1. What Makes A Good Inventory Control System?
An inventory control (I/C) system is a set of interdependent processes, procedures , and methods that
interact regularly to track the flow of individual inventory items from the time they enter the supply
chain of the business to the time they leave the business through its distribution or asset disposal
system.
The system includes all aspects of managing a companys inventories : purchasing, receiving,
warehousing, storage , tracking, shipping, turnover, and reordering. Ideally, each of these aspects
makes up a separate subsystem. However , different companies have different ways of dealing with
these aspects in relation to inventory control. Some treat each aspect as a subsystem while others do
not.
Computerised inventory control systems have made it possible to combine the various functional
subsystems of inventory management into a single cohesive system. In the modern business
environment , even MSEs have come to rely on computerised inventory management systems.
A computerised I/C system may be too much of a good thing for small establishments like retail
outlets , shoe stores, convenience stores, and the like. These types of businesses can continue using
manual systems or partially computer-assisted systems.
However, they may still be found to have a good inventory control system. It is not computerisation
that makes a good inventory control system but something more fundamental.

2. Elements of a Good Inventory Control System
Inventory management has four important functions:
Counting and monitoring of inventory items
Recording and retrieval of items storage location
Recording changes to inventory
Anticipating inventory needs, including inventory handling requirements
A good inventory control system support all the above functions of inventory management to achieve
the ultimate goal Maximizing cash flow:
Counting and Monitoring of inventory Items
The nature of inventory is that it is always moving or flowing through different channels. An effective
I/C system should be able to count and keep track of every inventory item as it moves because the

3. company incur cost the moment each item comes in and that cost not only has to be recovered but
also contribute to the companys profitability.
Tracking inventory and assessing its values as it makes progress through the processes is the
primary reason for developing the system. For a business that deals only with finished goods, the
task is relatively simple: it basically involves counting cans, kegs, or boxes. The task becomes more
complex for manufacturing firms , where there is conversion of materials inventory into finished
products inventory. In a manufacturing set up, tracking inventory flow goes hand-in-hand with:
-Handling raw materials
-Controlling materials in process
-Managing finished products
The more common use of an inventory control system is constantly counting finished inventory for
sale. This is because items with retail worth have greater value and offer a more accurate picture of a
companys net worth.
Recording and retrieval of Item Storage Location
A crucial feature of a good inventory system is the inventory database , the repository of data related
to every inventory item. This is the key to effective inventory tracking. The database contains
everything there is to know about inventory: item identification, date acquired, quantity acquired,

4. vendor identification, unit cost, reordering parameters, purchasing lead time, quantity used , date
used, place/process used , persons responsible for transactions, warehouse location code, item
status.
A non-computerised inventory database works fine, but it is many times slower and more error-prone
than a computerised version.
The current trend toward inventory management automation has introduced the concept of real-time
intelligent information processing in the warehouse. Automation uses combinations of hardware
including material handling and data collection technologies. The "intelligent bCrLf" part of the
system is powerful software that automatically controls all aspects of warehouse operations, including
management of the inventory database.
Part of a good inventory control system is a stock locator database, which is preferably computer-
based. This database, in tandem with the inventory database in a modern space management
system , helps in proactive decision making. It captures and maintains records of: stock number, lot
number, number of pallet loads in each storage location , grid coordinates of the reserve area,
individual rack tier positions, and pallet load capacity of all storage locations.
An equally important part of the system (whether automated or not) is a sensible effective
warehousing design. Small businesses, especially those involved in processing fairly large volumes
of materials and goods, can reap great benefits from a user-friendly and properly organised
warehouse layout. A well-designed warehouse makes locating and retrieving stored materials
efficient and lends support to the inventory database system.
For example, when a materials releasing clerk requests for retrieval of a specific item from storage,
the inventory database system links the items location code with its actual physical location

5. information in the stock locator database. Warehouse personnel use the location information for
actually retrieving the item from storage. If the warehouse is efficiently designed, retrieval of the item
takes only a short time. Quick retrieval contributes to quick delivery to the customer.
Recording Inventory Sales
An inventory database does not operate by itself. It needs input before it can process output.
Since the database is at the core of a good inventory control system , assurance must be provided
that all transactions involving inventory are captured by the system: purchasing , purchasing returns,
receiving, storage , requisitioning, retrieval from storage , delivery to end-user, spoilage/damage.
The business has to design effective triggering mechanisms that signal system operators to perform
appropriate database update procedures the moment an inventory transaction occurs. Effective
feedback mechanisms also need to be put in place to confirm that updates have been performed
promptly and correctly.
Moreover, data quality control must be exercised at all times in order to guarantee that all data items
that the database captures are accurate and valid.
Anticipating Inventory Needs

6. One of the most important factors of success in cash flow management is keeping inventory levels at
minimum. The business only keeps stock of enough goods and materials to prevent a stock-out
situation that could paralyse operation.
To achieve this objective, the business has to anticipate future inventory needs as accurately as it
can in order to respond effectively to seasonal customer demand (and thus take advantage of sales
revenue opportunity) without placing itself into a situation called over overstocking.
If the companys inventory control system is sound, its inventory database system can produce
detailed reports, summaries, and analyses which can assist management in planning future
purchases and/or production schedules. REport details like for example, vendors and purchasing lead
time, can guide management in scheduling purchase orders. Unit cost details help management
make purchase volume decisions and set aside funds for the purchase.
Inventory Management Secret
Inventories are assets that do not work until sales are made. Therefore, turning those inventories is
critical to the companys financial growth and success.
Inventory turnover is the primary criterion for a good inventory control system.

7. There is no magical mathematical equation or formula for determining just the right level of inventory
based on previous sales, but every business has the capacity to know the tastes and behaviours of
its customers, to understand its products, and to make wise management decisions.
Business can use this knowledge to achieve inventory turnover that translates to maximum profit
margin and cash flow.
Learn more about having a good inventory system and see your business grow and succeed. Visit
http://bonusreviewsdot.com to know better ways of doing business.
CSO