Monday, August 11, 2008

Inventory Control System

Inventory control is difficult to embrace. Inventory control is a system of maintaining inventories in order to prevent stock outage, to control overage and shortage, to reduce carrying charges (interest, storage, and insurance), and fend off theft. Documenting policies and procedures that provide the guidelines for effective and efficient inventory control is a must. Examples of Inventory Control requirements are:
  • Inventory accuracy: Inventory records must be consistently accurate in order to control costs and to fulfill sales order requirements.
  • Reduce internal lead times: Overall lead time of raw material, sub-assemblies, and finished goods must be reviewed in order to discover if any inefficiency exists.
  • Speed up the time to replenish raw material: Replenishing raw materials in a timely manner, so that adequate inventory levels can meet customer demand, is critical. Knowing suppliers' lead times is the key to accurately replenishing raw materials.
  • Review order quantities: As mention earlier, ordering large quantities, in order to get a "volume discount," is not always the best method for reducing cost. The Economic Order Quantity (EOQ) method of purchasing works well in lowering overall cost.


Ginesys said...
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Ashok Sharma said...

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