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Release time:2019-04-08
The Advantages of Inventory Control

The Advantages of Inventory Control


Skip to main content.Small Business» Running a Business» Inventory Control» The Advantages of Inventory Control by Kenneth Hamlett Fotolia.com"< Certain advantages exists for the company that fully controls and manages its inventory. Depository image by Czintos Ödön from >a href='http://www.fotolia.com'<Fotolia.com>/a< Related Articles 1 Advantages & Disadvantages of a Computerized Inventory Management System2 Advantages & Disadvantages of Excess Inventory3 Advantages & Disadvantages to a Manual Inventory Control System4 Why Is Inventory Control Important?Any company that maintains inventory for sale or as part of a raw material supply must have defined inventory control policies. For most small businesses, inventory functions as the largest investment the company makes. Numerous financial and service related advantages exist for the company that manages to effectively control its inventory; these include leaner operations and reduced operational expenses. Customer Service An increase in customer service levels results from having a highly defined and working inventory control policy. Imagine two competing companies: company “A” has very defined inventory control policies and company “B” has very few policies in place. A customer calls company “B” to place an order. Company “B’s” inventory system says it does not have the product available and the wait time would be three weeks. The customer then calls company “A”, and company “A” has the product available and can ship the same day. Nothing abnormal happened here except that company “B” did have the product available. But because no one received the product in the system, the customer service person could not see the available inventory. Company “B” lost the sale and possibly any future sales from this customer. Company “A” gets the sale and probably all future sales from this customer. It also maintains a higher fill rate (the number of orders filled divided by the total number of orders received). Labor Cost Well-defined inventory control policies can reduce the labor costs associated with managing the inventory. Each time inventory gets handled, whether to move it from one location to another, to retrieve it for order picking or to put it away for storage, it involves labor. This handling makes up part of the cost associated with managing inventory. Companies prefer to handle the inventory as little as possible. When a company constantly searches for lost inventory, moves inventory from one location to another because of poor space utilization or handles the inventory multiple times, it results in increased labor costs. Properly managed inventory reduces these incidents and reduces the labor cost associated with the inventory. Inventory Costs Lower inventory cost is a definite advantage for the company that effectively controls its inventory. Business owners need to fully understand the costs of carrying inventory, not just how much the inventory costs to purchase. Inventory carrying costs consist of all the expenses a company incurs for owning inventory. These expenses include the cost of capital, storage and risks costs (including obsolescence, damage, theft and deterioration) plus the appropriate taxable amounts. Effective inventory control reduces these costs because it reduces the total amount of inventory required to manage the business. Inventory control monitors the level of inventory and proactively manages obsolescence and deterioration by ordering in the appropriate quantities. Effective inventory control also reduces storage costs, because it orders enough inventory to fill consumer demand and not much more. Bottom Line The company that effectively and proactively controls and manages its inventory has a competitive advantage over the company that has lax inventory control policies and procedures. References (1) Automotive Service Association: Official SiteAbout the Author From 2002-2006, Kenneth Hamlett was publisher and head writer for UNSIGNED Music Magazine, an online publication with over 100,000 readers. Prior to establishing UNSIGNED, Hamlett was a business solutions analyst and spent 15 years formulating and writing proposals for supply chain business solutions. He is a graduate of the New York Institute of Photography. Photo Credits Depository image by Czintos Ödön from Fotolia.combibliography-icon icon for annotation tool Cite this Article Choose Citation Style MLA APA Chicago (B) Hamlett, Kenneth. "The Advantages of Inventory Control." Small Business - Chron.com, http://smallbusiness.chron.com/advantages-inventory-control-2228.html. Accessed 07 April 2019. Hamlett, Kenneth. (n.d.). The Advantages of Inventory Control. Small Business - Chron.com. Retrieved from http://smallbusiness.chron.com/advantages-inventory-control-2228.html Hamlett, Kenneth. "The Advantages of Inventory Control" accessed April 07, 2019. http://smallbusiness.chron.com/advantages-inventory-control-2228.html Copy Citation Note: Depending on which text editor you're pasting into, you might have to add the italics to the site name. More Articles What Are the Benefits of Using a Computerized Inventory System? Types of Inventory Control The Main Function of Inventory The Advantages of Holding a Large Amount of Inventory Also Viewed Methods for Inventory ControlGoals & Objectives of an Inventory-Control SystemThe Disadvantages of Holding Too Much Inventory on HandWhat Are the Advantages of Inventory Control in a Healthcare Organization?Disadvantages of High Inventory LevelsTypes of Inventory Management SystemsThe Basic Steps in the Management Planning ProcessLogo Return to TopAbout Privacy NoticeYour California Privacy RightsInterest Based AdsTerms of UseOur CompanyCareersAdvertise with UsAd ChoicesContact Customer ServiceNewsroom ContactsConnect Email NewsletterFacebookTwitterPinterestGoogleInstagram


Advantages of Inventory Control Systems

Inventory control is important for all organizations that need to keep inventory on-hand. This lesson will discuss how properly managing inventory through an inventory control system can benefit an organization.Inventory ControlJana, a long-term inventory manager, is teaching a course on inventory management. On the first day, she dives into the lesson by asking the students to imagine that they are selling vacuums. In order to have on-hand supplies, or stock that is readily available to sell, they order fifteen of the latest Super Sweepers. Next week they order ten more, even though they have only sold one Super Sweeper in the past 7 days. Now, they have 14 Super Sweepers to sell, and recent trends indicate that the Super Sweepers will be around for a long time. Jana goes on to explain that having too many Super Sweepers indicates a problem with the inventory control system. Inventory control systems are the procedures put in place to monitor and manage inventory in order to increase efficiency. The goal of inventory control is to increase profits by decreasing the costs associated with poorly managed inventories. Jana tells the class that, when inventory is managed properly, a company: Can more effectively manage cash-flow and liquidityCan ensure they provide great customer serviceCan reduce the labor costs associated with inventory controlMoving forward, Jana explains that inventory control can impact cost-flow and liquidity, customer service, and labor costs. Properly managing inventory can greatly benefit the company in these areas, as well as others that may be industry- or organization-specific. Cash-Flow and LiquidityMoving forward, Jana directs the attention of the class back to the Super Sweepers. She explains that if you do not properly manage inventory, you might order things you don't need. Further, you might need inventory and not have it. Because of this, poor inventory control can negatively impact cash-flow, or the money that is moved in and out of the organization. Some inventory is not ready to sell, and thus, if there is too much of this inventory, the organization's liquidity, or the amount of available assets that can quickly become cash, is tied up in the inventory. If there is not enough inventory, then customers will not be able to buy the items they want, thus reducing profitability and liquidity. This is especially problematic if you have a large amount of inventory that will spoil or isn't ready to sell. In this case, the organization may have to throw out the inventory or sell it for a price well below its worth. Putting in place an inventory control system can assist the organization in managing the amount of inventory it has. This will reduce the risk that it will have too much or too little inventory, which can harm liquidity and cash-flow. Customer ServiceTaking a deeper look into the role of inventory and organizational success, Jana explains to the class that inventory is important for customer service, or the process of providing services to your customers. An inventory control system can help an organization ensure it has the products its customers need and want. Thus, it allows them to provide great customer service by meeting its customers' needs. Jana directs the class back to the Super Sweepers and tells them to imagine that their company is constantly running out of Super Sweepers. Each time the Super Sweepers are on back-order, meaning it isn't available in their inventory, customers become agitated. Eventually the customers stop ordering their Super Sweeper and source them from somewhere else. Thus, the inability to accurately track and store inventory will negatively impact the organization's ability to provide great customer service, which in turn, can be harmful for profitability. An inventory control system can increase customer service by helping the organization know how many Super Sweepers it needs, and how often it should order them. If Super Sweepers are always, or almost always, instantly available, then customers will have their needs and interests met. Labor CostFinally, a proper inventory control system can save money on labor cost by helping the organization count inventory quickly and identify what it needs to order.


Advantages & Disadvantages of a Computerized Inventory Management System

Advantages & Disadvantages of a Computerized Inventory Management System


Skip to main content.Small Business» Managing Employees» Management Systems» Advantages & Disadvantages of a Computerized Inventory Management System by Kimberlee Leonard; Reviewed by Jayne Thompson, LLB, LLM; Updated January 28, 2019 Advantages & Disadvantages of a Computerized Inventory Management System Related Articles 1 What Are the Benefits of Using a Computerized Inventory System?2 Advantages & Disadvantages to a Manual Inventory Control System3 The Advantages of Inventory Control4 Scope & Limitations in Inventory SystemsAny business that sells products needs a reliable method for inventory management. With bar codes, point-of-sale software and warehouse tracking, computerized inventory management systems make it easy for businesses to stay updated consistently. As with any new system implementation, business owners should consider the advantages and disadvantages of using a computerized inventory system before writing a check. Advantage: Automated Reordering and In-Stock InformationComputerized inventory informs employees and customers within seconds whether an item is in stock. Because the inventory is synced with sales, there is a running tally of what is in stock and what isn't. This helps flag reordering needs and provides better service to customers. As inventory drops below a specific threshold, new orders are placed with vendors and tracked to let customers know when the new products will arrive. Advantage: Integration With AccountingMany of the computerized inventory platforms integrate with accounting software to track cash flow. This makes the process of transferring inventory costs and assets between programs seamless and reduces the need for additional bookkeeping costs. Financial statements are more easily generated with shared data between inventory and bookkeeping. Advantage: Forecasting and PlanningInventory management software does more than track where inventory is located and when to reorder it. A data collection system is used to create needed forecasting and strategic planning reports. Business owners review trends regarding which products do well in certain months or during specific cyclical seasons. Business owners use this data to plan for growth and order inventory intelligently to best utilize cash flow resources. Disadvantage: System CrashOne of the biggest problems with any computerized system is the potential for a system crash. A corrupt hard drive, power outages and other technical issues can result in the loss of needed data. At the least, businesses are interrupted when they are unable to access data they need. Business owners should back up data regularly to protect against data loss. Disadvantage: Malicious HacksHackers look for any way to get company or consumer information. An inventory system connected to point-of-sale devices and accounting is a valuable resource to hack into in search of potential financial information or personal details of owners, vendors or clients. Updating firewalls and anti-virus software can mitigate this potential issue. Disadvantage: Reduced Physical AuditsWhen everything is automated, it is easy to forego time-consuming physical inventory audits. They may no longer seem necessary when the computers are doing their work. However, it is important to continue to do regular audits to identify loss such as spoilage or breakage. Audits also help business owners identify potential internal theft and manipulation of the computerized inventory system. References (2) Finances Online: What is Inventory Management Software?Investopedia: Inventory ManagementAbout the Author With more than 15 years of small business ownership including owning a State Farm agency in Southern California, Kimberlee understands the needs of business owners first hand. When not writing, Kimberlee enjoys chasing waterfalls with her son in Hawaii. bibliography-icon icon for annotation tool Cite this Article Choose Citation Style MLA APA Chicago (B) Leonard, Kimberlee. "Advantages & Disadvantages of a Computerized Inventory Management System." Small Business - Chron.com, http://smallbusiness.chron.com/advantages-disadvantages-computerized-inventory-management-system-22513.html. 28 January 2019. Leonard, Kimberlee. (2019, January 28). Advantages & Disadvantages of a Computerized Inventory Management System. Small Business - Chron.com. Retrieved from http://smallbusiness.chron.com/advantages-disadvantages-computerized-inventory-management-system-22513.html Leonard, Kimberlee. "Advantages & Disadvantages of a Computerized Inventory Management System" last modified January 28, 2019. http://smallbusiness.chron.com/advantages-disadvantages-computerized-inventory-management-system-22513.html Copy Citation Note: Depending on which text editor you're pasting into, you might have to add the italics to the site name. More Articles Common Problems of an Inventory System: System Analysis & Design The Disadvantages of the Continuous Inventory System Advantages and Disadvantages of a Computerized Accounting System for Small Businesses Advantages & Disadvantages of Computerized Accounting Also Viewed Advantages & Disadvantages of Excess InventoryGoals & Objectives of an Inventory-Control SystemThe Objectives of a Sales & Inventory SystemAdvantages & Disadvantages of Using a Computerized Patient Billing SystemTypes of Inventory Management SystemsThe Advantages of Manual Vs. Computerized AccountingThe Disadvantages of Holding Too Much Inventory on HandLogo Return to TopAbout Privacy NoticeYour California Privacy RightsInterest Based AdsTerms of UseOur CompanyCareersAdvertise with UsAd ChoicesContact Customer ServiceNewsroom ContactsConnect Email NewsletterFacebookTwitterPinterestGoogleInstagram


What are the advantages of inventory control system?

What are the advantages of inventory control system?


Sign In Inventory ManagementWhat are the advantages of inventory control system?UpdateCancelawlyVDddW WtbVyHO TXeOVSFcviSbdaOgltewYFKCKwadaiLDcnZKGtYDXoQrJ An operating system for your small business.Get the answers you need, when you need them with automated insights and financial experts.LzeDSYXaqgUHrBGnSBn mnMmjcolEqFruPgelx rVaztmr zIMEspifSMcHQrLaLlDqpIezupDWfvaJcKTcjKFtBWgEoxLTsbrW.KVcLdoRWbLmHNHzpYou dismissed this ad.The feedback you provide will help us show you more relevant content in the future.UndoAnswer Wiki7 Answers Dhwani Trivedi, My Company helps businesses to automate their Inventory operations.Updated 89w ago· Author has 149 answers and 102.6k answer viewsWell, maintaining the right balance of stock level can substantially improve your profit. Advantage of Inventory Control System Helps you to avoid maintaining high level of inventory Keeping a high level of inventory can induce losses, as their is always a possibility that your products can get expired, damaged or obsolescent. Key to inventory control is to exactly understand the demand of your product in the market. Helps you achieve the sales quota. Nobody want to lose on a sale. A sophisticated inventory control environment allows you to meet the surging demand, as you are aware of the stock level in your warehouse you can plan your purchases or production accordingly. Carefully accessing the demand flow can help you forecast the incoming orders. Optimize the Supply Chain - lessen the logistic cost. Whether you are maintaining the stock at your warehouse, distribution center or procuring it from a third party supplier. Optimizing the logistic workflow is extremely important, once you are aware about the location of your products you can choose the most optimum way to deliver the orders and thereby substantially cut on the logistic overheads. Even today, using spreadsheets is a common practice to implement inventory control, however they are always prone to human error and can consume a fair amount of man hours. You should explore some modern automation software that can automate the entire inventory control operation for you. I work with Orderhivewhich helps businesses to automate their inventory operations. It comes with inbuilt features that Constantly update the stock level.Help you define safety level stock.Help you locate products ( through bar-codes ) in warehouses for hassle free shipment.Keep track of incoming & outgoing stock.Generate real-time reports which enable you to plan purchases & production in advance.Evaluate & forecast demand.Optimize your logistic workflow.I hope this helps 1k Views · View 6 UpvoterssRmAfpwYoPaYnpeTsUqPFonItrNdhcKeYcCdi nbgjvyuHfTi GZyWANwvUeieWXZtEOSCHrPusKiQDhLtwPKeqehR Inventory management software by Oracle NetSuite.NetSuite helps track and turn inventory faster. Get a free product tour today!FNFFrWHNbOeVFMeK rMQWTbDrLiuvaxNrlYC TtWxaJNGCftVN VnUAGvejBbtHKZPMsMuSfiItOBPeFiYG.EKcemojAmQgYou dismissed this ad.The feedback you provide will help us show you more relevant content in the future.UndoRelated QuestionsMore Answers BelowWhat is the main function of an inventory control system?What are the main advantages of an inventory management system?What are the Inventory controller job responsibilities?What are the different objectives of inventory control?What is the importantance of inventory control?View moreRelated QuestionsWhat is a perpetual inventory control system?How do inventory control system works?What is inventory control number?How do the different methods of inventory control differ?What is an inventory control specialist's job description?Why are multiple techniques useful in inventory control?How is inventory control?Why is inventory control is required?What is an echelon inventory system?What are the various techniques of inventory control?What is two bin inventory control system?What is selective inventory control?What is the inventory system?How can I do stock control through a perpetual inventory system?What is perpetual inventory system?Related QuestionsWhat is the main function of an inventory control system?What are the main advantages of an inventory management system?What are the Inventory controller job responsibilities?What are the different objectives of inventory control?What is the importantance of inventory control?What is a perpetual inventory control system?How do inventory control system works?What is inventory control number?How do the different methods of inventory control differ?What is an inventory control specialist's job description?


The Advantages of Manual Inventory Systems

The Advantages of Manual Inventory Systems


PostEmailPrintMARKETINGThe Advantages of Manual Inventory Systems By: Jonathan Lister Updated September 26, 2017 Jupiterimages/Photos.com/Getty Images By: Jonathan Lister Updated September 26, 2017 Share It ShareTweetPostEmailPrintRelated Net vs. Absolute Inventory Learn More →Manual inventory systems are thought to be a way of the past. The normal "bean counting" performed by small businesses to keep tabs on inventory has given way to the automated world of bar codes and scanners. Even with all this technology, manual inventory systems still hold key advantages over computer-based counterparts. Sometimes Eyesight Is Better Automated inventory systems are prone to glitches and errors just like any other piece of electronic equipment or software. A manual inventory system allows business owners and employees to physically verify that inventory is available. This removes the potential for data entry errors, which can lead to disappointed customers. Manual verification of inventory can also allow employees an opportunity to physically inspect the product and ensure each item is suitable for sale. The only thing worse than a disappointed customer is an angry one who was sold a defective product. Cost and Time The hardware and software purchases required for an automated inventory system can be cost prohibitive for a small business. A manual inventory system can cost as little as a sheet of paper and a pencil. Manually accounting for inventory also saves time, since a business owner doesn't have to scan items into an automated system so they can be read and deducted from a computerized inventory when sold. Saving time also saves money. Power Failure and Tamper Proof A manual inventory system is impervious to power failures that take down automated inventory systems. A business owner is able to account for his inventory even if a tree takes out a nearby transformer, cutting the power to the entire block. Manual inventory systems are also more difficult to tamper with because the items are physically counted. An automated system can be tampered with to artificially reduce inventory to enable theft. Related Articles Net vs. Absolute Inventory Accounting for Inventory Loss How to Set Up a POS System Importance of Computerized Inventory Systems Inventory Control Tools Types of Electronic Inventory Systems How to Fix Inventory Errors in Financial StatementsReferences Street Dictionary: Inventory ManagementBasic College Accounting: Advantages and Disadvantages of Computerized Accounting SystemsAbout the Author Jonathan Lister has been a writer and content marketer since 2003. His latest book publication, "Bullet, a Demos City Novel" is forthcoming from J Taylor Publishing in June 2014. He holds a Bachelor of Arts in English from Shippensburg University and a Master of Fine Arts in writing and poetics from Naropa University. Photo Credits Jupiterimages/Photos.com/Getty Images Related Accounting for Inventory Loss Learn More →Related How to Set Up a POS System Learn More →Related Importance of Computerized Inventory Systems Learn More →Related Inventory Control Tools Learn More →Related Types of Electronic Inventory Systems Learn More →Related How to Fix Inventory Errors in Financial Statements Learn More →EntrepreneurshipAccountingManagementMarketingWritingTaxesAbout UsTerms of UsePrivacy PolicyCopyright PolicyContact Us


The Disadvantages of Inventory Control

The Disadvantages of Inventory Control


PostEmailPrintMARKETINGThe Disadvantages of Inventory Control By: Sean Russell Updated September 26, 2017 stock-taking image by Maksim Shebeko from Fotolia.com By: Sean Russell Updated September 26, 2017 Share It ShareTweetPostEmailPrintRelated How to Set Up a POS System Learn More →In a business environment where even small businesses have products that ship all over the world, inventory control and management have grown in popularity. These services provide a supply chain that keeps tabs on products through every stage of development, and allows management to get real-time estimates of their available stock throughout the day. Even with all this power, there are several disadvantages to inventory control worth considering. Bureaucracy While inventory control allows employees at every level of the company to read and manipulate company stock and product inventory, the infrastructure required to build such a system adds a layer of bureaucracy to the process. In cases where inventory control is in house, this includes a number of new hires that are now present to regulate the warehouses and facilitate transactions. In cases where inventory is controlled by a third party (e.g., InMan or SAP), the cost is a subscription price and dependence on a separate company to manage your infrastructure. Either way, this means a larger overhead and more layers of management between the owner and the customer. From the customer's standpoint, this means a problem that requires senior management to handle will take longer to solve. Impersonal Touch Another disadvantage of inventory control is a lack of personal touch. Large supply chain management systems make products more accessible across the globe, and most provide customer service support in case of difficulty, but the increase in infrastructure can often mean a decrease in the personal touch that helps a company stand out above the rest. For example, the sales manager of a small manufacturing company that sells plumbing supplies to local plumbers can throw in an extra box of washers or elbows at no charge to the customer without raising any alarms. This is done for the sake of customer relations, and often makes the customer feel like he is unique. While free materials can also be supplied under inventory control, processing time and paperwork make obtaining the material feel more like a chore for the customer, or even an entitlement. Production Problems Although inventory control systems give you a better handle on the amount of stock you have and have sold, the same systems can hide production problems and cause customer service disasters. Since the focus is on inventory and not quality control, broken or incorrect items that would normally be disqualified are shipped along with correct items. Related Articles How to Set Up a POS System The Bullwhip Effect in Supply Chain Importance of Computerized Inventory Systems Accounting for Inventory Adjustments What Is a SAP Inventory System? Disadvantages of Lean Manufacturing The Advantages of Manual Inventory SystemsReferences Boston College: Disadvantages of Inventory Management InformationIdaho University: Disadvantages of Inventory Management InformationAuto Glossy: "Mobil and the Disadvantages of Inventory Control"About the Author Sean Russell has been writing since 1999 and has contributed to several magazines, including "Spin" and "Art Nouveau." When not writing, Sean helps maintain community gardens in Silver Lake and Echo Park, California. Russell also worked extensively on the restoration and rejuvenation of public parks in Florida, Louisiana and Mississippi after damage from 2004-2005 hurricanes. Photo Credits stock-taking image by Maksim Shebeko from Fotolia.comRelated The Bullwhip Effect in Supply Chain Learn More →Related Importance of Computerized Inventory Systems Learn More →Related Accounting for Inventory Adjustments Learn More →Related What Is a SAP Inventory System? Learn More →Related Disadvantages of Lean Manufacturing Learn More →Related The Advantages of Manual Inventory Systems Learn More →EntrepreneurshipAccountingManagementMarketingWritingTaxesAbout UsTerms of UsePrivacy PolicyCopyright PolicyContact Us


Top Five Benefits of a Good Inventory Management Strategy

Top Five Benefits of a Good Inventory Management Strategy


From OUr ExpertsFor over 25 years Scanco has been the go to experts in Warehouse and Manufacturing Automation. Our Solution Specialists are here to help solve some of the most complex supply chain problems. Trending topics, industry trends, common problems, expert advice and, more


Top Ten Benefits of Inventory Management

Top Ten Benefits of Inventory Management


Managing inventory is important in all aspects of a business. This can help you gain visibility across your entire supply chain. With an inventory management solution in place, your business will enjoy many benefits. Here are the top 10 perks: 1) Increased SalesBusinesses who actively manage their inventory report a 2-10% increase in sales. 2) Increased Information Transparency Know when items are received, picked, packed, shipped, kitted, manufactured, etc. Also, know when you need to order more, when you’re over-stocked, or under-stocked. 3) Shorter Lead Times Businesses who actively manage their inventory report a 50% reduction in lead times. 4) Lower Costs Effective inventory management practices help result in decreased inventory write-offs, plus lower inventory holding costs. Carrying extra inventory can be very costly for your firm.  5) Improved Delivery Performance Real-time inventory updates improve the flow of goods to customers. 6) Increased Employee Efficiency Good inventory management solutions save time. Less time spent on managing inventory results in greater productivity for you and your clients. 7) Accurate Planning Stay steps ahead of the game and always have the right amount of products on hand by making decisions based on inventory trends. 8) Decreased Stock-Outs Businesses who actively manage their inventory report a 10-25% decrease in stock-outs. 9) Increased Customer Loyalty Improve your accuracy and efficiency, and your customers will love you for it. They’ll trust you to fulfill their needs, and you’ll have exactly what they’re looking for when they come back for more. 10) Increased Inventory Turnover Optimize the value of goods you have and increase inventory turnover by keeping fewer slow-moving products on hand, while increasing your stock levels on profitable goods. Want to learn more about an efficient inventory management system? Click here

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