Inventory Control Systems

Inventory control systems are designed to increase and maintain high order fulfillment levels for your distribution centre. Can your inventory control systems keep pace with changing customer order fulfilment needs?

inventory control systems editInventory Control Systems

Your organisation may be a start up business or an established organisation expanding into new market. Each business cycle experiences common pitfalls and disconnects when their inventory control systems and inventory management processes are unable to support business initiatives.

A Turn Key Solution has undertaken a number of inventory management assessments that have identified some of these pitfalls and implemented a combination of technology and process solutions to address these challenges.The quality and integrity of data and our reports is impacting on inventory investment decisions. Increased operational costs to maintain outdated systems. Poor data response time due to lack of hardware investment. Wrong stock mix ordered drives higher inventory levels. Physical stock not matching systems stock levels.

Inventory control systems increase order fulfilment. Inventory control is the management and coordination of all processes and procedures which support an effective inventory policy for your organisation. Managed correctly, organisations can benefit from increased customer service levels, reduced inventory investment levels and controled administration costs. This is achieved by using the right tools for better decision making by skilled inventory control resources who understand the impact that they can make on the business. Understanding how to manage demand with supply is the core focus of inventory control.

Inventory control process

Controlling the level of investment to achieve a service target across the supply chain is dependant on a number of factors that an organisation must manage with skilled and equiped inventory control specialists. Each inventory control specialist plays their part either planning, coordinating tasks and managing the flow and accuracy of physical inventory. Success is achieved by having a solid structured platform that is system and process driven, consisting of:

  • An integrated ERP system that supports finalcials and warehouse management processing
  • The right inventory policy for your organisation
  • Sales and operations planning process as a conduit
  • Proper planning settings supporting leadtime, safety stocks, reorder points etc
  • Updated inventory processes, procedures and is version controlledand followed.
  • Inventory control process audit and controls for compliance

Inventory control in retail

In a retail environment, the objective is to have your stores ranged and laid out correctly with each shelf and display full of inventory to ensure that the customer has a wide selection to choose from. As the retailer is focused on velocity, inventory control can be quite challenging, especially if the wrong replenishment method is chosen.

Empty shelves at a retail store reduces the customer experience and can have a tendancy to create noise down the supply chain for most organisations who do not have a responsive supply chain. As space is a premium for the retailer, it is unlikely that there is any back office space to store excess inventory of all ranged products, so focus is placed on only storing promotion sku's or primary selling sku's for that store. The logistics challenges in managing the flow of goods from back office into a store environment are componded by the number of stakeholders involved in touching the inventory and the level of data integrity as some point of sale systems (POS) are not polled as frequently.

Inventory control in wholesale

wholesaler provides the retailer with an assortment of products and typically has a higher delivery frequency to stores as most progressive companies are adopting a direct to store policy (DTS) rather than to a DC. This process encourages the wholesaler to pick stock for each store and replenish based on sell through rates generated by polling each POS at store level. As noted in the retail store example, the extent of the error between physical and perpetual can translate into excess stock being supplied through a stock replenishment process. Identifying and correcting these errors can take some time, especially if the supply chain systems being used are not fully integrated.

Inventory control in manufacturing

A manufacturer has a broad supply chain supporting thousands of sku's from raw materials, work in process, components and sub assemblies to finished goods. This scale presents a number of challenges for the stock control team as sku's also changes their state i.e. from components to sub assembly then to finished goods. The importance placed on data integrity for managing the bills of material, routings and item master files is extremely high and only complicates the challenge further if DRP is activated, pulling stock to multiple warehouses or distribution centres.

Integrated inventory controls systems

Organisations need to make the right choice and select the inventory control system that not only supports their current needs, but more importantly, is able to support additional functionality to narrow the business growth and technology gap at the right cost. The following are examples of inventory control systems that may suit your organisation.

Inventory control software

There is a range of inventory control software that will meet the needs of any size organisation each with a cost of entry that suits the type and scale of business. These systems all provide a standard level of functionality in terms of inventory control transaction flow and an integrated financial backbone that supports all core functions ie: Suppliers, customers, inventory management, fixed assets, costing, distribution, manufacturing etc. Depending on the type of business, some products focus on retail business solution, while others offer manufacturing business solutions and service based software packages. The common aspect for all of these baseline products is that businesses load and export data electronically or adopt a combination. As errors can also occur, the main advantage is that the systems provide an integrated solution compared with spreadsheet inventory control.

Inventory control system spreadsheets

Start-up FMCG SME's generally with a fairly low sku range will use this method of inventory control as it's low cost and very easy to use. As your business grows and requires additional reporting and control, the spreadsheet models can become quite complex and may lead to data errors, missing links, incorrect formulas etc. Sharing information with a number of users is challenging and can contribute to poor data integrity as several users will access the file. Item maintenance, inventory posting, accounts payable, BOM maintenance, item transfers etc are processes that are reliant on data process timing and accuracy.
barcode inventory control systems

Bar code systems were specifically designed to improve an organisations speed and accuracy for processing transactions. A typical barcode system consists of label printer(s), access point(s), radio frequency scanner(s), label software and adhesive labels. In a retail environment, the point of sale (POS) system relies on the integrity of the barcode label to achieve the objectives of speed and accuracy. The accuracy is a function of content integrity at the time the label was produced as content is typically manually keyed by an operator. Bar code systems can deliver organisations real savings by reducing cycle time processing, providing realtime data for decisions and inventory reduction. As barcode inventory systems can fail, resulting in software or hardware replacement, the main draw-back of this system is the effort and cost of de-stickering or over stickering all your stock.

RFID inventory control systems

Radio Frequency Identification (RFID) is a form of communication technology that uses radio waves to identify or track objects. It is typically a small chip (RF Tag) that stores data which can be scanned by a reader in any direction, compared to a barcode label which is scanned by an operator or a fixed scanner under a line of sight. The RF tag can be reused as the content is refreshed (read/write) whereas the label is read only. The RFID tag is still a higher cost compared to the conventional barcode label.