What is Inventory Control? Definition
1. According to Gordon Carson,
"Inventory control is the process where by the investment in materials and parts carried in stocks is regulated, within pre-determined limits set in accordance with the inventory policy established by the management."
This definition of inventory control is taken from a book titled 'Production Handbook' published in 1958 and edited by Gordon B. Carson.
Definitions of inventory control w.r.t different perspectives are quoted below.
Image credits © Prof. Mudit Katyani.
2. In General sense,
"Inventory control is a method where all stocks of goods are properly and promptly issued, accounted, and preserved in the best interest of an entity that handles its inventory."
3. In terms of Business,
"Inventory control is a method designed by the top level of management of a company. It requires a strategic decision to be taken for its effective implementation. Its proper implementation is the responsibility of the store manager."
4. In an Academic perspective,
"Inventory control is a method to identify those stocks of goods, which can be used for the production of finished goods. It shall be supported by a schedule which gives details regarding; opening stock, receipt of raw-materials, issue of materials, closing stock, and scrap generated."
Now let's discuss further to understand the meaning of inventory control.
Meaning of Inventory Control
Inventory control means to monitor the stock of goods used for production, distribution and captive (self) consumption.
For a specific time period, stock of goods are placed at some particular location. Stock of goods includes raw-materials, work in progress, finished goods, packaging, spares, components, consumable items, etc.
Inventory Control means maintaining the inventory at a desired level. The desired-level keeps on fluctuating as per the demand and supply of goods.
The concept or meaning of inventory control is depicted in the diagram.
Following important points convey the broad meaning of inventory control:
- Inventory Control mainly focuses on location, storage, recording the quantity, and accounting for the amount of inventories.
- It helps to supply inventories to different departments or units whenever demand requisition is raised. Mostly, it supplies inventories to the production department.
- It keeps a record of inventory issued to the concerned department located at a specific place.
- It provides prompt and proper service to all concerned departments or units.
- It also helps to maintain inventories at lowest costs.
- It bifurcates high-value and low-value stock of goods.
- It also avoids over-stocking and under-stocking of raw-materials.
How to Achieve Inventory Control?
The inventory control can be achieved by:
- Purchasing items of the right-quantity, at the right-place and at right-time.
- Providing a suitable, secure, and sufficient place for storage.
- Developing a proper inventory identification system.
- Maintaining an up-to-date record keeping.
- Making proper requisition procedures.