Home Uncategorized What Are Inventory Control Techniques? 10 Special Technique

What Are Inventory Control Techniques? 10 Special Technique

by orderfulfillment

The set of techniques, tactics, and instruments utilized to keep, track, order, and distribute inventory is referred to as inventory management. Businesses spend a significant portion, preferably the majority, of their resources in inventories. As a result, it is critical to develop and implement an efficient inventory management strategy that maintains levels of inventory exactly where they should be. 

What are inventory control techniques

What are inventory control techniques

Small companies sometimes suffer with working capital, which can have an impact on inventory levels, resulting in stock-outs and disgruntled buyers. If there is a lot of this, the business may go out of business. Inventory management approaches come in handy here. However, business managers may retain ideal inventory counts, eliminate human error, save costs on physical stock items, and more with the correct inventory control techniques.

Let’s explore 10 of the most popular techniques of inventory control nowadays. These are incredibly effective methods for improving inventory control in your organization.

What Are The Inventory Control Techniques

The set of techniques, tactics, and instruments used to keep, track, order, and distribute inventory or stock is referred to as inventory management. Businesses spend a significant portion, if not the entire majority, of their money in inventories. As a result, it’s critical to develop and implement an efficient inventory management strategy that maintains stock levels exactly where they have to be.

Smaller companies sometimes suffer with working capital, which can have an impact on inventory levels, resulting in stock-outs and disgruntled customers. If there is an excessive amount of this, the business may cease to be in operation. Inventory management approaches come in handy here.

Business managers may retain ideal stock count, eliminate human error, save costs on actual stock items, and much more with the correct inventory control systems.

10 Special Techniques Of Inventory Control

Formulas and analytics are used in several inventory management strategies to manage inventory, while others depend on procedures. All strategies are designed to increase accuracy. The tactics used by a corporation are determined by its demands and inventory. Explore the overview of inventory management strategies that are ideal for your company. Here’s a rundown of what they are.

Selective Inventory Control Technique

Selective inventory control focuses on differences in control techniques from product to product depending on a selective basis. We cannot employ consistent management since it is costly and procedures have a dispersed effect. We can utilize criteria like lead time, criticality, procurement issues, consumption, product cost, and others for this reason. The two classification systems below can utilize to selectively handle distinct sorts of materials.

ABC Inventory analysis or selective inventory divides your inventory into 3 groups based on how much it costs to keep and how well it sells. 

  • A-Items: These are the best-selling items that do not occupy much storage space or expense.
  • B-Items: These are the products that sell frequently but cost more to store than A-items.
  • C-Items: The remainder of your inventory, which accounts for the majority of your inventory expenditures yet provides the lowest to your bottom line.

Applying the ABC system reduces your working capital costs by identifying which things you should replenish more frequently as well as which products you are not required to store as regularly. ABC analysis improves inventory turnover and lowers outdated inventory.

ABC analysis

ABC analysis

On the other side, VED is an abbreviation of Vital, Essential, and Desirable. Businesses mostly utilize this strategy to control inventories of spare parts. For example, a larger amount of inventory is needed for critical items that are both expensive and necessary for manufacturing. Others are critical spare components whose lack may cause the manufacturing process to stall. As a result, such inventory must be kept. Likewise, a business can keep a low amount of inventory for desired items that are not used frequently in manufacturing.  

Lean Inventory Management Techniques

Lean is a method of inventory management that includes a variety of techniques, a mindset, and a system.  Kaizen is the ideology linked with this concept. In regards to lean management, the concept entails reducing and eliminating unneeded resources employed throughout your operations. 

Lean inventory management may help you save money while increasing customer satisfaction. It also seeks to eliminate waste, enhance effectiveness, and maximize profitability through a variety of ideas and qualities.

Economic Order Quantity

The economic order quantity (EOQ) approach concentrates on determining how much inventory the firm should order at any given moment and when the order should be placed. Once the inventory hits the reordering point, the manager will reorder it. The EOQ model reduces the ordering and carrying expenses involved while making a purchase. The EOQ model allows the company to put the appropriate amount of inventory.

Minimum Order Quantity

The minimum order quantity (MOQ) is the smallest stock amount that providers will sell. If you cannot meet the MOQ for a certain product, you will be unable to purchase it from that seller. Suppliers employ minimum purchase numbers to boost their revenues while simultaneously disposing of more stock and reducing “discount shoppers”.

Minimum order quantity

Minimum order quantity

The quantity of minimum order is decided by adding your total inventory cost plus any additional expenditures you have to pay before attaining profit. Therefore, MOQs assist wholesalers in being profitable and maintaining consistent cash flow.

Just-In-Time Inventory Management

JIT inventory management entails producing what is necessary when and in the quantity needed. Many businesses use a just-in-case stock management strategy, keeping a little quantity of inventory on hand in the matter that a sudden demand rise. By generating goods to order, JIT management strives to build a zero inventory management system. It works on a pull technique, where an order arrives and triggers a cascade response across the whole supply chain. This alerts the employees that inventory must be requested or production of the needed products must commence.

JIT inventory

JIT inventory

JIT inventory management has several advantages, including:

  • Less outmoded, outdated, or spoilt inventory
  • Decreasing or eliminating stacking and storage while improving inventory turnover to reduce waste and increase effectiveness.
  • You can save money on both insurance and rent by reducing your stock.
  • Defecting and correcting manufacturing problems faster since production occurs on a lower and more focused scale.
  • Keeping a steady cash flow by ordering inventory just when essential.

Safety Stock Inventory

Safety stock inventory management is the ordering and storing of excessive stock in case the organization is lacking replenishment. This assists in avoiding stock-outs, which are often caused by inaccurate predictions or unexpected changes in consumer demand.

Batch Tracking

Batch tracking is a different word for lot tracking. It is a technique of properly tracing goods across the distribution network utilizing batch numbers. It enables you to determine where your goods derived from, where they moved, the amount that was shipped, and in case there is an expiry date, when they expire, whether they are raw materials or finished goods.

Batch tracking

Batch tracking

This inventory management system provides a number of benefits, including:

  • Supplier collaboration has enhanced
  • Simple and straightforward to remember
  • The tracking of expiry dates has been streamlined.
  • Accounting errors are reduced as a result of human tracking.

Consignment inventory

Consignment inventory is a contractual relationship in which a consignor, seller, or wholesaler, accepts to offer their goods to a cosine party, most usually retailers, without the retailer having to pay for the goods before. The cosigner holds ownership of the products and is only obligated to pay for them if they are sold.

Consignment inventory

Consignment inventory

As long as both retailers and suppliers are willing to share the threats and profits, it is a win-win case. Reduced inventory carrying expenses, straight-to-retailer shipment, and access to new marketplaces benefit vendors. Retailers take advantage of reduced risks, cheaper overall ownership costs, and greater cash flow.

Perpetual Inventory Management

Perpetual inventory management is also known as a continual inventory management system. It maintains purchased and stored goods in real-time, automatically updating your accounting method when a sale occurs, new inventory arrives, or inventory is utilized.

All of this data is transmitted to a centralized hub, which authorized personnel may view at any time. The benefits of this system contain the capacity to handle several sites swiftly, more accurate prediction, and proactive inventory turnover tracking. 

Demand Forecasting

The technique of projecting what your consumers will purchase when they will purchase it and the amount of it they will purchase is known as sales forecasts.

Demand forecasting

Demand forecasting

You can utilize either informal tactics like estimating or quantitative approaches like prior sales data analysis.

Whether you use forecasting to carry out business, expand into a new market, or track inventory, it will assist you in making smarter choices for running and expanding your firm.

The guiding principles of forecasting demand are including:

  • Making a monthly procedure that can be repeated.
  • Choosing what to evaluate and how frequently to evaluate it.
  • Data integration throughout all of your retail channels.
  • Keeping real-time, updated data.
  • Predict accuracy is measured at the customer planning, SKU level, and location.

Choose the most suitable inventory management system for your organization based on company data and objectives. After that, to optimize its advantages for your business, ensure you get the tools necessary to make it as simple as feasible. 


Inventory management is an important aspect of every organization. With effective techniques of inventory control in place, the company may drastically minimize its different costs such as warehousing, ordering, inventory carrying, obsolescence, and so on. It enhances the company’s supply chain. Managers can predict the amount of output at which they will need to make fresh inventory orders. As a result, enterprises must take all necessary precautions to ensure an achieving effective control and management system.


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