{"id":1592,"date":"2021-06-08T14:33:56","date_gmt":"2021-06-08T06:33:56","guid":{"rendered":"https:\/\/jobman.com.au\/?p=1592"},"modified":"2022-10-03T17:40:53","modified_gmt":"2022-10-03T09:40:53","slug":"which-inventory-control-method","status":"publish","type":"post","link":"https:\/\/jobman.com\/au\/articles\/which-inventory-control-method\/","title":{"rendered":"Which Inventory Control Method Is Right For You?"},"content":{"rendered":"<p>If the phrase \u201c<a href=\"https:\/\/jobman.com\/au\/features\/inventory-control\/\">inventory control<\/a>\u201d dredges up bad memories, you\u2019re not alone. Also called stock control, balancing your business\u2019 inventory levels is vital for keeping costs in check.<\/p>\n<h2>Why inventory control matters for an Aussie manufacturing business<\/h2>\n<p>Some manufacturers think inventory control is overrated. Our guess? If you\u2019re reading this, you\u2019re one of the clever ones who know the value of a stock control system.<\/p>\n<p>There\u2019s an art to inventory control. But there\u2019s also a science to solving the stock problem. That\u2019s what we\u2019re diving into in this blog.<\/p>\n<h2>Let\u2019s take stock: quick-fire questions on inventory control<\/h2>\n<h3>Are inventory management and inventory control the same thing?<\/h3>\n<p>Inventory <b>control<\/b> and inventory <b>management<\/b> are separate but closely related. <a href=\"https:\/\/jobman.com\/au\/features\/inventory-control\/\">Inventory management<\/a> involves more moving parts \u2013 purchasing, production forecasts, waste material and sales figures, to name a few.<\/p>\n<h3>What are the 4 types of inventory?<\/h3>\n<p>1. Raw materials (RM)<\/p>\n<p>2. Work in progress (WIP)<\/p>\n<p>3. Finished goods (FG)<\/p>\n<p>4. Maintenance, repair and overhaul (MRO)<\/p>\n<h3>What are the costs associated with poor inventory control?<\/h3>\n<p><b>Holding Costs:<\/b><\/p>\n<p>Storage space is valuable. Taking up too much of it with overstocked material restricts usable space, plus risks spoilage or obsolescence.<\/p>\n<p><b>Shortage Costs:<\/b><\/p>\n<p>Understocking material or products means you risk running out. From idle employees to missed deadlines, the consequences aren\u2019t pretty.<\/p>\n<h2>Popular inventory control methods in Aussie manufacturing<\/h2>\n<h3>Just-in-time (JIT)<\/h3>\n<p>As the name suggests, JIT inventory control involves warehousing just enough of something so stock levels are depleted <i>just in time<\/i> for the next shipment. This can be great for identifying low-demand stock. But miscalculations or disrupted deliveries can leave you high and dry at the wrong time.<\/p>\n<p>We all remember the <a href=\"https:\/\/www.abc.net.au\/everyday\/coronavirus-covid-19-why-is-everyone-buying-toilet-paper\/12024738\" target=\"_blank\" rel=\"noopener\">COVID-19 toilet paper panic<\/a>, right?<\/p>\n<h3>ABC inventory control<\/h3>\n<p>More a classification method than pure inventory control, ABC puts stock and materials into 3 categories:<\/p>\n<ul>\n<li>A-level: high value and high demand. Typically the top 20% of manufacturing materials that contribute 80% of sales.<\/li>\n<li>B-level: slightly less valuable, but still worth keeping close to hand.<\/li>\n<li>C-level: the bottom performers that don\u2019t sway sales figures too much.<\/li>\n<\/ul>\n<h3>Fixed quantity<\/h3>\n<p>A no-stress way to ensure you always have essential materials on hand is to trigger an order automatically when stock dwindles to a predetermined level. This is fixed quantity inventory control, and an ERP system for manufacturers like Jobman can handle the details.<\/p>\n<h3>Minimum\/maximum stock levels<\/h3>\n<p>Like fixed quantity, min\/max inventory control triggers an order for the maximum stock you can store when warehoused material hits the minimum acceptable limit. Some manufacturers think min\/max is risky because you might be waiting on material. But Jobman\u2019s forecasting and <a href=\"https:\/\/jobman.com\/au\/features\/inventory-control\/\">inventory management tools<\/a> alleviate these risks.<\/p>\n<h3>Two-bin system<\/h3>\n<p>Bin 1 holds most of the stock you need to fulfil orders. When that runs out, bin 2 has your back until new stock arrives to fill the first bin. That\u2019s the two-bin system in a nutshell. It can be hairy when you get near the bottom of bin 2, but the two-bin system is a simple way to visualise inventory requirements.<\/p>\n<h3>Three-bin system<\/h3>\n<p>Take the two-bin system and add another bin at your supplier\u2019s location. Bin 3 replaces bin 2 when empty, while the supplier produces material to refill bin 2. The three-bin method is based on Kanban methodology. While closely associated with JIT, three-bin stock control is surprisingly effective when you maintain good supplier relationships.<\/p>\n<h2>A final word on inventory control<\/h2>\n<p>Manufacturers who implement a stock control system effectively see benefits across the business. From increased storage space to less wasted material, lower material cost to bandwidth for innovation, stock control is a crucial piece of the manufacturing puzzle.<\/p>\n<p>Find out how <a href=\"https:\/\/jobman.com\/au\/\">Jobman, an ERP system made for manufacturers<\/a>, can take the stress out of stock management.<\/p>","protected":false},"excerpt":{"rendered":"<p>If the phrase \u201cinventory control\u201d dredges up bad memories, you\u2019re not alone. Also called stock control, balancing your business\u2019 inventory levels is vital for keeping costs in check. Why inventory&#8230;<\/p>","protected":false},"author":1,"featured_media":1810,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1592","post","type-post","status-publish","format-standard","has-post-thumbnail","category-erp"],"_links":{"self":[{"href":"https:\/\/jobman.com\/au\/wp-json\/wp\/v2\/posts\/1592","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jobman.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jobman.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jobman.com\/au\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/jobman.com\/au\/wp-json\/wp\/v2\/comments?post=1592"}],"version-history":[{"count":0,"href":"https:\/\/jobman.com\/au\/wp-json\/wp\/v2\/posts\/1592\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jobman.com\/au\/wp-json\/wp\/v2\/media\/1810"}],"wp:attachment":[{"href":"https:\/\/jobman.com\/au\/wp-json\/wp\/v2\/media?parent=1592"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jobman.com\/au\/wp-json\/wp\/v2\/categories?post=1592"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jobman.com\/au\/wp-json\/wp\/v2\/tags?post=1592"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}