The Different Methods Of Inventory Control: A Comprehensive Guide

The Different Methods Of Inventory Control A Comprehensive Guide

Inventory control is vital to your success when running a business that involves multichannel retailing, wholesale, or e-commerce. But what is inventory control, and why should you consider it a priority in your business operations? This guide will explore the different methods and explain their benefits and drawbacks. We will also discuss the importance of inventory control and how to overcome some associated challenges.


What is Inventory Control?

Inventory control is the process of tracking and managing inventory. This includes the ordering, shipping, and receiving of inventory and storage and disposal of inventory. Inventory control monitors the movement and storage of inventory to ensure that inventory levels are maintained at an optimal level.

The goal of inventory control is to minimize the cost of inventory while maximizing inventory turnover. In other words, inventory control strives to find the perfect balance between having too much inventory and not enough inventory.


Difference Between Inventory Control and Inventory Management

It’s important to note that inventory control and inventory management are not the same things:

  • Inventory management is a broader term that encompasses inventory control and other aspects of inventory such as forecasting, planning, and replenishment.
  • Inventory control is a narrower term focusing on tracking and managing inventory.


However, despite their differences, both exist to achieve the same goal: to minimize inventory costs while maximizing inventory turnover.


Types of Inventory Control Systems

There are two main inventory control systems: periodic and perpetual systems. Choosing the right inventory control system for your business will depend on various factors such as the type of business, the inventory size, and the inventory turnover frequency.


Periodic Inventory Control

Periodic inventory control systems are systems where inventory is counted and recorded at specific intervals. The most common interval is monthly, but inventory can also be counted quarterly, semi-annually, or annually.

The advantage of periodic inventory control systems is that they are relatively simple and easy to implement. The disadvantage of periodic inventory control systems is that they are less accurate than perpetual inventory control systems and can lead to stock-outs. 

Periodic inventory control is best for small companies with minimal inventory and infrequent inventory turnover.


Perpetual Inventory Control

Perpetual inventory control systems are inventory systems in which inventory is continuously tracked and recorded in real-time. This is done through the use of inventory software that is integrated with the company’s point-of-sale (POS) system.

The advantage of perpetual inventory control systems is that they are more accurate than periodic inventory control systems. The disadvantage of perpetual inventory control systems is that they are more complex and can be more expensive to implement.

Perpetual inventory control is best for businesses with multiple locations, large inventory levels, and high inventory turnover. It’s also ideal for businesses that sell fast-moving consumer goods (FMCG) and need to maintain tight inventory levels.


Methods and Techniques of Inventory Control

Inventory control uses different techniques and methods. However, the four common inventory control methods are:

  • ABC Analysis
  • Last In, First Out (LIFO) & First In, First Out (FIFO)
  • Batch Tracking
  • Safety Stock


This section will explain how each of these methods functions and support your business:


ABC Analysis

ABC analysis is an inventory categorization method that divides inventory into three categories:

  • ‘A’ items are the top priority and should be given the most attention.
  • ‘B’ items are important but not to the same degree as A items.
  • ‘C’ items are the least important and are given the least attention.


Applying ABC analysis can help inventory managers focus on the items that impact the business most.



LIFO (last in, first out) and FIFO (first in, first out) are inventory valuation methods. It assumes that inventory items that are most recently manufactured or purchased are sold first, while FIFO assumes that items that have been in stock the longest are sold first.

How you value your inventory will depend on various factors such as accounting regulations, tax implications, and inventory turnover.


Batch Tracking

Batch tracking is an inventory management method in which inventory is grouped into “batches,” and each batch is given a unique identifier. This identifier can be a barcode, lot number, or serial number.

Batch tracking allows warehouse managers to keep track of the following information:

  • Where the items come from
  • Where the goods are heading
  • When the items might expire


Safety Stock

Safety stock is inventory that is kept on hand to meet customer demand in the event of an unforeseen interruption in the supply chain. It can cover inventory shortages, unexpected increases in customer demand, and other unforeseen events.

Maintaining safety stock can help businesses avoid stock-outs and lost sales. However, carrying too much safety stock can tie up working capital and lead to inventory management issues.


Tips to Get Started with Inventory Control

Now that you understand inventory control meaning and methods, it’s time to put some of these techniques into practice. Here are some useful tips to help you get started with inventory control:

  • Evaluate your inventory needs regularly.
  • Develop a system for tracking inventory levels and movements.
  • Monitor inventory levels closely and adjust them as needed.
  • Ensure that your inventory management system is integrated with your accounting and POS systems.
  • Check inventory levels regularly and take corrective action if necessary.
  • Review your inventory control procedures regularly and make changes as needed.
  • Perform regular inventory counts and reconcile them with your inventory records.


By following these tips, you can develop an effective inventory control system that will help streamline your business operations and improve your bottom line.


Perform Inventory Control with DATAMYTE

Performing inventory control will be more convenient and effective if you digitize and streamline the inventory management process with DATAMYTE. The DataMyte Digital Clipboard, in particular, lets you create comprehensive workflows that focus on inventory management. For example, you can use the DataMyte Digital Clipboard to:

  • Create inventory control templates.
  • Perform inventory counts.
  • Enter inventory data into your inventory management system.
  • View inventory reports.


The DataMyte Digital Clipboard can perform inventory control regularly or as needed. With DATAMYTE, you can be sure that your inventory data is accurate and up-to-date.



Inventory control is a process that allows businesses to track and manage their inventory. There are different methods of inventory control, each with its benefits and drawbacks. By understanding the different inventory control methods and choosing the one that best suits your needs, you can improve your inventory management processes and bottom line.



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