TT313 INVENTORY CONTROL SYSTEMS 2 UNITS

Contents
 Overview of inventory control
 Reducing inventory costs
 Stock management
 Inventory management and customer services
 Inventory control systems
o Security
o Safety and sanitation
 Warehouse operation principles
o Warehouse equipment and handling
 Material requirement planning
 Supply chain management
INVENTORY CONTROL SYSTEM
Inventory control system is a set of hardware and software based tools that automate the process of
tracking inventory. Modern inventory control systems are almost exclusively based on barcode
technology. Though barcodes were initially developed to automate the process of grocery store check
out, their ability to encode a wide variety of alphabetic and numeric symbols makes them ideal for
encoding merchandise for inventory applications.
Inventory control system works in real time using wireless technology to transmit information to a
central computer system as transactions occur.
Inventory control system is employed in a wide variety of applications, but they all revolve around
tracking delivery of goods to customers. Inventory control is crucial in retail stores, especially those
with a large number or variety of merchandise items for sale. It is also used in ware house to track
orders and shipment, and for automated order processing. Other important applications of inventory
control system are in manufacturing, shipping and receiving.

Importance of Inventory Control System

- It ensure quality control in business that handle transaction revolving around consumer goods
- It is an important means of automatically tracking large shipments
- An automated inventory control system helps to minimize the risk of error
- In retail stores an inventory control system helps track theft of retail merchandise
- It provides valuable information about store profits and the need of the theft preventions
system
Inventory control system can serve a variety of information
- It can help a worker locate items on the order list in the warehouse
- It can encode shipping information like tracking numbers and delivery addresses
- It can remove these purchase items from inventory tally to keep an accurate count of in-stock
items
- It makes it simple to locate and analyse inventory information in real time with a simple
database search.

Components of Inventory Control System

- Inventory Software
- Barcode Scanner
- Wireless Barcode Scanner
- Barcode Reader Machine
- Barcode Printer
How to Design an Inventory Control System

Inventory management is a business function where owners and managers create policies and
procedures to safeguard their assets. This control system is a mix of operational and accounting
procedures. Owners and managers train employees on this function because it can be costly to replace
inventory, especially for smaller businesses with low capital resources. Designing an inventory
control system can use universal standards or include ones specific to a company’s internal
operations.

1. Determine the number of products or product lines in the business. Companies with several
product lines often require a more detailed system. Higher value inventory also can require
more controls to guard against inappropriate employee actions.
2. Create an inventory storage system. Storage is done at the retail, warehouse or distributor
level. Owners and managers also can use security tags or electronic devices to track inventory
moving through the company’s operations. They also can help retrieve stolen or lost
inventory.
3. Develop a counting process. Companies need periodic physical counts to reconcile actual
inventory to a company’s accounting books. The most common types are cycle counts and
annual inventory. Cycle counts require employees to count a specific number of items each
day or week. An annual count is often done before fiscal year-end.
4. Choose a valuation method. Valuing inventory is an accounting process. Methods include
first-in, first-out (FIFO); last-in, first-out (LIFO); and the weighted average process. FIFO
requires companies to sell older goods first, leaving more recent items in the accounting
ledger. LIFO is the opposite, where newer inventory is sold first. The weighted average
method recalculates inventory cost each time a purchase is made.
5. Decide whether you want a periodic or perpetual system. The periodic system updates the
accounting ledger once a month or quarter. Perpetual systems update inventory accounts after
each purchase, sale or other adjustment to inventory.
INVENTORY MANAGEMENT SOFTWARE
Inventory management software is used to track and manage the supply of goods and materials. It
helps businesses to keep track of the quantity, location, and condition of their inventory, as well as
to monitor and manage the flow of goods and materials in and out of their warehouses. They always
have the right amount of stock, without overstocking or understocking. It can also help businesses
identify trends in their inventory, so they can plan ahead for future needs. Furthermore, inventory
management software can help businesses with pricing decisions and cost-saving initiatives.
Inventory management software typically contains a database of all inventory items, with detailed
information such as stock levels, pricing, suppliers, and delivery dates. It can also generate reports
and track delivery dates and costs. This helps businesses to stay organized and efficient, while also
ensuring they meet customer expectations

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
Supply Chain Management SCM Software
Supply Chain Management SCM software helps to automate and streamline the process of tracking
inventory, ordering, and shipping products. It also helps to monitor and manage supplier relationships,
optimize inventory levels, and improve customer service. SCM software can also be used to track and
analyze data related to the supply chain, such as cost, delivery times, and customer satisfaction.
Demand Forecasting Software
Demand forecasting software's key features include historical data, market trends, and other factors to
create accurate forecasts of future demand. This information can then be used to inform inventory
management decisions, such as when to order new stock, how much to order, and when to discount
items. By using demand forecasting software, businesses can better manage their inventory functions
and ensure they have the right products in stock at the right time.
Multi-Channel Inventory Management software
Multi-Channel Inventory Management software allows businesses to track inventory levels, manage
orders, and optimize inventory levels across multiple sales channels. It also helps businesses to
automate processes such as order fulfillment, inventory replenishment, and stock management.
Additionally, it can provide insights into customer demand and help businesses make better decisions
about inventory levels
Point of Sale POS Software
Point of Sale POS software allows business owners to track sales, purchases, and stock levels in real-
time, as well as generates reports and analyzes data. It also helps businesses manage their inventory
more efficiently by providing automated ordering, tracking, and reordering processes. Additionally, a
POS system can be used to track customer information, loyalty programs, and discounts.
Vendor Management Software
Vendor Management software is software that helps businesses to track vendor performance, manage
vendor contracts, and monitor vendor compliance. It also helps businesses manage their inventory by
tracking inventory levels, ordering new inventory, and tracking inventory costs. Additionally, it can
help businesses.

Advantages of Inventory Control Management System

i. Process of inventory control saves money with improved accuracy and fewer errors
ii. Enjoy easier tracing and auditing capabilities
iii. Effective inventory practices help streamline workflow process
iv. You can manage inventory anytime, anywhere
v. Real time information access informs inventory decision making
vi. Provide better customer services through accurate order fulfilment
vii. Improved team collaboration helps everyone in your company
viii. Automated stock-level alerts ensure enhances security
INVENTORY TECHS
Barcodes
Barcodes can be part of either a perpetual or periodic inventory system. Some may consider the
barcodes part of an inventory management system, but in truth, this is equipment that falls under your
existing stock management system. A barcode is essentially a little picture with text or numbers that
gets put on each stock item. The text or numbers store a large amount of information. A scanner reads
that information and transfers it to a database, which tracks the parts and their locations. The system
performs scans when the new product arrives and when it is issued out.
Barcodes have a rapid return on investment (ROI) by lowering operating expenses once implemented,
even for small businesses. Other benefits of barcoding include:
 The elimination of manual data errors
 Faster collection of inventory information
 Automatic inventory updates
 Streamlining of documentation and reporting 
 Enabling inventory movement between multiple warehouses and departments
 Easy and quick identification of minimum levels and reordering of necessary levels

Implementing barcodes on inventory is a smart idea because they offer scalability and accuracy, even
to small and growing businesses

Radio Frequency Identification (RFID) Tags

RFID tags are also a type of equipment that falls under an existing inventory management system.
RFID tags are a type of smart tracking. RFID tags contain electronically stored information, more
information than is possible with conventional barcodes. Tags can be passive or active:
Active RFID tags include batteries, whereas passive tags do not have batteries. The RFID reader
supplies the power for passive tags through radio waves, whereas active tags send out their radio
waves. Both types of tags automatically update to identify the stock and capture any associated data.
RFID tags are an effective way to protect high-value items and products that require additional
security compliance, such as pharmaceuticals. Active tags are the best course in businesses where
inventory security has been an issue
Remote Tag Reading: The reading range for passive tags is approximately 40 feet, and the range for
active tags is 300 feet.
Simultaneous Tag Reading: The system can read several tags simultaneously so that it can check in an
entire pallet of products at once.
Unique Tag Codes: To track unique products, not just one type of product, you can give tags unique
identification codes.
Constant Updates: Without having to update the physical tag on the item, you can send it updates such
as warehouse location via your active tag or by keeping the passive tag system activated.
Some challenges with using RFIDs include:
 Passive RFID tags require scanners or handheld readers.
 The cost can be prohibitive for some businesses.
 The supply chain also needs the equipment necessary for RFID tags

Stock Control
Stock control, also known as inventory control, is a process of managing your stock to minimize costs
and prevent stockouts. Businesses can enhance their profitability by finding the right equilibrium
between maintaining adequate stock levels to meet customer demands and avoiding excess stock that
incurs holding costs.
Efficient stock control ensures timely order fulfillment, enhancing customer satisfaction and loyalty.
It holds a significant role in supply chain management, enabling seamless production planning and
efficient coordination with suppliers.
Warehouse managers face various challenges in maintaining efficient stock control, and these hurdles
can significantly impact warehouse operations. Let’s explore some of the most prevalent challenges:
1. Inaccurate demand forecasting leads to overstocking or under stocking.
2. Relying on manual tracking and spreadsheets, prone to errors.
3. Lack of real-time inventory visibility hinders decision-making.
4. Difficulty in managing seasonal demand fluctuations.
5. Inefficient order fulfilment processes cause delays and errors.
6. Limited warehouse space restricting inventory holding capacity
Warehouse managers can implement various stock controlling methods and strategies to overcome the
above challenges in stock control and achieve efficient inventory management. Here are some of the
most effective approaches:
 Just-in-Time JIT Stock Control: Just-in-Time (JIT) is a lean inventory management method
aiming to receive goods only when needed for production
 Min-Max Inventory Control: This theory sets minimum and maximum levels of stock to
maintain specific items in your inventory. So, when you get to the minimum level of stock, order
only enough to reach the maximum level set. Critics of this approach say that you may end up
with either too many or too few products
 First-In, First-Out/LIFO FIFO FIFO is a stock rotation strategy where the oldest inventory
items are sold or used first. LIFO assumes that the goods last added to the inventory are the first
goods to be sold. Implementing FIFO helps prevent inventory obsolescence and spoilage,
ensuring products are consumed or sold before expiration.
 Economic Order Quantity EOQ calculates the ideal order quantity that reduces overall
inventory expenses. It considers the cost of holding inventory, order processing costs, and demand
rates.
 Vendor-Managed Inventory VMI Vendor-Managed Inventory is a collaborative approach where
the supplier manages the inventory levels at the customer’s warehouse. Suppliers monitor stock
levels and replenish inventory as needed, taking the burden of inventory management off the
warehouse manager’s shoulders.
 Batch Control: Batch control is particularly relevant for products with batch specific attributes or
those manufactured in distinct batches. This method involves managing inventory by tracking and
controlling the movement of products in specific batches.