Inventory is naturally difficult current asset to control. By the location, in a manufacturing company, it could be spread from the warehouse to the production area, certain companies may store their inventory in another [offsite] location. It may use hundreds or even thousand of part codes. It may contain obsolete items. Some of them may belong to the company while some others may belong to other parties.
In this post series we are going to talk about inventory control systems, what issues to be addressed by an inventory control system. Then It will be broken into sets of possible detail (described) inventory controls in such areas as: in-transit inventory, inventory storage, obsolete inventory, and inventory transactions.
What Issues To be Addressed by an Inventory Control System?
There are at least three major concerns to be addressed when dealing with inventory:
1. It should be designed to prevent or at least minimize the risk of loss by any means. Okay, there is no way [neither any system] to hundred percent prevent inventory loss. But at least there should be sufficient controls are place to mitigate the greater risks of inventory loss.
2. The control system should ensure that goods shipped out billed to customers in appropriately manner. Ideally the system should be able to make sure that every inventory shipped out of the warehouse area is attached with proper bills. Proper bill means proper quantity, specifications, and amount to the correct customer.
3. The control system should ensure that costs are applied to inventories in fairly and consistently manner.