What is inventory control and what inventory systems are there?

Inventory control, definition and the different systems that exist

The definition of inventory control is that of a system that allows the management of the stock in a warehouse, both incoming and outgoing. The ultimate goal is to optimise costs and make the best use of stocks.

Management leads to optimisation, so it is essential to have practices in place to achieve your goals. This is where the concept of the inventory system comes into play, which provides organisation. There are several inventory systems depending on the characteristics of each company.

Depending on the complexity of each situation, the best method will be one or the other. What is worth bearing in mind is that today complex inventory control can be done in less time. ERPs makes it possible to automatically process a huge amount of data and, what is more, to work from a peripheral location to make changes to information.

Today, we can highlight three inventory systems: global, analytical and perpetual. Take note, as this will be of interest to you in deciding which system you are most interested in:

Global inventory system

The global inventory system is notable for its functionality and simplicity. In this case, all inventory operations are included in the same account, called "goods". If you do not have specialised knowledge, it is a way to get started and to keep the records to a minimum.

There are several steps to record, but always on the same account. Firstly, the starting point of the goods. Later, the purchases. Thirdly, sales of the goods. On the other hand, returns and purchase costs must be recorded. All this information can be centralised so that you don't waste time or get bogged down. This type of system is typical of the old shops because of its simplicity in making calculations and, of course, it is analogue.

The advantage of the global inventory system is, at the same time, its main disadvantage. As there is no breakdown, you will not be able to know the quantity of goods you have shipped, nor the costs or final value of what you have sold. This system requires you to also make a physical inventory. Therefore, although it is a basic system, it paradoxically ends up duplicating efforts.

Analytical or detailed system

The analytical system is one that focuses on knowing how much all the items included in the transactions are worth. This implies that a specific account is opened for each item, so that the bookkeeping will be done in this way. This provides advantages such as knowing the value of each account and the profit and loss.

And what are the elements that need to be taken into account? First, the inventory account. Then you have to add a purchase account. Third, you will be able to include a section on expenses for purchases. Subsequently, a sales returns account will be included. Fifth, a sales discount account has to be added. The sixth account to be recorded is the sales account. Seven, a section on refunds on purchases will be recorded. And finally, there will be a discount account on purchases.

This system has the great disadvantage that you do not know the quantity of goods and whether there has been a loss of goods. And this will force you to make a physical inventory to be able to keep track.

Perpetual inventory system

The perpetual inventory system is the most complex implementation system, but, in turn, the most effective. The mechanics are to carry out an input and output information check at any time.

This mechanic allows you to know how much you have sold, the profit or loss and the final value of the inventory. Generally, in order to obtain this information, all movements are included, so that the query you make is accurate and will help you to make decisions with greater certainty. This is why, in recent years, it has gained weight thanks to the development of new technologies and Big Data.

This system has the obvious advantage of accuracy and, if you have the technical means, it is the best. The main drawback is that you will usually need specialised ERP that helps you to record all the steps.

How does ERP support your inventory control tasks?

ERP is the software that helps you keep track of your stock from start to finish. Today it is possible to have information on incoming goods, purchases, sales, returns and to control any losses.

How is this achieved? First, by signing up for the right solution that includes all the necessary modules. Second, by making changes in real time, and this can be achieved with our Clould ERP. Finally, allowing access to any authorised person from any device. This will prevent operations from being carried out several times and, as a result, the consequent loss of time. It is not necessary to be at a fixed point to control incoming and outgoing goods and this makes work easier.

For all these reasons, nowadays it is advisable to have ERP for inventory control. What's more, this will allow a perpetual inventory system to be followed, even in SMEs.

Conclusion

Inventory control is an essential component for smart management of your goods and for getting the most out of them. Are you looking for specialised software to guarantee the best results? In SEIDOR Business One we provide you with ERP solutions that will allow you to manage stocks correctly. It is possible to get software for all types of companies, whether they are production, distribution or service companies. Contact us to find out more!