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What is the purpose of inventory control?

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Quick Answer

The primary purpose of inventory control is the efficient movement of materials and goods in line with a company's strategic plans. In particular, a company manages inventory to balance goals of meeting customer demand and minimizing costs, according to Anderson, Anderson and Parker in an excerpt from "Operations Management For Dummies.

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Full Answer

Inventory is costly to hold. Products sitting in storage facilities or on stockroom shelves require space, equipment, utilities and people, according to Heather Wood for the Houston Chronicle. The less extra space allocated to holding inventory, the lower the costs. Companies also take a huge financial hit when they have to throw out goods that perish or expire because they do not sell quickly enough.

A company runs the risk of running out of inventory if it maintains product levels that are too low. Anderson et al. notes that supply shortages can lead to angry customers. Therefore, ensuring that a business has an adequate supply of items to meet near-term demand is another priority in inventory control.

Other purposes of inventory control including protecting materials and goods and tracking sales data. Companies develop safety procedures for warehouses and stockrooms to ensure safe handling of products and physical safety of workers. Inventory control software programs allow companies to monitor the sales performance of certain goods at different price points, notes Wood.

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