Different Types of Inventory Control Systems

As the old saying goes, “there is more than one way to skin a cat.” With managing your inventory there are a variety of different options out there and you will want to choose the most cost-effective solution for your organization’s needs.

This article will discuss three types of inventory control systems: manual-entry, barcodes, and radio-frequency identification (RFID).

Manual Control Systems

Don’t scoff at those who actually still consider using manual entry accounting services to manage their inventory. The truth is for some companies, this is still the most cost-effective way to keep track of everything. Companies that have relatively few pieces of inventory to track should strongly consider using a manual-entry system.

For example a sole-proprietor who sells a trendy T-Shirt that they created. If you only have one product and you know it sales for $15 and you sell about a hundred of them a month, then you probably should just mark in down in a spreadsheet every time you make a sale.

A note on spreadsheets: spreadsheets are an excellent tool for managing inventory. Their flexibility is unrivaled by today’s database control systems. However, spreadsheets have serious weaknesses. Recent studies have shown that 9 out of 10 spreadsheets have errors in them. In addition if more than one person is interacting with the spreadsheet, it quickly becomes difficult to maintain the integrity of the data. Remember the time you sent a spreadsheet to Sue who then sent it to Bob and then sent it to Jim and then you all forgot about it for a month or so. After that month was up you probably had no idea which version had the correct information in it. Those organizations with multiple product lines and hundreds or thousands of pieces of inventory should invest in barcodes or RFID technology along with a database system to keep everything in one central location.

Barcode Systems

Barcode inventory control systems have become the standard in the United States. Barcodes are relatively inexpensive and have a couple of advantages over traditional manual-entry systems.

Accuracy. Once the barcode is printed with the correct information, there is very little room for error. With manual-entry inventory systems the clerk may enter $9.69 instead of $9.96; this simply doesn’t happen with barcodes.

Speed. Even though some people are amazingly fast at the 10 key or at typing, there is no feasible way to be as fast as scanning it. Think about how much faster the grocery store process is with scanners. Imagine if the grocery store clerks had to enter everything in by hand; you would be in line for a lot longer.

The one disadvantage of this type of inventory control system over manual-entry accounting services is that for most companies it will cost more in terms of pure dollars paid. It costs money to buy barcode printers, scanners, and stickers. In addition it costs money to buy the software to manage it all. With hand entry all you need is a spreadsheet.

RFID Inventory Control Systems

This technology is still relatively new and it is very exciting. In a nutshell this technology works by having a tag that emits information that can be collected by a reader from a distance. This distance is always a subject of debate. Some people claim there are readers that work for hundreds of yards, but the most common readers only work up to a few feet away.

When this technology becomes economically feasible for all large organizations, I predict it will take the place of barcodes. Imagine a warehouse full of inventory where you could simply log onto the computer, push enter and the system would automatically update to the amount of inventory that is out there. Very handy indeed.

However this type of inventory control system still has not taken off completely for economic reasons. The RFID tags themselves are a bit expensive and the necessary equipment and software to read and manage the tags are also pricey. For organizations like grocery stores who could see huge gains in time in the checkout process the technology would be too expensive. Imagine just taking your cart to the checkout stand where the monitor reads everything in your cart automatically and tells you the price. You pay for it and then you are out the door. Cashiers might be out of a job soon!

That sums up our discussion on the different types of inventory control systems out there. Manual entry, barcode, and RFID remain the most prominently used systems. Small companies may not need the more expensive technology. While larger companies need to see if it makes economic sense to upgrade to the latest in RFID technology.