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3 Types Of Inventory Control System For Business

Posted: September 26, 2019 by Ly Phan

3 Types Of Inventory Control System For Business

The ability to sell products or services and generate revenue is the ultimate goal for most businesses. However, this can only be achieved if the customer is happy with their purchase. How would a customer react to an “out of stock” notification when trying to make a purchase? In today’s instant gratification market, that customer would most likely turn to a competitor. This is just one example of why managing warehouse stock remains the highest priority of retail and manufacturing businesses. Let’s take a look at the benefits of inventory control and determine which types of inventory control systems are suitable for your situation.

 

The Right Inventory Control System Can Transform Your Business 

An inventory control system, or stock control system, is used to track and monitor product levels throughout the supply chain process. Hence, businesses can ensure the right amount of stock is at the right place at the right time. 

It not only helps you avoid running out of stock but also minimizes the risk of other inventory control problems, such as overstocking. By investing in a reliable inventory control system, companies will gain a competitive advantage and better visibility into inventory levels.

 

Types of Inventory Control Systems

Manual Inventory System

Manual inventory control systems are very high labor-intensive

The core characteristic of a manual inventory system is its ability to track inventory without the use of computerized systems such as WMS, barcode or RFID. Instead, businesses rely on human labor and a spreadsheet or stock book to keep track of the stock-flow. 

For small businesses that have a limited amount of inventory or with a slow-moving rate, the manual inventory system can be an optimal choice, due to its simplicity and very low upfront investment cost, as employees can easily keep track of the number of items that are on hand just by looking. It also does not take much time to learn or train staff on how to operate the system.

However, manually controlled inventory is very labor-intensive. Businesses are required to continuously track every transaction and stock level. Moreover, it is error-prone, due to its heavy reliance on human action. People might forget to record a transaction or simply miscount the number of goods. Double data entry or redundant recording that does not match with real stock level is common, causing businesses to inadvertently run out of stock.

This type of inventory control system is not recommended for large businesses or those with a high amount of inventory.

 

Barcode Inventory System

Barcode Inventory System enables businesses to easily track inventory

A typical barcode inventory system runs on a similar principle as the manual system, however, it is faster and more flexible, with the capability to transmit information in seconds. The system often requires special software to create the barcode for each product and hardware, such as a scanner, to scan the items and track their location. 

If mobility is your highest priority, the best option is a wireless scanner, as they aren’t restricted by a power cord and can scan items at any location in the warehouse. However, for businesses that have a budget constraint, a wired barcode scanner can be used as an alternative.

Using a barcode system for inventory control enables businesses to minimize human error and increase data accuracy significantly. In fact, compared to manually entered data, the error rates of a barcode scanner decrease by 99%. It is also easier for staff to track and locate inventory for production or shipping while saving a significant amount of time in data acquisition. As a result, businesses can make informed decisions quickly regarding ordering or shipping inventory.

In addition, a barcoding inventory control system enables businesses to cut down hours of paperwork, reducing labor costs and freeing up employees to focus on other important tasks. For example, the physical counting now can be done easily by scanning the item’s barcode and information will be processed in a matter of seconds.

However, labeling all locations and items with barcodes can be a time-consuming and expensive process, especially if your warehouse has a high amount of inventory. For businesses with limited budgets, the upfront investment in both software and hardware may be a deal-breaker. Other delays can also occur in training employees to adapt to new equipment, further increasing the costs. 

Still, putting in the effort to switch from a manual inventory control system to a barcode inventory system will definitely be worth it in the long run. As with any change or upgrade in technology, always do careful research before making a decision.

 

RFID Inventory System

RFID enables multi-scanning in just seconds

RFID stands for Radio Frequency Identification, which uses radio waves to transmit the information from RFID tags to an RFID reader. The tag contains a tiny microchip attached to an antenna that enables companies to track and record stock levels throughout the supply chain. 

RFID and barcode inventory system is similar in both offer effective ways of tracking inventory and collecting data. However, using RFID for stock control provides several advantages over barcodes, including: 

  1. Ability to multi-scan in seconds, enabling an entire pallet of products to be checked at once, instead of having to scan each product individually. 
  2. RFID tags can be read remotely while the barcode system requires an unobstructed line of sight into an item’s barcode tag, requiring staff to get closer to the stock for scanning.
  3. RFID tags are more resilient to damage compare to Barcode tags 
  4. Superior quality control, as RFID tags can be programmed to monitor any specific detail of the product.

The RFID inventory system is not without shortcomings since metal and liquid materials can affect the RFID signal, forcing businesses to use different types of tags depending on the characteristics of the product. In addition, implementing and maintaining an RFID inventory system is significantly more expensive and complex than other systems.

Therefore, while RFID is a powerful technology, it requires a clear understanding of business requirements around security, durability, and cost to determine whether the system is appropriate for your business.

 

Take the future in your hand

According to CIO, over 80% of software implementation projects are unsuccessful, poorly executed, or canceled before completion. Thus, given the amount of investment, many small and midsize businesses choose to outsource their warehouse and inventory functions to a reliable third-party vendor likes SmartTurn. Our solution provides a robust inventory control system with seamlessly handheld technology integration. An enterprise WMS system at a fraction of the cost of traditional systems.

Want to learn more? Stay tuned and follow the SmartTurn blog to keep up with the latest warehouse trends, news, and information.

 

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