Whether big or small, your company’s inventory is crucial to meeting your business objectives. This article describes risks to your inventory. It also provides a guide on what to look for when purchasing inventory control software. Finally the article concludes by reviewing some of the available options in the inventory software market.
Risks to Your Inventory
- Sadly, the greatest risks to your inventory come from within your organization. Most thieves are opportunists, not cold-hearted stealers. Chances are against Brad Pitt, George Clooney, and Julia Roberts teaming up to devise some crazy way to steal your company’s inventory. However, there is a much higher chance that the teenager who boxes your widgets might decide to pocket a few of them. Control your inventory against internal theft.
- Nature might damage your inventory. Think about what controls you have in place for fires, floods, lightning, snow storms, hurricanes, tornadoes, etc.
- Natural decay might be an issue depending on the type of inventory you have.
- High or low temperatures may be another risk.
- What to Look for in Inventory Control Software
Before purchasing control inventory software you will want to go through the following decision making model (these come from the COSO framework). Look at your organization’s internal environment. Meaning you should ask yourself do most of the people who work with the inventory seem honest. Does upper management seem honest?
Next you’ll want to identify how your inventory plays into the overall objectives of the organization. If it is a small part of the organization’s objectives then you won’t want to spend as much money on inventory control system software. However for most businesses inventory will be a large component of the objectives.
At this point you will want to identify events that could happen to inventory that will affect whether or not your business reaches its objectives. Identify as many as you can, I’ve given you a few ideas above.
Next assess the likelihood of these risks happening as well as their potential impact on the organization’s objectives. After following through these steps you will be in a much better position to decide what type of software for inventory control your organization needs.
Reviews of Available Options
Barcodes are one of the most cost-effective available. These little barcodes will help control against theft and data entry mistakes. Here’s what you’ll need:
- Barcode Scanner: These are the little babies that scan the products and work with your warehouse inventory control software to update the amounts of inventory you have on hand (very cool). They don’t come cheap, starting at round $300 each.
- Barcode Printer: These print out the barcodes with the numbers on them and the straight lines. They cost around $1,500 depending on what you want.
- Labels: These cost around $10 for a roll of them. This is just the special paper that the printer prints the labels onto. One roll usually has about 2000 labels on it, depending on the size of the labels.
- Inventory Control Software: This is where you initially enter all of the information from the barcodes. This can be a hassle up front, but after you have everything up and running you will love this software. Depending on the size and needs of your business this software costs anywhere from a couple hundred bucks to a couple million dollars. Most companies will end up paying around $2,000.
Radio-Frequency Identification (RFID) systems are a more expensive, but a very cool option for inventory control. Basically you don’t need one of those annoying little scanners. RFID works with little tags that send a signal back to the reader which is placed somewhere in the warehouse. Using control software and a computer you can see exactly where your inventory is at. If an employee steals something, you will know immediately. Some of these systems are so advanced you could probably follow the red-dot and tackle the thief. Very cool I know. Here is what you will need for this inventory control system.
- The Reader: This is the object that receives the signals from the tags. It is a very intelligent watch dog. These are expensive and most companies won’t release any standard pricing. The average is probably around $2,000 per reader. How many you need will depend on the size of your warehouse.
- The Tags: The tags have a tiny chip in them that sends information to the reader. Some tags will let you store a lot of information like when it arrived at the warehouse, how long it has been sitting there, etc. These tags cost anywhere from five cents a tag to 25 cents a tag.
- The Software: Unfortunately you need some sort of software to keep track of everything. This control software usually starts at around $1,000
Whether you need restaurant inventory control software or you work for large chip manufacturer, it is a good idea to think about control software for your inventory.
