Inventory control is the process whereby management ensures that inventory on hand is kept safe and in such a manner that it would enhance the entity’s cash flow.
Why is inventory control important
Management must understand what inventory they have, where it is kept and how and when inventory is moved both in and out. Doing proper inventory management helps management to lower costs, prevent fraud, enhance customer satisfaction and provides the basis for accurate financial data for reporting purposes. By making sure that your business has enough inventory on hand, customer satisfaction is enhanced by being able to immediately tend to their needs, and by ensuring just enough inventory is kept on hand, you ensure that valuable working capital is not locked away in large volumes of inventory stored away. Increased inventory levels also comes with the burden of the extra cost on insurance as well as storage fees.
How inventory control can be executed
Various methods of inventory control can be performed by companies and management. Software can be used as a very valuable tool to this effect. The following are some pointers that can be done easily and cost effectively by management:
Inventory control is a very important task in the operational activities conducted by management. Please contact us today should you require any assistance in strenghtening your controls over inventory.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)