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Inventory Control What You Should Know

Inventory control allows businesses to ensure that the right amount of supply is available to meet the customers’ demands. However, what is it? 

In this article, we will discuss what inventory control is. We will tell you the importance and the two main types of inventory control systems. Additionally, we will tell you the challenges and some tips to control your inventory effectively. 

Once you are done reading this article, you will have better control of your inventory. Thus, enabling you to meet the demands of your customers. 

Inventory Control: What is it? 

Inventory control, also known as stock control, refers to the process of managing and regulating a company’s inventory levels to ensure efficient and cost-effective operations. It is a way for a company to manage its supply to make sure it has enough but not too much. 

It involves keeping track of purchases, shipping, storage, and other factors to meet customer needs and be financially flexible.

The primary goal of inventory control is to maintain an optimal balance between supply and demand, minimizing excess inventory while ensuring that enough stock is available to meet customer needs. It also allows companies to evaluate their assets, account balances, and financial reports.

Why is it Important?

Inventory is one of the largest capital costs for businesses that sell products. If you examine the balance sheet of this type of company, you are likely to find that inventory constitutes a significant portion of current assets and consumes a considerable amount of working capital.

Inventory control helps to avoid the various costs associated with purchasing excessive inventory and the strains of operating without sufficient inventory. While some companies using just-in-time ordering may maintain extremely small inventories, nearly any business requires some form of inventory, which is best managed through inventory control systems.

If a company can lower inventory, it may discover new funds available for expansion or profits. If a company needs to carry more inventory and tight inventory control processes increase inventory levels, the business could find higher sales and, once again, higher profits. Using inventory control to optimize your warehouse, stockroom, supply room, or storefront is a sure way to reduce costs and better manage any kind of product.


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Two Main Types of Inventory Systems

There are two main kinds of inventory control systems: periodic systems and perpetual systems. The choice of which system to use depends on factors like the type of business, its size, and the kind of inventory it deals with. 

1. Periodic Inventory Control System

The periodic inventory control system involves regularly counting goods at specific intervals. In this system, warehouse managers manually count their inventory monthly, quarterly, or annually, depending on the organization’s needs and business operations.

The periodic system works best for small companies with a limited range of products in their inventory. It is also suitable for businesses that sell unique or larger-sized goods that can be easily counted manually.

2. Perpetual Inventory Control System

The perpetual inventory control system provides an up-to-date and accurate count of inventory levels using technology like barcodes and RFID tags. This information is recorded in a centralized database, which can be easily accessed by warehouse managers.

The perpetual system is well-suited for companies with multiple locations and those that manage large inventories.

Challenges of Inventory Control

1. Needs substantial resources

Managing inventory manually requires significant resources, including money and staff time. However, if you do not prioritize inventory control, you may end up wasting more time and money later. It is important to set aside dedicated time for inventory control and include it in your budget.

2. Visibility

Companies that deal with large stocks, complex warehousing, or multi-channel sales face challenges in managing their inventories effectively. 

It is crucial for businesses to have a clear understanding of their inventory for various purposes like restocking, accounting, cash flow, and sales. 

Failing to maintain visibility in inventory can result in poor inventory quality and the accumulation of dead stock. Thus, learning how to control warehouse inventory is essential.

3. Prone to human errors

Human Errors are bound to happen when businesses handle a constant flow of inventory in and out of their warehouses. For instance, vendors must send accurate invoices that need to be matched with purchase orders and the actual inventory. Mistakes at this stage can have an impact on your inventory control.

Tips to Control Your Inventory

1. Real-time tracking

By tracking inventory in real-time, you have accurate and current information that guides your financial and business decisions. This can boost your return on investment (ROI) and decrease carrying costs. 

Automatic inventory tracking is especially beneficial for businesses selling on multiple channels. It prevents overselling and ensures a seamless customer experience by synchronizing orders and inventory information across all channels in real time.

2. Perform regular audits

Warehouse staff needs to regularly check their inventory for spoilage, theft, and possible mistakes. This ensures that the accounting team has accurate details about the quantities and costs of the inventory. Using a digital inventory checklist is recommended to make this process easier.

3. Establish reorder points

This practice systematically replenishes your stock items at set periods so you can take better control of your lead time. The ABC analysis method is a helpful tool for carrying this out.

4. Be consistent with your labeling system

Modern warehouse management offers various choices for labeling and identifying inventory. It is important for businesses to find a suitable system and maintain consistency in label strategies.

For instance, using SKUs simplifies inventory management for your team. Barcoding your inventory enables easier control of inventory across multiple locations and facilitates management for multiple sales channels.

5. Always keep critical items in stock

For this tip, you should determine which products are essential for your business and make sure you always have them in stock.

Inventory Control Software

1. Zoho Inventory

Zoho Inventory is a cloud-based inventory control software allowing businesses to effectively manage their inventory, keep track of orders, and streamline their operations. It offers convenient features like instant updates on stock levels and automated reordering, making inventory management easier and more efficient.

2. InFlow Inventory

InFlow Inventory is a user-friendly software designed for small and medium-sized businesses. It provides inventory control, order management, reporting, and integration capabilities to help businesses efficiently manage their inventory.


Cin7 is a cloud-based inventory control platform that caters to retail, e-commerce, and wholesale businesses. It provides comprehensive inventory control, order management, warehouse management, and integration capabilities.

5. EZOfficeInventory

EZOfficeInventory is a web-based inventory control software that enables businesses to track and manage their inventory across multiple locations. It offers features such as asset tracking, maintenance management, and reporting.

Frequentlyasked questions

+ What is inventory control?

It refers to the process of managing and regulating a company’s inventory levels to ensure efficient and cost-effective operations.

+ Why is it important?

It is important as it helps to avoid the various costs associated with purchasing excessive inventory and the strains of operating without sufficient inventory.

+ What are the risks of poor inventory control?

Poor inventory control can lead to various risks such as stockouts, overstocking, increased carrying costs, reduced cash flow, inaccurate financial reporting, customer dissatisfaction, and decreased profitability.

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