Controlling Your Inventory

There are a number of things that you need to manage in order to have a strong organization. Your inventory is one of the places that you need to properly control in order to have a strong company. Many manufacturing plants make the mistake of having too many inventory items on stock. Keeping a high inventory is risky as it ties up your cash flow and you aren't certain when the inventory items will be sold. Depending upon the items that you sell, they can start to lose their value and you will not be able to acquire the full value from these products.

Using a solid inventory control system will allow you to make products to order so they are fresh. This also helps with other things as well like minimizing the amount of waste you have. It's a good way for you to really understand your company and to see what things you need to work on in order to maintain production and satisfy your customers.

Choosing an inventory control method is a bit of a different story. Inventory control methods come in a variety of programs, some of which are a complete overhaul and others that are just simple adjustments to what you already have prepared. To help you select the right inventory control method for your organization we have put together some of the best programs:
- ABC Analysis - The goal of the ABC system is to move all of the various items you have into different sections. This will help you to prioritize your inventory items based on certain aspects like their costs. Usually your items in the A section are of the highest value to the company and they will continue to go down from here. You also need to consider some other things such as reorder time when you are setting up the ABC system. This is an easy way to organize and manage your inventory.
- Min-Max - With this program you will set a minimum stock level and a maximum stock level. This way you are not ordering too much and being left with excess stock that is too expensive. You need to manage the level of your stock effectively or you will end up with expensive costs along with waste that needs to be controlled. Sales tracking will help you to understand the min-max level and to choose the correct amount to keep.
- Order Cycling - This program allows you to keep tabs on your inventory based on the date. Some companies opt for 30 days where others review their inventory every 90 days or so. What you will do is end up ordering your inventory items in cycles so you do not need to purchase them too often and you have enough on stock to fulfill orders for that quarter. Unlike the other systems you will need to stay on top of this one more as it requires a lot of dedication and accounting to keep it correct.
- Two Bin System - The two bin system is commonly used by companies to determine why they may have uneven supplies of stock. It is similar to the ABC system as you will end up taking stock and moving it into different bins. One bin is used to show the purchase time until the reorder time and the other bin is used to show reorder time to the customer's delivery of the materials. Other companies will use the bin system to help them for emergency needs. The second bin is considered overflow stock and when you start to pull from it, you need to place an inventory order. At least with this system you will not have trouble fulfilling your customer's orders.