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Introduction To Inventory Control System

An inventory control system tracks inventory by scanning barcodes or RFID tags on inventory items. It records transactions and provides information on inventory levels. Modern systems use wireless technologies and integrate with other business systems. Inventory control is important for businesses dealing with consumer goods to avoid stockouts and track shipments. It helps minimize errors and track theft.

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3K views5 pages

Introduction To Inventory Control System

An inventory control system tracks inventory by scanning barcodes or RFID tags on inventory items. It records transactions and provides information on inventory levels. Modern systems use wireless technologies and integrate with other business systems. Inventory control is important for businesses dealing with consumer goods to avoid stockouts and track shipments. It helps minimize errors and track theft.

Uploaded by

rahulpuri16
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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INTRODUCTION TO INVENTORY CONTROL SYSTEM

An inventory control system is a process for managing and locating objects or materials. In
common usage, the term may also refer to just the software component.

Modern inventory control systems often rely upon barcodes and RFID tags to


provide automatic identification of inventory objects. In an academic study performed
at Wal-Mart, RFID reduced Out of Stocks by 30 percent for products selling between 0.1
and 15 units a day. Inventory objects could include any kind of physical asset:
merchandise, consumables, fixed assets, circulating tools, library books, or capital
equipment. To record an inventory transaction, the system uses a barcode scanner or RFID
reader to automatically identify the inventory object, and then collects additional
information from the operators via fixed terminals (workstations), or mobile computers.

Common Components of an Inventory Control System?


Barcode Scanner

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Inventory Software

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IMPORTANCE OF INVENTORY CONTROL SYSTEM


Inventory control is important to ensure quality control in businesses that handle
transactions revolving around consumer goods. Without proper inventory control, a large
retail store may run out of stock on an important item. A good inventory control system
will alert the retailer when it is time to reorder. Inventory control is also an important
means of automatically tracking large shipments. For example, if a business orders ten
pairs of socks for retail resale, but only receives nine pairs, this will be obvious upon
inspecting the contents of the package, and error is not likely. On the other hand, say a
wholesaler orders 100,000 pairs of socks and 10,000 are missing. Manually counting each
pair of socks is likely to result in error. An automated inventory control system helps to
minimize the risk of error. In retail stores, an inventory control system also helps track
theft of retail merchandise, providing valuable information about store profits and the
need for theft-prevention systems.

Computers and Inventory


Automation can dramatically impact all phases of inventory management, including
counting and monitoring of inventory items; recording and retrieval of item storage
location; recording changes to inventory; and anticipating inventory needs, including
inventory handling requirements. This is true even of stand-alone systems that are not
integrated with other areas of the business, but many analysts indicate that productivity
and hence profitability gains that are garnered through use of automated systems can be
increased even more when a business integrates its inventory control systems with other
systems such as accounting and sales to better control inventory levels.."
How Does an Inventory Control System Work?
Automated inventory control systems work by scanning a barcode either on the
item. A barcode scanner is used to read the barcode, and the information encoded by the
barcode is read by the machine. This information is then tracked by a central computer
system. For example, a purchase order may contain a list of items to be pulled for packing
and shipping. The inventory control system can serve a variety of functions in this case. It
can help a worker locate the items on the order list in the warehouse, it can encode
shipping information like tracking numbers and delivery addresses, and it can remove
these purchased items from the inventory tally to keep an accurate count of in-stock items.
All of this data works in tandem to provide businesses with real-time inventory tracking
information. Inventory control systems make it simple to locate and analyze inventory
information in real-time with a simple database search.

Inventory control systems maintain information about activities within firms that
ensure the delivery of products to customers. The subsystems that perform these functions
include sales, manufacturing, warehousing, ordering, and receiving. In different firms the
activities associated with each of these areas may not be strictly contained within separate
subsystems, but these functions must be performed in sequence in order to have a well-run
inventory control system.

In today's business environment, even small and mid-sized businesses have come to
rely on computerized inventory management systems. Certainly, there are plenty of small
retail outlets, manufacturers, and other businesses that continue to rely on manual means
of inventory tracking. Indeed, for some small businesses, like convenience stores, shoe
stores, or nurseries, purchase of an electronic inventory tracking system might constitute a
wasteful use of financial resources. But for other firms operating in industries that feature
high volume turnover of raw materials and/or finished products, computerized tracking
systems have emerged as a key component of business strategies aimed at increasing
productivity and maintaining competitiveness. Moreover, the recent development of
powerful computer programs capable of addressing a wide variety of record keeping needs
—including inventory management—in one integrated system have also contributed to the
growing popularity of electronic inventory control options.

Given such developments, it is little wonder that business experts commonly cite
inventory management as a vital element that can spell the difference between success and
failure in today's keenly competitive business world. Writing in Production and Inventory
Management Journal, Godwin Udo described telecommunications technology as a critical
organizational asset that can help a company realize important competitive gains in the
area of inventory management. He noted that companies that make good use of this
technology are far better equipped to succeed than those who rely
on outdated or unwieldy methods of inventory control.
APPLICATION

An inventory control system may be used to automate a sales order fulfillment process.
Such a system contains a list of order to be filled, and then prompts workers to pick the
necessary items, and provides them with packaging and shipping information.

An inventory system also manages in and outwards material of hardware.

Real-time inventory control systems may use wireless, mobile terminals to record inventory
transactions at the moment they occur. A wireless LAN transmits the transaction
information to a central AVALON.

Physical inventory counting and cycle counting are features of many inventory control


systems which can enhance the organization control systems WORK ONLY with
computers.

What Industries Use Inventory Control Systems?


Inventory control systems are employed in a wide variety of applications, but they
all revolve around tracking delivery of goods to customers. Inventory control is crucial in
retail stores, especially those with a large number or variety of merchandise items for sale.
Inventory control is also used in warehouses to track orders and shipments, and for
automated order processing. Other important applications of inventory control systems are
in manufacturing, shipping, and receiving.
THE FUTURE OF INVENTORY CONTROL SYSTEMS.
In the latter part of the 1990s, many businesses invested heavily in integrated order
and inventory systems designed to keep inventories at a minimum and replenish stock
quickly. But business owners have a variety of system integration options from which to
choose, based on their needs and financial liquidity.

At the same time that these integrated systems have increased in popularity,
business observers have suggested that "stand-alone" systems are falling into disfavor. A
1996 study by the International Mass Retail Association (IMRA), for example, concluded
that stand alone Warehouse Management System (WMS) packages acquired to perform
individual functions will soon become obsolete because they do not integrate well with
other systems.

Another development of which small business vendors should be aware is a recent


trend wherein powerful retailers ask their suppliers to implement vendor-managed
inventory systems. These arrangements place the responsibility for inventory management
squarely on the shoulders of the vendors. Under such an agreement, the vendors obtain
warehouse or point of sale information from the retailer and use that information to make
inventory restocking decisions.

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