize waste, and maximize profitability. In the F&B industry, storage control involves managing the storage of ingredients, perishable items, kitchen equipment, and other supplies essential for day-to-day operations. It encompasses maintaining optimal inventory levels, organizing storage spaces efficiently, and ensuring the freshness and quality of ingredients.

Proper storage control directly influences a restaurant's costs and profitability. By efficiently managing inventory levels and minimizing wastage, F&B businesses can reduce food costs, improve profit margins, and enhance overall operational efficiency. Conversely, inadequate storage control can lead to food spoilage, overstocking, increased expenses, and compromised quality. Let's explore some essential best practices to elevate your storage and inventory management game in the F&B realm.

1. Implement FIFO (First In, First Out) Methodology

FIFO isn't just an accounting term; it's a golden rule in F&B storage management. By prioritizing the use of older inventory items before newer ones, you minimize the risk of food spoilage and wastage. Train your staff to organize storage areas accordingly, ensuring that perishable items are rotated appropriately.

Example: Let's say your restaurant receives a shipment of fresh produce, including lettuce, tomatoes, and cucumbers. Your kitchen staff adheres to FIFO by placing the newly arrived crates behind the existing ones in the storage room. When preparing salads or sandwiches, they reach for the older produce first, ensuring that nothing goes to waste. This leads to improved cost management and higher customer satisfaction due to the freshness and quality of your dishes.

2. Invest in Quality Storage Equipment

Your storage equipment is the backbone of your operation. Invest in commercial-grade refrigerators, freezers, and shelving units that can withstand the demands of a busy kitchen while maintaining optimal temperature and humidity levels. Quality equipment not only preserves food freshness but also extends shelf life, reducing unnecessary waste.

Example: You decide to upgrade your restaurant's refrigeration equipment to commercial-grade units with adjustable shelves and temperature controls. With these new appliances in place, perishable ingredients like dairy products and meats stay fresh longer, reducing the frequency of food spoilage and resulting in significant cost savings over time. This results in significant cost savings over time and maintains the reputation of your restaurant for serving high-quality, fresh ingredients.

3. Embrace Labeling and Organization

Clear labeling and organization are your allies in the battle against chaos. Implement a systematic labeling system for storage containers, shelves, and bins to facilitate easy identification and access to ingredients. Take it a step further by categorizing items based on usage frequency and grouping similar items together for efficient retrieval.

Example: Your kitchen manager implements a color-coded labeling system for ingredient containers and storage shelves. Green labels indicate items with a longer shelf life, while red labels signal perishable items that need to be used first. This streamlines operations, minimizes food waste, and improves overall kitchen organization, contributing to smoother service and higher productivity.

4. Conduct Regular Audits and Inspections

Routine audits and inspections are your proactive measures to ensure storage compliance and food safety. Schedule regular walkthroughs of storage areas to check for cleanliness, temperature consistency, and adherence to food safety protocols. Encourage staff to report any issues promptly, fostering a culture of accountability and continuous improvement.

Example: Every Monday morning, your head chef conducts a comprehensive walkthrough of the restaurant's storage areas. During the inspection, they check temperature logs, inspect food packaging for signs of damage or expiration, and ensure that storage shelves are clean and well-organized. Any discrepancies or issues discovered are promptly addressed and documented for follow-up action.

5. Leverage Technology for Enhanced Control

In today's digital age, technology is your ally in streamlining storage and inventory management processes. Explore inventory management software solutions equipped with barcode scanning, real-time tracking, and automated reporting functionalities. These tools empower you to monitor stock levels, track ingredient usage, and make data-driven decisions with ease.

Example: You invest in inventory management software equipped with barcode scanning capabilities. When new inventory arrives, your staff scan each item's barcode to update the digital inventory database in real-time. This automated process eliminates manual data entry errors and provides accurate, up-to-date information on stock levels and usage patterns.

Read more about how big brands like KFC implemented these technologies in the link below.

6. Optimize Space Utilization

Space is a valuable commodity in any F&B establishment. Maximize your storage space by utilizing vertical shelving, stackable containers, and custom storage solutions tailored to your kitchen layout. Organize storage areas strategically, keeping frequently used items within easy reach while relegating less-used items to secondary storage spaces.

Example: To maximize storage space in your restaurant's walk-in refrigerator, your team installs adjustable wire shelving units that can be customized to accommodate containers of various sizes. They also designate specific areas for different categories of ingredients, such as meats, dairy, and produce, to streamline inventory retrieval and minimize clutter. This enables faster retrieval of ingredients, reduces time spent searching for items, and increases overall kitchen productivity, leading to smoother operations and improved customer service.

7. Train and Empower Your Team

Your staff are your frontline warriors in the battle for efficient storage and inventory control. Provide comprehensive training on storage procedures, food safety protocols, and equipment operation to ensure everyone is on the same page. Encourage open communication and empower your team to take ownership of storage responsibilities, fostering a culture of collaboration and accountability.

Example: As part of their onboarding process, new kitchen staff undergo comprehensive training on storage and inventory control procedures through their company Learning Management System . They learn how to properly handle and store ingredients, follow food safety protocols, and use equipment effectively. Regular refresher training sessions are conducted to reinforce best practices and address any emerging issues or concerns. This reduces the risk of errors, accidents, and food spoilage, resulting in smoother operations, higher food quality consistency, and enhanced customer satisfaction, ultimately driving repeat business and revenue growth.

In the dynamic world of F&B operations, mastering storage and inventory control is non-negotiable for sustained success. By implementing these best practices and embracing technology, you can optimize your storage processes, minimize waste, and delight customers with consistently high-quality products and services. Remember, effective storage and inventory control are not just tasks; they're the cornerstone of operational excellence in the F&B industry.

Also read: Stop Losing Out: 4 Incredible Benefits of Waste Management Exposed!

Make Your Storage Control More Accurate

It becomes vitally important to have excellent systems in place for your restaurant industry to continue to survive in this day and age. Suppose you're still using pen and paper techniques for inventory control. In that case, it's the right time to invest in software to streamline the process. Nimbly is one such automated system with a mobile app.

Nimbly comes with a Digital Routine that allows you to digitalize your paper-based checklist and transform them into insights that everyone in your team with authority can access. Nimbly’s app also features Geo-fencing, where you need to be at the exact storage location to perform storage or inventory control inspections.

The validation has become more robust because it also requires the auditor to capture a photo or video at the exact location. It can also validate any variances so that follow-up actions can be done accurately. With Nimbly, gaining accurate data on storage control inspection is no longer a taxing task.

Learn how Nimbly can assist your business today

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Types of Storage Available to Businesses

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For businesses striving to maintain competitive edge and operational efficiency, the importance of strategic storage solutions cannot be overstated. Beyond merely housing items, the right storage setup ensures security, accessibility, and optimal asset management . This blog will guide you through the various types of storage available to business, detailing the features and advantages that can help you achieve superior organization and protection of your valuable assets.

Climate-Controlled Storage: Protecting Your Sensitive Assets

One of the primary concerns for businesses storing sensitive items is protecting them from extreme temperatures and humidity. Climate-controlled storage maintains a consistent temperature and humidity level, ensuring your assets remain pristine.

Key Benefits:

• Temperature Regulation: These units keep the temperature within a narrow range, preventing damage to electronics, artwork, and sensitive documents.
• Humidity Control: Climate-controlled storage prevents mold, mildew, and rust, which can damage valuable items, by maintaining optimal humidity levels.
• Ideal for Sensitive Items: Businesses dealing with electronics, pharmaceuticals, fine art, and important documents will find this type of storage indispensable.

At Interstate Logistics , we offer temperature-controlled storage that ensures your specialty items are kept in optimal conditions and safeguard them from environmental damage.

Secure Storage: Ensuring the Safety of Your Business Assets

Security is paramount when storing business assets. Secure storage facilities offer advanced security measures to protect your items from theft and unauthorized access, providing peace of mind.

Features of Secure Storage:

• 24/7 Surveillance: High-resolution cameras continuously monitor and record all activities within the facility.
• Access Control Systems: Only authorized personnel can access the storage areas, thanks to secure access control systems.
• Alarm Systems and On-Site Security: Alarm systems and security personnel on-site further enhance the security of your stored items.
• Barcoded Crates: At Interstate, we use sealed and barcoded crates, which make it easy to track and secure your items and add an extra layer of protection.

Secure storage solutions protect your valuable assets, reduce the risk of loss, and enhance your business’s overall security.

Asset Management Storage: Streamlining Inventory and Asset Tracking

For businesses with extensive inventories, efficient asset management is crucial. Asset management storage solutions go beyond simple storage, incorporating advanced tracking and management systems to keep your inventory organized and accessible. Companies partnering with commercial movers in Virginia can particularly benefit from these solutions, ensuring their assets are meticulously managed and seamlessly integrated into their operations, both during and after the move.

Capabilities of Asset Management Storage:

• Automated Asset Tracking: Utilizing barcode technology and wireless scanners, businesses can easily track the location and status of their assets.
• Real-Time Updates: Inventory updates are provided in real-time, ensuring you have an accurate picture of your assets at all times.
• Customizable Software: The software can be tailored to meet the specific needs of your business, maximizing efficiency.
• Comprehensive Reporting: Generate detailed reports on asset conditions, locations, and maintenance schedules.
• Maintenance Tracking: Keep track of the lifecycle and maintenance of each asset, ensuring optimal performance and longevity.

Interstate’s ILIST® system exemplifies these capabilities , offering a leading-edge asset management solution that ensures effective and efficient processing of customer inventories. From computers to copiers, ILIST® can track virtually any equipment within your facilities.

Short and Long-Term Storage: Flexibility to Meet Your Needs

Whether you need storage for a few months or several years, having flexible storage options is essential for businesses. Short and long-term storage solutions cater to varying needs, providing the flexibility required to manage business operations smoothly.

Short-Term Storage:

• Temporary Needs: Ideal for office renovations, office relocations , or seasonal inventory.
• Quick Access: You can easily retrieve and access items as needed, minimizing disruption to business operations.

Long-Term Storage:

• Extended Storage: Perfect for items not needed on a daily basis but still important, such as archived documents or surplus inventory.
• Cost-Effective: Long-term storage options are often more cost-effective, providing businesses with a secure place to store items over extended periods.

At Interstate Logistics, we offer both short and long-term storage options , ensuring that your business can adapt to changing needs with ease. Our services provide accessibility and reliability, ensuring peace of mind. Access to stored items is available by appointment, providing convenience and flexibility.

Specialty Storage: Custom Solutions for Unique Items

Some businesses have unique storage needs that require specialized solutions. Specialty storage options are designed to cater to these specific requirements, ensuring that even the most unusual items are stored safely and securely.

Examples of Specialty Storage:

• Customized Containers: For uniquely shaped or oversized items, custom containers ensure a perfect fit and maximum protection.
• High-Value Items: Temperature-controlled vaults and moisture-free environments are ideal for high-value items such as antiques, artwork, and collectibles.
• Large Items: Storage solutions for automobiles, boats, and other large items keep these valuable assets in optimal condition.

Our storage facilities at Interstate have even accommodated historical items for the federal government, demonstrating our capability to handle a wide range of specialty storage needs.

Understanding the Types of Storage Available to Business

At Interstate Logistics, we understand the diverse storage needs of businesses and offer a range of s olutions to meet these requirements. Our facilities, equipped with the latest technology and security measures, offer climate-controlled and secure storage  and advanced asset management to provide peace of mind and ensure the safety of your valuable assets. For more information on the types of storage available to businesses and how we can help your business, contact us . Your business deserves the best , and we are here to provide storage solutions that exceed your expectations.

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8 top inventory management software products

Inventory management software can help companies manage their supply chain in a turbulent world, but using the right product is crucial. Learn more about which software to choose.

• Jacob Roundy

Inventory management is the process of tracking the flow of goods in and out of an organization. Inventory management software can help improve this process by collecting data about materials, suppliers and transportation status, among other data points, but supply chain leaders must work with others at their company to choose the right software for their organization.

Supply chain management is more complex than ever because of factors like increasing globalization and extreme weather events. Inventory management software can help organizations handle these challenges. The software can help companies save money because employees can better track products within a warehouse and improve customer service because products are more likely to reach customers on time.

Here's a look at some of the top inventory management software on the market.

The author selected the following inventory management platforms by drawing on research from sources such as Capterra and G2. Products are listed in alphabetical order.

Cin7 is a cloud-based inventory management platform that can help employees manage processes such as manufacturing, warehouse management , and invoicing and billing cycles.

Cin7 is available in two forms. Cin7 Core is out-of-the-box software, while Cin7 Omni is designed for organizations that require custom configurations and integrations.

Cin7's features include tools for point of sale, reporting and forecasting, accounting, and managing third-party logistics , among others. One of its advantages is the software's ability to integrate with brands like Amazon and Shopify.

Finale Inventory

Finale Inventory is inventory management software that's designed to scale with a company's growth. Its features include kitting and bundling capabilities, stock auditing and financial reporting as well as a developer API for custom integrations.

The software also includes barcoding hardware that connects to its cloud-based software. Companies can deploy it out of the box.

Finale Inventory is a good fit for small businesses that are expanding into the midsize range and need software that can adapt as the business grows. Finale Inventory also offers an enterprise plan that can support high-volume retailers.

Fishbowl Inventory is inventory management software that helps organizations track inventory and manage warehousing and manufacturing processes. The software is particularly well-suited for small and midsize companies that need a tool that can scale with growth.

One of Fishbowl's biggest advantages is its integration with QuickBooks accounting software. Users can pull inventory data into QuickBooks, which lets them make their cost calculations and forecasting more accurate.

Fishbowl's features include the ability to track inventory in real time, automatically purchase new inventory when needed, process payments and manage multiple vendors and warehouses in one system, among others.

InFlow Inventory

InFlow Inventory is cloud-based inventory management software that enables users to track stock across company locations using multiple devices. Users can also reorder stock with purchase orders and create and manage invoices online, among other capabilities.

The software lets users pick, pack and ship with various carriers, which could help improve costs and speed of delivery to customers. In addition, InFlow's Online Showroom enables B2B customers to browse an online catalog and place orders online.

InFlow offers fairly flexible pricing plans compared to other inventory management software. Monthly and annual plans are available with no setup fees.

Katana Cloud Inventory

Katana Cloud Inventory is a cloud-based inventory platform. Katana Cloud Inventory is a particularly good fit for small and medium-sized businesses because of its customization options and ability to keep pace with company growth. Katana offers larger-scale pricing plans for bigger companies as well.

Katana's features includes real-time tracking of products, production management capabilities and cloud accounting, among others. The platform also helps users to centralize B2B and B2C sales orders.

Lightspeed Retail

Lightspeed Retail is a point-of-sale inventory management system that was created for retail companies. The cloud-based software works across devices, which can simplify tracking of inventory levels and stock keeping units across locations.

Lightspeed Retail can preload product information from suppliers, which lets users obtain needed product information or find a product by searching across a supplier's uploaded catalog.

Companies can combine Lightspeed Retail with Lightspeed eCom, the company's e-commerce software, which would let users manage inventory from their online and brick-and-mortar stores through one platform.

Sortly helps companies manage physical inventory such as materials, tools and equipment. Features include a folder and tagging system for organizing and customizing inventory as well as reports that provide insight into item flow and inventory value over time. Sortly can also integrate with work collaboration apps, so users can receive automatic alerts in those apps when stock is low.

Sortly has plans available for enterprise-level organizations and an app built specifically for small businesses. Through the app, users can scan barcodes with their smartphone, upload photos and update inventory information. Its cloud capabilities let users sync data across multiple devices.

Zoho Inventory

Zoho Inventory is a cloud-based inventory management system that includes features to help manage various parts of the inventory lifecycle, including sales and shipping .

Zoho Inventory's integration capabilities include Amazon, eBay, Shopify and PayPal, which could be beneficial for companies that need software to be compatible with partners across their supply chain.

The company also provides guides for small and midsize businesses on its website.

Jacob Roundy is a freelance writer and editor, specializing in a variety of technology topics, including data centers and sustainability.

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warehouse management system (WMS)

Part of: The value of inventory management software

Some problems with inventory management that companies frequently face include ordering errors and lack of warehouse space. Learn how to prevent these issues.

Efficient inventory management can help retailers and other companies improve their operations. Learn some best practices for balancing supply and demand.

Discover some of the advantages of using inventory management software, including helping companies minimize costly errors and prevent theft.

Some of the most important inventory management software features are inventory tracking and reports and analytics capabilities. Here's the full list.

With its Cerner acquisition, Oracle sets its sights on creating a national, anonymized patient database -- a road filled with ...

Oracle plans to acquire Cerner in a deal valued at about $30B. The second-largest EHR vendor in the U.S. could inject new life ...

The Supreme Court ruled 6-2 that Java APIs used in Android phones are not subject to American copyright law, ending a ...

Snowpark Container Services aims to provide the vendor's users with a secure environment for deploying and managing models and ...

The introduction of graph processing, vector search and full-text search optimize Spanner for developing and managing modern ...

The vendor's latest Astro platform update integrates the open source transformation tool to help users better prepare information...

Two executive board members will depart SAP in a move that the company says is both to streamline the structure of the board and ...

Sophia Mendelsohn talks about SAP's ambitions to both set an example of sustainability and be an enabler of it with products such...

In this Q&A, SAP CTO Juergen Mueller explains why a clean core is critical for moving to S/4HANA cloud and how the enterprise ...

Data professionals can use LLMs for data and predictive analytics work. Still, the analysis of large amounts of textual and ...

The tech giant's latest analytics and data management moves include the general availability of Gemini in BigQuery and the ...

Though the BI platform already enables users to analyze data and develop data products using natural language, AWS plans to do ...

Enterprise content management systems can become outdated, prompting a migration to cloud-based options. Follow these seven steps...

As Salesforce prepares to roll out its own generative AI tools for Slack this fall, Box adds AI for joint users, who can use ...

Some industries might be wary of generative AI, but not legal. We find out how -- and why -- attorneys are embracing it in this Q...

Workday, the first SaaS provider in the Salesforce Zero Copy Partner Network, will integrate data with Salesforce, allowing ...

U.S. continuous security clearances system faces severe delays and budget overruns. The now $1.7B project is years behind ...

Professional development platforms' offerings range from courses taught by well-known figures in their field to classes in which ...