Knowing the difference between inventory control and inventory management can help businesses function better. These two terms are often used interchangeably, but they refer to different strategies. They play important roles in the success of any organization that deals with products.
In this article, we will discuss the differences between inventory control and inventory management and how they affect a company's overall performance and revenue.
Define Inventory Management
Inventory management is the process of properly handling inventory, from raw materials to finished goods. This smart practice helps businesses decide what to order, how much, and when.
It involves keeping tabs on items from when you order them to when they're in customers' hands. Inventory management aims to have just the right amount of items – not too much or it will go to waste and not too little that it can not fulfill customers' demands.
Some basics of inventory management include:
- Handling Stock Start to Finish: It's about managing goods, from ordering to selling.
- Forecasting What's Next: Using past sales data, companies guess what customers will want in the future. This insight allows businesses to plan better, set prices right, and grow.
- Restocking: It helps figure out when to restock.
- Calculates Sales: How often items sell within a particular time.
- Quick Checks: Regular small checks to know what's left.
- Real-Time Data: It helps with audits to make sure counts match as inventory moves around.
Define Inventory Control
Inventory control is like the daily manager of the warehouse within the bigger inventory managementpicture. It handles the details like getting stock, storing it, moving it around, and making sure orders get fulfilled(and returned, if needed).
A key part of this is managing how things move in and out. Inventory control often involves the following methods:
- FIFO (First in, First out): The oldest items are used first for orders.
- LIFO (Last in, First out): The newest items are used first for orders.
- FEFO (First expiring, First out): Items near their 'best before dates' are used first for orders.
Keeping the warehouse tidy is part of this approach too.
When new inventory comes in, it gets tagged with a unique code. And when things go out, the team records and packs them up. In addition, Vendor-managed inventory (VMI) systems help decide when to send more goods based on sales data while using inventory control methods.
Fundamentals of inventory control method are:
- Manage Warehouse Space: Helps put items in the right place in the warehouse.
- Tracking Items: It makes sure things don't go bad and are used before they expire.
- Smart Placement: Put popular items close to where the team packs orders.
Companies can avoid running out of things or having too much stock by closely monitoring the inventory. Plus, no money is wasted on items going bad or on extra storage.
Inventory Management Systems vs. Inventory Control Systems: What Is the Difference?
Below is a table showing the difference between inventory control and inventory management:
| Aspect | Inventory Control | Inventory Management |
|---|---|---|
| Definition | This system helps control inventory levels in the warehouse. | This system helps in forecasting and restocking inventory on time. |
| Focus | It focuses on what and how much is stocked in the inventory and in what condition. | It focuses on the flexibility to meet customer demand and maintain supplier relations. |
| Scope | Smaller scope. It focuses on a limited or specific aspect of inventory management. For example: concentrating on a particular product line, a single warehouse, etc. | Larger scope. It focuses on a broad approach, like managing all aspects of inventory within an organization. |
| Main Purpose | Track stock and make sure of proper usability. | Manage demand and supplier connections. |
| Decision Making | Short-term adjustments for stock levels. | Long-term strategic planning for optimizing a company's inventory levels to achieve specific business goals. |
| Strategic Importance | Internal stock maintenance. | External market condition response. |
Selecting the Right Inventory System for Your Business
Apart from knowing what is the difference between stock control and inventory management, understanding how and which inventory system is right for your company is also important.
When you're thinking about which solution to pick, follow these steps to get started:
- Check Your Current Setup: Take a look at what approach you're using now. Find where it can be better, and note what things you want to add.
- Talk to the Employees: Have a chat with your warehouse crew and the suppliers. See if the new system should be compatible with their tools.
- Explore Your Options: Different companies have different inventory tricks. Shop around. But no matter what system /software you choose, make sure it can do automatic restocking, cycle counting, and tracking. That's a must!
Choose the Correct Inventory Management System for Your Business With TranZact
Finding the right inventory management system for your business is like finding the perfect fit for your shoes. And TranZact helps you find the perfect inventory management system that fits your company's unique needs. You'll be on the right track by reviewing your company's current situation, getting insights from your team, and exploring different options.
Remember, your inventory system should make things smoother and smarter for your business, like TranZact's inventory management software. So, take the steps outlined in the article above to make the right choice. Let TranZact guide you toward successful inventory management designed just for you.
FAQs on the Difference Between Inventory Control and Inventory Management
1. Are inventory control and inventory management the same thing?
No, both terms are related but different. Inventory control handles the primary stock situation. Inventory management takes care of the entire stock management process, like what to order, how much, and when.
2. What does inventory control do?
Inventory control manages stock in the warehouse, like receiving, storing, and fulfilling orders.
3. What's the main goal of inventory management?
Inventory management's main goal is to predict what raw materials the company needs, when to order them, and how much to order while considering customer demand.
4. Is the scope of inventory control bigger than inventory management?
No, inventory management has a wider scope as it involves building good relationships with suppliers and making strategic inventory-related decisions.
5. What does inventory control help prevent?
Inventory control prevents overstocking or running out of products by managing the daily flow of goods.
6. What's the key role of inventory management?
The key role of inventory management is making sure you have the right items in stock at the right time, without having too much excess inventory.
7. Can you name a key element of inventory control?
One key element of inventory control is to maintain the reorder point for immediate stock needs.
8. Does inventory management handle long-term planning?
Yes, inventory management involves long-term planning, like predicting future demand and managing supplier relationships.
9. What are the benefits of effective inventory management?
Effective inventory management can lead to reduced costs, improved order accuracy, better customer satisfaction, and better use of resources.
10. What is inventory control vs. asset management?
The main difference between inventory control and asset management is that inventory control deals with tracking and managing the tangible goods or products a company holds in its inventory. Asset management goes beyond physical goods and includes a broader range of valuable resources a company owns, like machinery, patents, trademarks, etc.
