What Is an Inventory Control System?


An inventory control system is a technical solution that manages and tracks a company's inventory through the supply chain. This technology will integrate and manage buying, shipping, receiving, warehousing and returns into a single system. The best inventory control systems will automate a lot of manual processes.


Inventory refers to the stock of any kind of material stored mainly in the production process for future use. Inventory is important for supply chain management as it directly affects both cost and service. These are key elements to any logistics system. They also have an impact on other logistics activity centers such as customer service, transportation, warehousing, order processing and material management. Providing adequate service to the end customer inevitably requires a certain amount of inventory somewhere in the chain, as demand is mostly uncertain and production and transportation of the product take time.




There needs to be an optimum minimum of inventory, where the inventory is minimum and the chances of getting out of stock are also minimum. A company achieves this through inventory management. Inventory has various functions such as balancing between demand and supply; Reducing costs to acceptable inventory levels, delivering desired customer levels, taking advantage of quantity discounts, etc.




Inventory control is a scientific method of store keeping and significantly reduces material acquisition and retention cost. This is related to maintaining optimum for several factors like growth in manufacturing units, increasing complexity of modern industry, high idle time cost of machine and men and high level of stress on liquidity.




There are many inventory control mechanisms such as ABC, VED, SAP and FSN analysis.



The various inventory models are economic order quantity (EOQ), material requirement planning, just-in-time and delivery requirement planning.