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Inventory Control: The Crucial First Step in Supply Chain Management

For a supply chain to be efficient and effective, two things must happen: first, the supply chain should be cost-effective and, second, it should deliver the expected results in time.

Supply chain management is not just boxes and lines. It’s a system that determines how assets, technology, processes and people interact to enhance overall organization performance and ensure customer satisfaction by improving product or service delivery. When parts of this system are not aligned, redundancies and operational losses are inevitable.

Arguably, one of the core aspects (and perhaps the linchpin) of successful supply chain management is inventory control and management. Effective inventory control can provide visibility into the transactions essential to a company’s long-term growth. Here’s how.


Inventory consists of the raw materials, work-in-progress and finished products that represent the chief source of revenue for a particular enterprise. Inventory control, or stock control, is the process of regulating and managing inventory levels to avoid shortages, overstocks, and other costly problems.

Inventory control is crucial in creating a balance between point of origin and point of consumption to ensure consumer requirements are met on time and in full. In recent decades, supply chains have grown in length and complexity, all in the pursuit of margin improvements and shorter lead times. Consequently, this adds several layers of complexity to inventory control.

The repercussions of poor inventory control can reverberate throughout an organization and detrimentally affect its bottom line. Too little inventory, and there’s a substantial risk of running out of stock, losing sales, and missing out on cost efficiencies. On the other hand, over-ordering ties up much-needed working capital, increases carrying costs, and can significantly impact quality control leading to low-quality goods. Other risks include stock obsolescence and increased holding costs associated with dead stock.

Inventory control systems help in the balancing of demand and supply, minimize the chances of lost sales and reduce operating costs. Managing inventory is step one in optimizing the supply chain to deliver the most enterprise value. Inventory optimization boosts profitability and enhances supply chain visibility by keeping a known, steady flow of inventory.


An effective inventory management system is critical to optimizing business profitability. One thing is certain when it comes to inventory: it all represents money. Inventory management is a simple concept – it’s the process of sourcing, storing, and selling inventory – yet the nature of modern supply chains makes the process incredibly complex.

The objective of inventory management is to keep the stock levels in the right balance at all times. Effectively controlling your inventory involves a number of important considerations and requires you to first understand your demand. In the new era of consumer real-time expectation, it’s important to invest time and money in inventory control systems that produce accurate demand forecasts.

Another significant part of inventory control is fine-tuning your stock replenishment strategies. Most businesses have defined stock reorder points designed to meet a minimum or maximum stock capacity. For instance, some enterprises reorder on a fixed date and others when stock levels drop to a specified level. A smarter inventory control strategy is to take a more dynamic approach that makes use of automation and data analytics, while also considering demand forecasts, supplier lead times, and cost-effective order quantities.


Supply chain disruptions are inevitable. The Covid-19 pandemic is a great example. It was an unprecedented event that disrupted the flow of goods, leading to a breakdown in manufacturing and delivery of products to end-consumers. To keep your operations from coming to a grinding halt, it’s imperative that safety stock is kept on hand to buffer against demand, supply chain, or fulfillment disruptions.

Gone are the days of manual inventory counts. A perpetual inventory system keeps a real-time record of the sale, purchase, and use of inventory, giving you a complete and in-depth picture of your inventory. This way, reorder points, and purchase orders are automatically updated to keep an optimal level of inventory at all times.

The good thing is that all this comes down to data management. Strong inventory control techniques combined with Inventory management software helps companies maintain effective data oversight through inventory tracking and providing accurate demand forecasting. Manufacturers tend to have a large amount of investment tied up to the inventory they hold. Getting a better understanding of your inventory improves quality control and helps increase overall operational excellence by reducing operating and inventory costs


The core focus of inventory optimization is to keep an adequate amount of inventory available in the right quantity, at the right place, and at the right time. With good inventory control software, manufacturers can increase profit margins with real-time insights across inventory levels.

Inventory optimization solutions like DATASCOPE WMS enhance performance throughout the sales process by leveraging relevant data to understand supply and demand variability. The right software system will improve strategic and operational decision-making.

DATASCOPE WMS software contains dozens of inventory control modules to help you manage your entire inventory, from raw material receipts to picking, packing and shipping of finished goods. To find out more about the inventory control methods and see how you can implement these modules into your own supply chain, schedule a software demo today.

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