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What is The Purpose of Inventory Control

Inventory control in your business involves stocking the correct number of products or components to prevent the chances of overstocking and understocking. Every business should implement an intelligent method of monitoring their stock levels to minimize any costly problems or inconveniences.

Why Implement Inventory Control?

Maintain Control

You should ensure your business has enough inventories to meet your needs and that of your customers. Inventories such as raw materials or finished goods are classified as the company’s working capital and thus classified under the current account.

Typically, inventories are a source of revenue for your business. Thus, properly maintaining your inventory levels ensures you have control over your working capital.

Minimizes High Order Costs

The process of ordering raw materials or other forms of inventory is systematic. These products or components must be ordered, accepted, and inspected. Having a pre-scheduled ordering process ensures you order the goods in time and in smaller batches, thus reducing the business’s ordering costs.

Reduces Production Shortages

For continuous production, a company should have enough raw materials. Inconveniences or halting of production can occur if the company does not have enough inventory. Thus, inventory control helps in avoiding such problems.

Types of Inventory Control Systems

Perpetual Inventory System

It is also referred to as the continuous inventory system. The system continually subtracts or adds inventory items in regards to how they are sold or received. This type of inventory system maintains up-to-date inventory information of all products in the business. 


  • Offer accurate inventory data.
  • You can adequately monitor your inventory and order immediately you note a shortage.
  • Minimizes shortage of inventory


  • This method can be pretty costly to maintain

Periodic Inventory System

In the periodic inventory system, you don’t track your inventory daily, but you check the levels at the end of a pre-scheduled period. For instance, you can decide to check inventory weekly or monthly. Most businesses use the physical inventory counting method rather than computerized counts.


  • You don’t have to regularly maintain inventory, thus more affordable than the perpetual inventory method.
  • Straightforward to implement
  • Is the best for small businesses


  • You may lose the inventory levels in your business leading to shortages

ABS Inventory System

ABS is also classified as a selective inventory system. The method classifies inventory in terms of importance.  It splits the inventory into three main categories, namely:

  • Category A: The class contains the most valuable products in an organization.
  • Category B: The items in this class are relatively valuable to the business.
  • Category C: The inventory contains items that contribute to the organization’s profit but are less significant to the business.


  • Maintains proper stock turnover levels
  • Proper tracking of valuable items
  • Better management of all inventories


  • Requires adequate standardization of items for it to be installed.

Barcode Inventory System

The Barcode inventory system uses intelligent technology to record all inventory items in your business accurately. You use a barcode system to update any new item in your business. It is an automated process and does not necessitate any manual counting.


  • Very accurate
  • Minimizes manual errors during the counting and recording process
  • Updates inventory levels accurately and automatically
  • Assists in timely information


  • It can be expensive to label all items with unique bar codes
  • Time-consuming

conclusion: What is the purpose of inventory control

Inventory control is paramount for businesses that want to flourish in today’s dynamic market. We hope after reading this article that you’ve gained a better understanding of what it’s purpose is along with different types of inventory control systems.

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Our inventory management solutions can help bring your business to where you want it to be! Contact our full service eCommerce agency at your convenience, we’re looking forward to speaking with you!

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