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An Inventory Control System

An Inventory Control System

  • An inventory control system is a technology solution that manages and tracks a company’s goods through the supply chain. 
  • It integrates and manages purchasing, shipping, receiving, warehousing, and returns into a single system. 
  • The objective of an inventory control system is to ensure the constant availability of products, by defining:
    • When products should be ordered.
    • What quantities of products should be ordered?
    • How to maintain adequate quantities to meet demand, while avoiding overstocks and stock outs

Types of Inventory Control Systems

  1. Perpetual inventory system.
  • A perpetual inventory control system tracks inventory in real-time. As soon as a product is sold, its barcode is scanned and it is removed from a global inventory database. When one is received, it is scanned and added to the inventory database. 
  • Each part of the system has access to the same database and information. 
  • A perpetual inventory provides a highly detailed view of inventory changes and an accurate accounting of inventory levels without the need for manual inventory counts. 
  1. Periodic inventory system.
  • A periodic inventory system is kept up to date by a physical count of goods on hand at specific intervals. 
  • With a periodic inventory system, a business will not know how many products it has until after the physical count is completed. 
  • Counting stock manually is a process that takes a lot of time and manpower. Each and every item in stock has to be counted. 
  • A periodic system is only acceptable for smaller warehouses with minimal amounts of inventory. 

Barcode Inventory Systems

  • Inventory management systems using barcode technology are more accurate and efficient than those using manual processes. 
  • Barcode systems update inventory levels automatically when workers scan them with a barcode scanner or mobile device. 
  • The benefits of using barcoding include:
    • Accurate records of all inventory transactions
    • Eliminating time-consuming data errors that occur frequently with manual or paper systems
    • Eliminating manual data entry mistakes
    • Ease and speed of scanning.

The benefits of using barcoding include:

  • Updates on-hand inventory automatically
  • Record transaction histories and easily determine minimum levels and reorder quantities
  • Streamline documentation and reporting
  • Rapid return on investment (ROI)
  • Facilitate the movement of inventory within warehouses and between multiple locations and from receiving to picking, packing, and shipping

Radio Frequency Identification (RFID) Inventory Systems

  • Radio frequency identification (RFID) inventory systems use active and passive technology to manage inventory movements. 
  • Active RFID technology uses fixed tag readers throughout the warehouse; RFID tags pass the reader, and the movement is recorded in the inventory management software.
  • Passive RFID technology, requires the use of handheld readers to monitor inventory movement. When a tag is read, the data is recorded by the inventory management software. 
  • RFID technology has a reading range of approximately 40 feet with passive technology and 300 feet with active technology.