Why Inventory Control System is Important?
Before we dig deep into how the inventory control systems work using different technologies, let’s talk about why inventory management is important?
The backbone of the business is to know what you have in your warehouse, and also how to manage the supply chain properly. Inventory management saves you money and enables you to fulfill your and your customers’ needs. In simple words, it makes cost control of different operations much easier. In today’s world, technology has made inventory management much easier. The question is – how?
What is Inventory Control System?
An inventory control system is a system that covers all aspects of managing a company’s inventories; procuring, shipping, receiving, tracking, warehousing and storage, turnover, and reordering.
In a computer company’s warehouse motherboards, power supplies, fans, graphic cards, hard drives are inventories.
Types of Inventory Control Systems
- Main Inventory Control Systems
- Inventory Control Systems Within Inventory Management Systems
Let’s discuss Main inventory control systems in detail.
Perpetual Inventory System:
When you use a perpetual inventory system, it continually updates inventory records and accounts for additions and subtractions when inventory items are received, sold from stock, moved from one location to another, picked from inventory, and scrapped. Some organizations prefer perpetual inventory systems because they deliver up-to-date inventory information and better handle minimal physical inventory counts. Perpetual inventory systems are preferred for inventory tracking because they deliver accurate results on a continual basis when properly managed. This type of inventory control system works best when used in conjunction with a database of inventory quantities and bin locations updated in real-time by warehouse workers using barcode scanners. Inventory management apps are perpetual inventory systems.
Periodic Inventory System
Periodic inventory systems do not track inventory on a daily basis; rather, they allow organizations to know the beginning and ending inventory levels during a certain period of time. These types of inventory control systems track inventory using physical inventory counts. Once physical inventory is complete, the balance in the purchases accounts shifts into the inventory account and it is adjusted to match the cost of the ending inventory. Organizations may choose whether to calculate the cost of ending inventory using LIFO or FIFO inventory accounting methods or another method; keep in mind that beginning inventory is the previous period’s ending inventory.
Now lets discuss Inventory Control Systems Within Inventory Management Systems
Barcode Inventory Systems
The Barcode system has made inventory management more accurate, easier, and efficient than manual inventory management.
For example, when a worker adds an item in the inventory with a barcode scanner or it will automatically update the inventory level. The benefits of using barcoding in your inventory management processes are many:
- Correct records of all inventory transactions
- Removing time-consuming data errors that occur commonly with manual or paper systems.
- Eliminating manual data entry errors
- Ease and speed of scanning
- Updates on-hand inventory automatically
- · Radio Frequency Identification (RFID) Inventory Systems
Radiofrequency identification also called RFID inventory systems use active and passive technology to manage inventory activities. To use Active RFID Organization needs to install fixed tag readers throughout the warehouse. When an RFID tag passes the reader, the activity will be recorded in the inventory management software. This technology provides the most accurate results if you require real-time inventory tracking, or if you want to resolve an inventory security issue. On the other hand, Passive RFID technology uses handheld readers to monitor inventory activities. This technology is very simple, when a tag is read, the inventory management records all the data. The reading range of RFID is approximately 40 feet with passive technology and 300 feet with Active technology.
I hope you all have learned how inventory control systems work using different technologies. Thanks for reading.