Explain the concept of inventory control and discuss its techniques.

Inventory control is the process of managing and regulating the supply, storage and distribution of stock. Inventory control is a key function of supply chain management that maintains appropriate quantities of stock to meet customer demand.

The objective of stock optimization is to have the right products in the right place at the right time – as efficiently and cost-effectively as possible. Stock optimization (also known as inventory optimization) plays a key role in ensuring inventory control techniques can be carried out effectively. It’s the art of achieving stock availability, while reducing inventory costs and minimizing the risk of excess items. This is done by forecasting demand and managing supply variables while dynamically adjusting stock rules and inventory parameters.

We all know that inventory takes up valuable warehouse space and ties up capital. Therefore it’s important to invest money in products that will sell so you can optimize inventory turnover and warehouse space.

In this post we’ll look at 6 inventory control techniques that will specifically show you how to control your stock levels, help you optimize your inventory and maximize profits.

1. Understand your demand

Our first inventory control technique is all about demand forecasting. The key to controlling your stock levels is knowing what products to carry to satisfy market demand. It’s critical to invest time (and money if required) in setting up advanced inventory forecasting models that produce accurate demand forecasts. It’s not enough to look at last year’s sales figures and expect this year’s to follow the same pattern! Effective forecasting should consider:

lifecycles: every item in your warehouse is sitting at a specific stage in its product life cycle. Each life cycle stage will affect the item’s demand pattern and so needs to be considered when forecasts are being calculated. Read our blog on demand forecasting accuracy for more details.

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