Inventory Controlling
Inventory controlling, also known as inventory management, describes the process of monitoring, evaluating, and, if necessary, adjusting inventory levels.
In inventory control, inventory levels are monitored, evaluated, and adjusted as needed.
Definition of Inventory Control
Inventory controlling is part of inventory management and also serves as the link to financial management. The term “inventory controlling” refers to the analysis of specific inventory values and key performance indicators in order to create transparency in complex warehouse situations and thereby maintain an overview of current inventory levels. In a company’s logistics operations, inventory controlling is a vital tool, as it offers comprehensive analytical functions to monitor inventory levels, evaluate them, and take appropriate action as needed. Based on past, present, and future trends, important decisions can then be made regarding inventory planning and the company’s overall strategy.
The controlling system also helps companies transition products from the so-called “actual” state to the “target” state: that is, having the right quantity of the right goods in the warehouse at the right time. Inventory controlling assists with planning, purchasing, management, and the administration of logistics.
How does inventory control work?
An important task of inventory controlling is evaluating information, key performance indicators, and inventory figures to use this data to calculate, for example, the optimal order quantity. An important tool for this is, for example, ABC analysis. It indicates the percentage of total value that a product represents over a specific period. From this, it is possible to determine how often this product should be available in the warehouse. Using these key figures, a company can better plan the management of its future inventory.
Software-Based Controlling
Inventory control can be performed manually or using software. However, especially in larger companies with an extensive product portfolio, manual processing with pen and paper or Excel is insufficient. As the volume of data increases, manual handling has long since become impractical. As a result, more and more companies are turning to inventory control software. This ensures effective inventory control by identifying potential issues before they arise. Additionally, decision-makers can base their decisions on the software’s insights rather than relying on gut instinct.
Advantages
- Reduce capital and inventory costs
- Maintain consistent delivery capability and avoid out-of-stock situations
- Flexible delivery times
- Fully automated status analysis
- Accurate forecasts
- Optimal safety stock
What are the responsibilities of inventory control?
An important task of inventory control is monitoring inventory trends and the current product assortment. Furthermore, identifying unnecessary inventory and so-called slow-moving items (inventory/items with a very low inventory turnover rate) is a key component. All inventory monitoring tasks aim to identify the appropriate measures for optimizing inventory levels. This also supports the company’s day-to-day operations. Controlling helps ensure that the right number of parts and products are kept in stock to avoid out-of-stock situations, excess inventory, or other warehouse issues.
Objectives of Inventory Control
Inventory control is indispensable for a company with large inventory levels. Often, costs arise that can be easily avoided through inventory control. A key task of inventory control is to minimize inventory levels so that as little capital as possible is tied up, while still ensuring that customers do not experience delivery delays.
Overview of Additional Objectives
- Reduce and optimally manage inventory
- Keep working capital as low as possible
- Save money, time, and effort
- Optimize the company’s supply chain
- Identify slow-moving items
- Achieve an optimal balance between delivery capability and inventory reduction
- Optimize processes and resource utilization
FAQ
What methods are used in inventory control?
A distinction can be made between different types of inventory control:
- ABC/XYZ analysis: Here , a company’s inventory is categorized based on its value and urgency
- Just-in-time: Inventory levels can be reduced so that materials are delivered exactly when they are needed.
- Safety stock: This can help address fluctuations in demand and out-of-stock situations.
How can inventory control be optimized?
To optimize inventory control, certain factors—such as data analysis and demand forecasting—can help provide a better understanding of trends. Automated ordering systems can help process orders more quickly. Strengthening supplier relationships, for example, can also help improve reliability.
How can inventory control influence customer satisfaction?
Well-functioning and effective inventory control ensures that needed products are in the right place at the right time, which also leads to higher customer satisfaction. It also helps prevent excess inventory.