What Is An Inventory Control System And How Does It Work?

The inventory control system is a crucial element of any online business. Making the right choice in your method of managing inventory method will ensure that you have the correct inventory at the right moment to meet customer needs. An accurate system for counting inventory will make your company more profitable, by reducing the price of goods sold and will increase sales as you’ll have stock available to meet orders.

A system for controlling inventory will assist in streamlining and automating the process of managing inventory for you. In this article, we will discuss the features of the inventory control process and the benefits it could bring to your company.

Inventory Control System

A system for controlling inventory is a solution that tracks and manages the goods of a company’s supply chain. The technology can integrate and coordinate the purchasing as well as receiving, shipping storage, and returns into one system.

A good inventory control system can make it easier to automate many manual procedures. It will give you a clear overview of what stocks you own in your warehouse, their location, and the time you must order more to keep your stock at optimum levels.

Types of Inventory Control System

The systems for controlling inventory have advanced. In the past, they were nothing more than spreadsheets. But nowadays, machine learning has added greater automation to inventory control. There are two main types of systems for controlling inventory.

1. The system of perpetual inventory.

A continuous inventory control system monitors the inventory in real time. Once an item is sold, the barcode is scanned and removed from the inventory database of the world. If a receipt is received the barcode is scanned and included in the database of inventory. Each component of the system can access the same database as well as information.

A perpetual inventory offers the most precise view of inventory changes and provides a complete analysis of inventory levels without the requirement to count inventory manually. It’s suitable for businesses of all sizes and is essential for stores that have a high volume of sales or multiple locations.

2. periodic Inventory system.

A system of periodic inventory keeps up-to-date through a physical count of the inventory of items at regular intervals. When using a periodic inventory system the business won’t know the number of goods it has until the physical count is complete. It’s simple to see the way this could cause problems in the process of fulfilling orders. The stock count was precise several months or even weeks ago, but now, when customers want to purchase the item, you need to physically inspect your inventory to verify whether you have enough to sell.

The manual count of stock is a task that takes much time and energy. Each SKU needs to be counted. This is not a good idea in a store with a lot of inventory.

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The periodic system is suitable for smaller companies that have a small inventory.

Why is Inventory Control System Important?

For your business to operate efficiently and make money, You must be able to keep the product available when a customer requests it. Amid this simple assertion lies the complex nature of purchases as well as sales, shipping receiving storage, and shipping. A system for inventory control can help you simplify and manage this complex so that you can concentrate on other areas that make up your company.

1. Actual-time levels of inventory.

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A continuous inventory system will keep track of inventory levels globally every time the product is purchased, sold or manufactured, or returned. With a precise, real-time inventory, you can analyze the flow of inventory and set efficient points of reordering. This will help you avoid out-of-stock issues and overstocked inventory. Real-time inventory levels enhance relationships with customers by stopping backorders and improving relations between employees by providing them with an accurate picture of the status of inventory.

2. Improve your workflow for logistics.

The supply chain of your business is complicated.

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There are numerous steps to get the product to your client. A well-designed management system for inventory will not just enable you to monitor the product at every stage of its journey, it will also provide you with the tools to identify bottlenecks in the logistics process.

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This allows you to have more time to focus on enhancements.

3. Savings on financials.

There are many ways in which inaccurate inventory could cost your business.
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If there isn’t a product available, a buyer might cancel an order and purchase the item elsewhere rather than wait for an order backorder.

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However, incorrect inventory could result in stock that is not needed, which can increase the cost of storage in terms of insurance, storage costs, and tax. A system for controlling inventory will reduce your expenses by keeping stock at the right levels.

4. Reduce manual labor inaccuracies.

Physical inventory tracking is susceptible to fraud and errors. When you track a product from purchase order to delivery and then implement an inventory control system, you eliminate the possibility of theft and human error from the problem.

5. Increase customer satisfaction.

At this time of next-day delivery or next-day delivery, customers are expecting to receive their orders on time. If your inventory isn’t accurate customers could place an order for the item that you display as in stock but do not have. This could lead to the cancellation of an order or a backorder that could result in unhappy customers who might not purchase from your store again.


Inventory is the mainstay of every eCommerce store. Making sure that the products you need are in stock can prevent the backorders of customers, ensure that they are satisfied, and makes your business more profitable. An efficient inventory control system can take care of the bulk of this for you, by automating manual inventory control procedures streamlining your logistics process, and providing you with an immediate view of the inventory levels.
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Related Resource: How Stock-Keeping Units (SKUs) Work And How Businesses Can Use Them

Whatever the case is, if you’ll need more support, you can always Get In Touch and let us know how we can help out. You are also welcome to share your additional thoughts, suggestions, opinions, recommendations, or even contribution questions (for FAQ Answers) in our comments section below. That’s it! Until the next one, thanks for taking the time to read this guide!

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