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The Inventory Mentor

Apr 17, 2019


Inventory Control and Inventory Management – do you know the difference?

Inventory Control vs Inventory Management?

In today’s technologically advanced business landscape, you are doing a massive injustice to your business by not automating your inventory processes. It doesn’t need to cost you large sums, and you will undoubtedly see an ROI within a few months at the very latest, so the risk in this investment is minimal.

If you want to serve your business better begin by understanding the difference between Inventory Control and Inventory Management. Although they might sound similar, they serve different business objectives.

Both are just as important to be able to run a successful distribution business, but if you are a new business and can’t budget for both, an Inventory Control system would be first to look at.

Inventory Control handles the inventory that is already in your warehouse and forms part of your ERP solution, it’s the transactional layer that allows you to:

• Receive inventory

• Process stock takes

• Process inter-branch transfers

• Process inter-branch receipts

• Pick, pack, and ship stock

• Process purchase orders on suppliers

• Process customer invoices on your sales.

Inventory Control is the supervision of non-capitalized assets (inventory) and stock items whereas Inventory Management is the strategy for balancing the amount of working capital that is tied up in inventory with service-level goals across multiple stock-keeping units (SKU’s). Inventory Management ensures that you always have the right quantity of the right product at the right time and in the right location. Inventory Management tools provide:

• Demand planning and forecasting

• Calculating safety stock

• Calculating re-order points

• Identifying fill rate %

• Calculating replenishment stock

• Identifying obsolete items

• Streamline your ordering process

• Optimizing warehouse layout

Let’s look at this symbolically – your warehouse is the body, your Inventory Control are the arms and legs – they do all the hard & physical labour. Your Inventory Management is the brain which processes all the data from your inventory control and turns that data into valuable insights to enable you to make critical business decisions. These two areas are co-dependent, and although you could use an Inventory Control on its own, you won’t get the real business benefits as you would if you ran it in harmony with Inventory Management. Also, let’s not forget the “gut” intuition here, as this plays a role when statistical projections presented to you may need to be discarded or tweaked as your human instinct is telling you something different.

Putting it all together

Your Inventory Management tool takes data from Inventory Control and analyses past trends, allowing you to identify possible risks in the supply chain which all helps to avoid over or under stocking.

To achieve better Inventory Management, you first need to improve your Inventory Control. Once that is automated, it’s advisable to implement a tried and tested Inventory Management tool to ensure you have the right amount of product on hand to maximize your profits and minimize your inventory investment.