Inventory Control (Meaning, Objectives) | Top 6 Techniques

What is Inventory Control (Meaning, Objectives)/Top 6 Techniques 

Almost every company has inventory in some form or other. However, not all of them have mastered the process of inventory control. Organizations now turn to inventory management systems to optimize their company’s supply chain management without spending extra resources. Inventory control involves the implementation of scientific methods to maintain optimal inventory levels; one of the most important aspects of running a successful business.

In this article, we will be learning a little more about what is inventory control i.e. stock level management, its objectives, importance, techniques, and also briefly touch upon the difference between inventory control and inventory management.

Inventory Control

Inventory Control – The Definition

Inventory Control is a method adopted by organizations for optimal inventory management, incurring minimal storage, carrying charges for its stock, as well as satisfying customer demands in the market.

The inventory stock is maintained by an organization to fulfill and maintain the demand of interested consumers in the market. Utilizing scientific techniques is a necessity for management to control the inflow and outflow of inventories while maintaining stock levels. In simple words: it is synonymous with maintaining stock in warehouses, using best practices with help from qualified personnel!

Inventory control is the process of stocking more of the fast-selling products while cutting down on the comparatively slow-selling products in an attempt to reduce wastage, stop the cash flow block, smoothen the supply chain and of course, meet consumer demands.

Inventory Control Definition

Objectives Of Inventory Control

Inventory control is not only a crucial part of operations but also for customer experience & satisfaction. It has increasingly become an area of focus for an increasing number of eCommerce businesses. Let’s look at some of the objectives of inventory control:

Perennial supply of raw materials and other intermediate items for timely completion and shipment of customer orders

  1. Reduced storage and carrying charges of the inventory to a minimum, as stocks are maintained in huge quantities. The maintenance and storage of stock incur significant costs to the businesses.
  2. Perennial supply of raw materials and other intermediate items for timely completion and shipment of customer orders.
  3. To maintain the overall investment of the company in maintaining an optimal level of inventory.
  4. Capitalizing on the situations whenever there is a reduction in market prices of inventory items and effectively managing inventories during an inflationary period where materials can be handled more efficiently.
    Reduction Of scaps and efficient management of unyielding items in an inventory.
  5. Effective maintenance of safety stock and auto continuation of minimum order quantity of the inventory items.

Importance Of Inventory Control

Maintaining an appropriate level of stock is crucial to managing inventory efficiently. Being overstocked would block a more-than-necessary level of cash flow while being understocked would run the risk of costing the business valuable customers due to the inability of the desired product. Businesses must master this method of having the right amount of inventory at the right time. Here are a few reasons why:

  1. With better management and implementation of inventory control, an organization is in a more flexible position to handle sudden changes. Whether there’s an increase or decrease in demand for products, the business will respond as needed – causing a positive impact on revenue.
  2. Inventory control ensures efficient and timely service to customers. When businesses meet their customers’ expectations, it ensures that they come back for more.
  3. The better management of inventory stock reduces the risk associated with loss and wastage of inventory. The controlled storage helps to prepare for any unforeseen incidents in the future
  4. Inventory control plays the role of a bridge for inventory when there is a major disparity in planned production and actual production due to any unexpected event.
  5. With effective inventory control, an organization can prevent overstocking as well as understocking of their inventory, maintaining an optimal flow.
Importance Of Inventory Control

Inventory Control Techniques

There are numerous techniques involved in the inventory control procedure. Some of the popular ones include:

Usage Of Inventory Optimization Tools

Software solutions are designed to counteract the inevitable fluctuations in demand and supply by proactively managing materials based on an expected need.

ABC Analysis

ABC analysis is a useful tool for managing inventories by categorizing them into three grades based on the valuation of materials. It helps to divide resources in an organized manner so that no important material goes missing or gets over-stocked with products that are not selling well.

Batch Making

In this procedure, the materials are ordered and managed using unique batch numbers which help to manage the expiry of the product as well as the timely use.

Economic Order Quantity (EOQ)

This method is used to evaluate the best volume of an order for a particular requirement so that expenditure on purchase and handling is minimized.

Just In Time (JIT)

JIT is a great way to reduce inventory costs, as companies receive inventory on an as-needed basis instead of ordering too much and risking dead stock. Deadstock There are materials that were never sold or used by customers before they were removed from the sale status.


The LIFO and FIFO methods are two different ways to determine the cost of inventory. The First In, First Out method assumes that older stock is sold first- a great way for keeping your products fresh!
LIFO, or Last-in, First-out prevents inventory from going bad. It assumes the newest product on hand will be sold first.

Inventory Control Vs Inventory Management

Inventory Control Vs Inventory Management

The nomenclatures, “Inventory control” and “Inventory management” are often used interchangeably for their similarity as both concepts answer a singular question – “How much stock should one order?”. They cover different aspects and levels of inventory optimization.

In short, inventory control is all about maximizing the profit with the lowest possible level of inventory. But what is inventory management? It is a broader concept including the process of raw material & finished goods inventory procurement, movement, and delivery.

Another difference to note, inventory control starts after the goods reach the warehouse or an equivalent storage location, whereas inventory management pertains to the goods that are already in the warehouse, there to and fro logistics throughout the supply chain, down to the order fulfillment.

Inventory Control is a crucial element of any business. Whether you’re the owner or just an employee, it’s important to know what inventory control means and how it can help your company in different ways. One key goal for this system is to make sure there isn’t too much or too little product on hand at all times so as not to disrupt production schedules. It helps to conserve space without leaving orders vulnerable to damage or duplicate purchasing activity and reduces excess inventories while saving money.

Before you go…

Check out ZapERP inventory management software – a comprehensive tool to streamline and efficiently manage your inventory.


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