The entire process of managing inventory is complicated and there are quite a few steps to it. You need to manage stock and along with it also look after the daily activities with it. That’s what you call inventory management and inventory control.
They might be similar, but they are not. So, how do they differ? We’ll take a look at the difference between inventory control and inventory management. Let’s see what they mean and how you need both to ensure you have a highly efficient inventory.
What is Inventory Control?
Inventory control refers to the monitoring process of inventory levels across various locations. It ensures there is adequate inventory available as per the customers’ needs.
To assess the difference between inventory control and inventory management, you must know the former reduces the overstocking risk. It also prevents understocking, it minimises the amount of inventory. This decreases holding costs while keeping enough inventory at hand.
Basics of Inventory Control
A key part of inventory control is how goods in the inventory move in and out. To keep tabs on the moving goods, the companies and the inventory personnel use the following methods:
- FIFO (First in, First Out): The oldest items that are used first for orders
- LIFO (Last In, First Out): These are the newest items sent for the first orders.
One of the other benefits of this approach is to keep the warehouse tidy. When a new inventory comes in, it gets a unique code. This allows the team to record and track it.
Fundamentals of Inventory Control
In the difference between inventory control and inventory management, the fundamentals of the former are as follows:
- Manage Warehouse Space: Helps to put the items in the right place in the warehouse.
- Tracking Items: Ensures that the items don’t sit on the shield nearing or beyond the expiry date.
- Smart Placement: Put the popular items near the place where the team packs the order.
With inventory control, you can:
- Supply stock to various departments in organisations
- Work on location, storage and accounting of your inventories.
- Bi-furcate the high-value stocks as it helps storage.
Companies can avoid running out of the ri stock or have too much stock as they monitor the inventory closely. Additionally, the difference between inventory control and inventory management saves money and time.
But what about the latter? What do you need inventory management for? Let’s find out.
What is Inventory Management?
The process to manage the flow of inventory in the entire supply chain is inventory management. This is how you can manage inventory from the point of order from a supplier to the point when it sells to the customers.
It also manages the relationships of the suppliers and clients. By establishing a solid inventory management strategy, your company can streamline the supply chain, cut costs, and enhance customer service.
Given that inventory stands as a critical asset for any business, maintaining the precise amount of inventory is imperative. Insufficient inventory poses problems, as does having an excess.
That is why companies need inventory management. Let’s see the basics of the difference between inventory control and inventory management.
Basics of Inventory Management
The core concept of inventory management includes:
Handling Stock from Start to Finish: This management process looks into the management of goods from ordering to selling.
Forecasting: Inventory management also helps in forecasting. By using sales data, companies can guess what customers are going to look for in the future. This insight allows the business to plan its production better and set prices right.
Now, to truly understand the difference between inventory control and inventory management, let’s take a look at the fundamentals of the latter.
Fundamentals of Inventory Management
Inventory management usually uses software to help you manage the inventory. It makes the process more efficient. While using spreadsheets may seem like a good idea.
Businesses that have a sizable inventory can improve their operations with the help of an inventory management system. Before knowing about its usage, it’s important to understand the crucial difference between inventory control and inventory management.
In the case of the latter, a tool or management software can reduce human errors. This enhances productivity and efficiency while reducing costs. Also, companies can restrict employees so they can only access the data they need.
Lastly, it also allows greater visibility of stock with the help of real-time data and makes decisions based on the data you have.
- Restocking: Helps determine when to restock items.
- Calculates Sales: Tracks how often items sell within a specific timeframe.
- Quick Checks: Conduct regular small checks to know current inventory levels.
- Real-Time Data: Assists with audits to ensure counts match as inventory moves.
- Meets uncertainty in customer demand.
- Ensures smooth production requirements.
- prevents stock-out situations.
- Takes advantage of quantity discounts.
Let’s see a comparison table to have a clear view when it comes to understanding the difference between inventory control and inventory management.
Comparison
| Parameter of Comparison | Inventory Management | Inventory Control |
| Meaning | Forecasting and re-ordering goods in a company | Regulating stock levels in a company’s warehouse |
| Purpose | Maintain a balance between demand and supply | Avoid wastage and theft of goods |
| Scope | Wide range of activities | Part of inventory management (narrower scope) |
| Focus | When to order, how much to order, from whom to order | Preventing stock damage and spoilage |
| Monitoring | Weekly or monthly (depending on business size) | Daily |
So, out of these two, which one is right for your business? Which one do you take care of first?
Choosing the Right Inventory System for Your Business
Apart from knowing the difference, it’s also important to know if the system is right for your company. When you are thinking about choosing one out of the two, here are a few parameters to consider:
- Assess the Current Set Up: Take a look at the approach you have currently to manage your inventory. Find the loopholes and places where there can be improvement.
- Talk to the Employees: Talk to the warehouse crew and employees and see how compatible they are with the tools.
- Explore Your Options: Different companies follow different inventory methods. So, regardless of whichever software or method you choose, ensure it has the following – automatic restocking, cycle counting and tracking! All of these are crucial.
Difference Between Inventory Control and Inventory Management: Which One Do You Handle First
Two approaches clash on inventory management and control for stock success. Some say control is key: know what inventory (stock) you have and its condition. Then look at bigger issues like warehouse setup and predicting demand shifts.
Others argue profits hinge on understanding your inventory’s future needs. They believe managing inventory (forecasting, adjusting) comes before controlling it.
Choose the one that aligns the most with your company’s needs.
FAQs: What is the Difference Between Inventory Control and Inventory Management
What is the main goal of inventory management?
Its purpose is to predict what raw materials the production company needs when to order them and what quantity to order- all considering customer demand.
Which one has a wider scope- inventory management or control?
Inventory management has a wider scope. This involves building good customer relationships. Also, you need to make strategic inventory-related decisions.
What does inventory control prevent?
Inventory control prevents overstocking or running out of products by managing the daily flow of goods.
What are the four types of inventory?
There are four different types of inventory work-in-progress (WIP). raw materials finished goods and maintenance repair a overhaul (MRO) inventory. When you know which item belongs to which category, you can optimise your operations and account for each stage of the production process more efficiently.
Conclusion
Now you know the difference between inventory control and inventory management. Understanding both is crucial for optimising your supply chain. Inventory control ensures efficient stock levels, while inventory management involves broader strategies like demand forecasting. For expert guidance in mastering both, contact Qodenext. Our specialists will help streamline your operations and enhance efficiency.
