04 March, 2022


Small and large companies experience the same situation: How much inventory should they carry in warehouses?

Too little inventory may lead to shortages and customer dissatisfaction. Too much inventory may lead to excessive storage and overhead costs. Practicing inventory control allows businesses to predict what their current product demands are now and in the future. Then, they adapt their inventory levels successfully to fluctuating demand changes.

What is inventory control and how does it impact operations? You need to practice inventory planning to accurately know how your business performs transactions. You should also have the inventory controls in place to know the types of products that you carry and an inventory controller to track the products’ movements through processes.


Companies may have different types of goods in storage based on what is needed in processes:

  • Raw materials: Raw materials may refer to any inventory that is not considered works-in-progress or finished goods to the company. Often, we think of raw materials as papers, metals, plastics, or chemicals that have not experienced any processing.

However, raw materials may have different meanings based on the company’s operations. For example, manufactured gears would be considered a raw material for an assembly company, but are finished products for a contract manufacturer.

  • Works-in-progress: Works-in-progress (WIP) are items that have undergone some manufacturing procedures but are not considered finished goods. These items may sit on inventory shelves waiting for an order to arrive. When an order arrives, then the manufacturer will take the WIP and continue the production line to finish the product.
  • Finished goods: Finished goods are products that are complete. They have also undergone testing and quality control. These products are waiting to be sold to customers.
  • MRO: MRO refers to any inventory or supplies used for the company’s operations. Inventory that is considered MRO may include raw materials, such as nuts and bolts to repair equipment, cleaning supplies, finished goods, office supplies, and packaging materials. MRO is considered any item that assists with maintaining equipment, facilities, or the work environment.

An inventory controller may use specific control systems that will best monitor and maintain inventory levels. Two types of inventory systems are perpetual systems and periodic systems.

A perpetual inventory system works by continuously monitoring inventory levels and updating warehouse data in real time. This type of inventory tracking involves updating records when the products arrive at the warehouse, picked from shelves, moved throughout the shop floor, or are disposed.

A periodic inventory system involves only tracking products during certain periods in operations. This system involves performing a physical count of all goods and then updating warehouse records.

There are advantages and disadvantages to each type of system. A perpetual inventory system provides more daily accuracy with warehouse logistics but has higher costs to implement. A periodic inventory system allows companies to focus on their operations until they need to physically count products, but may use all of their resources to perform the counting and may lead to errors.


Another aspect regarding inventory control involves planning how much stock to hold at one time to maintain customer satisfaction without overstocking products. Inventory planning focuses on forecasting customer demand to understand what buying trends are happening presently and where these trends may lead. Based on these forecast reports, the inventory controller adjusts the level of goods on shelves by ordering more inventory or holding back on purchase orders.

Successful planning strategies can ensure that your company does not oversell products when the inventory is not available in warehouses. By controlling this factor, it increases customer satisfaction while also keeping warehousing costs manageable.


To help monitor inventory, inventory tracking software automates the product levels through every sales channel that is deployed by your company. The system offers unique features such as tracking sales orders, managing material purchases, and monitoring inventory movement when barcodes are scanned. The software offers you a way to gain more supply chain visibility at all levels.

When researching tracking software, look for an application that offers customization and integrations to make the software more robust and versatile to present operations. The software should offer analytical tools to evaluate the data and extrapolate information on demand that is the most important and actionable for your industry warehouse.

There may come a time when you need to switch to a new inventory control tracking system. If you find that the current software cannot track multiple sales avenues, cannot keep up with operational growth, or your inventory levels are not balanced, it could be time to upgrade your software. You also may want to switch the software if you need a system that supports mobile operations or to add other fulfillment services such as in-store pickup.


With inventory control as another part of your management strategies, you consistently have a snapshot of present inventory levels. Then, you use the management systems to keep your warehousing costs low while having enough products on hand.

Here at WSI, we offer warehousing services to companies of all sizes so their products reach destinations on time and within budget. As leaders in 3PL, we provide inventory management, fulfillment services, custom packaging, transportation logistics, and return goods management services. Reach out to WSI today to learn more.

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