Inventory Control
Definition:
Inventory control is the process of managing and overseeing the ordering, storage, and use of an organization's inventory. It involves tracking inventory levels, determining optimal stock quantities, and ensuring that the right products are available in the right quantities at the right time to meet customer demand or production requirements.
Example:
Acme Manufacturing implements an inventory control system to manage its raw materials, work-in-progress, and finished goods. The system tracks the quantity of each item in stock, monitors usage rates, and generates alerts when stock levels fall below predefined reorder points. This helps the procurement team to place timely orders with suppliers, maintain optimal inventory levels, and avoid stockouts or excess inventory.
Why is Inventory Control important to Procurement teams?
Effective inventory control is important for procurement teams to optimize working capital, reduce carrying costs, and ensure a smooth flow of materials and products. By closely monitoring inventory levels and usage patterns, procurement teams can make informed decisions about when and how much to order, minimize the risk of obsolescence or spoilage, and respond quickly to changes in demand. Proper inventory control also helps to improve customer service levels, reduce lead times, and support the overall efficiency and profitability of the organization.