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Three Types of Inventory Control Systems

Inventory management is becoming more and more important for organizations as competition heats up. Knowing how much inventory is on hand is important to keep carrying costs low. Knowing how much inventory has been sold is just as important so your organization can decide which products to keep or modify. Knowing where your inventory is, how much it costs to make, and how often it is turning over can give you a leg up on less ambitious competitors. This article will list three types of inventory control systems and help you decide which would be best for your organization.

Many smaller businesses start out trying to track their inventory using spreadsheets. This is a very low cost option and spreadsheets are valuable tools. If you are a spreadsheet whiz then you can track hundreds or thousands of products with this system. However, spreadsheets have their weaknesses. One is that they quickly proliferate. You started a spreadsheet to track Blue Widgets, while your coworker started one to track Red Widgets. Another coworker has one to track purple widgets and so on and so forth. At the end of the period you have ten worksheets all with different styling and functionality. Sure yours is the best, but maybe your coworkers don’t see it that way.

One other weakness of using spreadsheets to track inventory is that their data entry controls are often not up to bar. Don’t get me wrong, you can make spreadsheets very control heavy, but most users don’t know how to do this. For example Sue, your coworker, accidentally entered letters where a dollar amount should have been. Some types of inventory control systems will already have a control in place that won’t let Sue make this mistake.

If you’re a small corporation with very few product lines and only one person over controlling the inventory, then spreadsheets may be a good option for you. However, if you have many product lines, I would recommend moving onto a barcode system.

Barcode systems include barcode printers, stickers, readers, and software. Your inventory controller will ensure that all of the correct barcode information is printed onto the stickers and that the stickers are on the correct products. Then each inventory employee simply has to run the scanner over the product and the information is automatically organized into one secure location. There isn’t any chance that Sue will make any mistakes. I would highly recommend a barcode inventory control system for companies with multiple product lines.

The third inventory system, and most advanced, is known as radio-frequency identification (RFID). This system almost seems like magic; basically little tags send information to readers from a specified distance. You don’t have to actually scan anything, the reader just picks up the information. One advantage of RFID over barcodes is that you can “scan” multiple items at once.

RFID software will automatically update the inventory information on your computer. Again there is no room for employees to make data-entry errors. RFID technology is still a little expensive, though prices are coming down. I foresee this as the main-stream inventory control system in the future.

Whether you decide to use spreadsheets, barcodes, or RFID technology to control your inventory really depends on the size of your organization as well as the variety of your products. Small companies with few products can get away with using spreadsheets. However once multiple product lines start appearing, then it is time to make a shift to either Barcodes, or the more expensive RFID.

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