Inventory control or stock control can be broadly defined as "the activity of checking a shop's stock." However, a more focused definition takes into account the more science-based, methodical practice of not only verifying a business' inventory but also focusing on the many related facets of inventory management (such as forecasting future demand) "within an organisation to meet the demand placed upon that business economically." Other facets of inventory control include supply chain management, production control, financial flexibility, and customer satisfaction. At the root of inventory control, however, is the inventory control problem, which involves determining when to order, how much to order, and the logistics (where) of those decisions.
An extension of inventory control is the inventory control system. This may come in the form of a technological system and its programmed software used for managing various aspects of inventory problems , or it may refer to a methodology (which may include the use of technological barriers) for handling loss prevention in a business.
An inventory control system is used to keep inventories in a desired state while continuing to adequately supply customers, and its success depends on maintaining clear records on a periodic or perpetual basis.
Inventory management software often plays an important role in the modern inventory control system, providing timely and accurate analytical, optimization, and forecasting techniques for complex inventory management problems. Typical features of this type of software include:
Through this functionality, a business may better detail what has sold, how quickly, and at what price, for example. Reports could be used to predict when to stock up on extra products around a holiday or to make decisions about special offers, discontinuing products, and so on.
Inventory control techniques often rely upon barcodes and radio-frequency identification (RFID) tags to provide automatic identification of inventory objects--including but not limited to merchandise, consumables, fixed assets, circulating tools, library books, and capital equipment--which in turn can be processed with inventory management software. A new trend in inventory management is to label inventory and assets with a QR Code, which can then be read with smart-phones to keep track of inventory count and movement. These new systems are especially useful for field service operations, where an employee needs to record inventory transaction or look up inventory stock in the field, away from the computers and hand-held scanners.
Inventory control systems have advantages and disadvantages, based on what style of system is being run. A purely periodic (physical) inventory control system takes "an actual physical count and valuation of all inventory on hand ... at the close of an accounting period," whereas a perpetual inventory control system takes an initial count of an entire inventory and then closely monitors any additions and deletions as they occur. Various advantages and disadvantages, in comparison, include:
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