Post about "inventory management"

What Is an Inventory Management Control System?

The inventory is one of the main factors that determine how well businesses work and make profits. It is healthy and important for all businesses to operate and manage their inventory well so that turnover rates will minimize as product quality and productivity increases. The focus and objective of the inventory management control is to maintain an optimum level of the inventory and its investment. Many of the businesses today has succeeded in making plans and improvements for their inventory system and management; the management as well as inventory controls work differently and vary greatly from one business to another. Some inventory control models have complicated and complex inventory models while some might have simple and easy inventory models and methods.How does the inventory management control system work? What are the types?Generally, inventory management control system works pretty similar for almost all business the differences though, might include a few changes in methods and workouts depending on business motivations, goals, and future accomplishments. Our modern world today consists of a variety of businesses which indeed have different business cultures and styles, which can be seen by their unique practices, rules and regulations, dressing codes, and other factors. The simplest method for inventory management control system works pretty easy; small businesses, shops, partnerships, and other forms of businesses use this method daily. This method can also refer to a visual or a look-se method where the purchase person would review the stock daily to look for items and observe whether they are scarce, overloaded, or if there are any improvements to be done. He also places orders when there is a gap or a need for items in the inventory and when the minimum level is believed to be reached. For the simple method of inventory management control system, records are not a must. These simple methods only require visual or look-see experience to gather information but does not necessarily require a neat and accurate records of items in the inventory; the amount, sales, withdrawals, and deposits are all observed physically and no records are needed to remember and to serve as any evident which can sometimes cause confusion as well as loss of profits due to slow productivity and a disruptive flow of the system though the method does not require much effort or knowledge in technological tools.Well, to improve the visual method, it would be convenient, simpler, and safer to arrange or place the re-order near the storage r production team so that orders can be placed right away as the production team starts it production right away not to waste time because time is money. Also, the re-order line should be higher than the normal usage until new orders will arrive and will be placed again. This method works simply just like the visual method, however, considering where the container should be placed and that orders can be placed once a container is empty makes this method efficient and effective since it is well planned and structured which will then raise productivity, improve distribution, and have maximizing rates of customers and receive positive feedback.Another method, the perpetual inventory control method, allows managers to keep daily records of the inventory which includes the quantity or the total amount of items in stock, withdrawals, sales, and deposits to ensure the amount of cash flow projections and make sure that there are no mistakes in orders and receipts to avoid customer negative feedback and turnovers. In order to use the perpetual inventory control system, the manager has to include and consider the name of the items in stock, the projection of the amount of cash needed to purchase the items, and refunds in case customers did not receive products ordered or if there are any misconceptions.The ABC classification inventory management control system is also a well-known control system that works effectively. Here in this method, items are classified separately into groups (usually about three groups according to the annual costs of items used and the ranks of usage) to control and maintain a stable structure because it is greatly believed that the inventory system is also the main organ in a business that when stops abruptly, can flutter the whole productivity system and can affect other areas of a business as well. Also, the ABC control system does not only controls the system, but it throws a great opportunity for managers to decide on their own the best way to control different systems and change as situations change. It is also the manager’s job to decide which items are in need.How to control Inventory Management System? (tips and techniques)1. Consider economic purchases as well as the quantity of items or products purchased2. Observe reorder levels and keep schedules on when to order items3. Always have a safe stock or a minimum inventory in case items ran out of stock immediatelyTo control inventory management system, a business has to consider the amount and the quantity of items ordered to meet the entire needs of a business. The company has to project costs and expenses each time orders are placed in order to manage and control the inventory and reduce as much costs as possible. Sometimes companies would increase their orders and the amount of products and items to reduce costs and expenses but this can lead to having large average stock inventory, which results in increase carrying stock.4. Consider the costs of carrying stocks and orders:a. Costs of orderingb. Costs of carrying stocksCosts of ordering include transportation fees where if small amounts are ordered, it is most likely that transportation fees will be costlier than large amounts or orders. Costs of postage, telegrams, phones, faxes, transportation and other out-of-pocket costs can also lead to a costly inventory management. Training programs, setups, overtime, and other fixed costs like salaries and wages will serve as fixed, must-pay costs. Costs of carrying stocks mainly include investment interests, which is where most companies forget about when doing a business. Most businesses forget all about taxes and interest rates which were the main reasons why businesses failed; companies have to control and keep records or their stocks and inventory to avoid serious financial problems and expenses needed to be aware of. Space occupied by stocks in inventory is funded; taxes, rents, electricity costs, and water costs could also minimize the goals and profits projected if not controlled properly.