What is Inventory Control? Definition & Tips

Inventory control, also known as stock control, is the process of managing your  inventory stock. It helps companies account for the goods in their control and lets them put in place procedures to manage all items effectively.

Inventory control is closely related to inventory management, which is the entire process of looking after inventory, from purchasing the stock to turning it over and ordering more. Inventory control in terms of the organization of your stock is vital for the proper running of your company. It will ensure that you have enough units to fulfill orders and have safety stock. Effective inventory control will also help you avoid having any dead stock or overstock. Safety stock acts as a buffer to reduce the risk of an item being out of stock. Dead stock is inventory that doesn’t sell.

The goal of inventory control procedures is to maximize profits with minimum inventory investment, while improving customer satisfaction levels. Proper inventory control can keep track of your purchase orders and keep a functional supply chain. Systems can be put in place to help with demand forecasting and allow you to set reorder points, too.

Inventory control involves several components including:

  • Deciding the optimal amount of inventory your business should hold – Too much inventory will cost your business money to store and could lead to waste. Conversely, too little and you run the risk of being unable to fulfill orders, therefore losing out on sales.
  • Deciding when your business will order more of an item as it begins to run out – this helps ensure you can fulfill sales, maximizing revenue.
  • How inventory is managed while in stock – For example, storing it in a way that allows employees to find it easily, or that encourages older items to be used first.
  • Good inventory control systems ultimately ensure businesses always have the correct level of stock, enabling them to meet sales demand while reducing waste and storage costs.

Inventory Control vs. Inventory Management

Though they might sound like the same thing, inventory control and inventory management do have their differences. 

Inventory control is all about regulating and handling the inventory you already have on hand. For example, what you do with leftover product that doesn’t sell, or whether you track products with barcodes or RFID tags. 

Inventory management deals with inventory demand forecasting and replenishment usually with an inventory management system, like backordering processes and bulk shipping systems. It is a broader term that covers how you obtain, store, and profit from raw materials and finished goods alike. To improve both starts with getting a handle on your inventory control process.