TL;DR: Inventory planning and control helps Indian manufacturers balance stock availability, cash flow, and production needs while reducing waste, errors, and operational surprises.

Inventory control and planning is one of the most important jobs every business must focus on because inventory is often the second highest expense for organizations. Good inventory planning and control have various advantages for businesses that sell goods as a primary source of income.

This blog briefly talks about inventory control and planning, including its purpose, advantages, and possible challenges.

What Is Inventory Control and Planning?

Inventory control and planning is any organization’s process to choose the best quantity and timing to manage its inventory. This process aims to align inventory plans with the company’s ability to produce goods and earn revenue. The process of inventory planning mainly has an impact on the business and its profit.

The Importance of Inventory Control and Planning

Almost all businesses maintain inventory since it is one of their most valuable assets. The following are other factors for why managing and planning your inventory is essential:

1. Increased Sales

Sales can be increased by organizing and managing inventory levels. The selling of inventory is the only method to make a profit. Therefore, managing and organizing your inventory is essential to be ready for that scenario.

2. Improved Cash Flow

Inventory planning and control inventories are two of the best ways to improve cash flow and profitability. The cash flow statement will show a decrease in inventory stock as a negative amount, meaning a financial outlay or that a business bought more goods than it could sell.

3. Storage Optimization

Using well-designed storage facilities and continuously improving their layout and design can have a positive impact on the revenues, which is one of the most important advantages of inventory control. Planning for products that are in high demand is also essential for cutting down on travel time.

4. Boost Client Satisfaction

You can raise the reliability of the inventory control process by creating more creative rules and procedures, which will shorten lead times, save money, boost customer happiness, and keep customers coming back.

The Goals of Inventory Control and Planning

By managing and organizing your inventory, you can also achieve additional objectives, such as:

1. Forecasting

Inventory forecasting is a technique that employs a marketing strategy to predict future sales and, thus, future inventory needs. It is sometimes referred to as inventory estimation.

2. Cost Control

Inventory expenses, also called holding and storage expenditures, can comprise 20-30% of your overall business expenses. Reducing all of these expenses is the goal of inventory planning.

3. Optimal Utilization of Space

By improving the layout and design over time, well-designed storage facilities can favor the bottom line. How inventory is used in manufacturing, production, or fulfillment will influence the arrangement and overall space utilization.

Benefits of Inventory Control and Planning

Inventory management includes inventory planning and controlling stock. As inventory is often a business’s second-largest expense, business owners monitor it closely. Check out the list of advantages of inventory management and planning that follows:

1. Free Up Cash Flow

Small firms don’t typically have enough funds on hand to buy a lot of goods. The amount of money spent on inventory is restricted by regulations and processes that business owners set. Inventory planning and control can help businesses manage their cash flow.

2. Increased Profits

Planning and managing inventory can help business owners make more money. Higher business profits are frequently obtained by buying the proper kind of inventory to satisfy consumer demand. Limiting the business’s old-fashioned inventory is another benefit of inventory planning and control techniques.

3. Limits Misuse

Policies and procedures for inventory stop employees from misusing it. Employees may take inventory goods for their use in informal work settings. The company suffers a financial loss as a result of stolen inventory.

How to Make an Excellent Inventory Plan?

Here are some points that will help you create an effective inventory plan:

1. Take a Look at the Product’s Volume

Business forecasting is useful for creating an inventory plan. Once you know the market demand for your product, developing a process to manage and maintain your inventory levels will be much simpler.

2. Keep an Eye on Inventory Considerations

Demand is influenced by a variety of factors, including effective advertising, price reductions and product offerings made by your competitors, the income and environment of your target market, seasonal demand, market trends, and consumer preferences.

3. Maintain Warehouse Productivity

Keeping an ideal inventory level requires managing a clean and organized storage area for your goods. It is difficult if you continue to employ manual processes while doing it.

4. Automation of the Inventory Processes

Automating key business operations will be helpful in creating an inventory strategy because reports will be more accurate and less likely to contain errors. With the assistance of the Automation Inventory System, all inventory control and planning is made simpler, helping you to create a great inventory plan and increase your profits.

Challenges of Inventory Control and Planning

Managing so many different procedures and variables at once leads to some difficulties. Even minor hiccups might lead to major problems. Common challenges of inventory control are:

1. Varying data

Planning an inventory effectively means the use of numerous sources of data. Additionally, it is a complex process to combine all of this data. Retail reports and historical data, which may be scattered across various legacy systems, will need to be gathered by inventory planners.

2. Guesswork

Predictions are more complex to make. Even with analytics technologies, guessing will always exist if the proper KPIs (key performance indicators) aren’t in place to direct your inventory strategy. Additionally, predicting may become more difficult due to constantly shifting market conditions.

3. Multiple Locations

It can be difficult to distribute goods that are kept in different places. Knowing where to distribute your inventory can be tough without a good inventory tracking system.

4. Human Errors

The entire solution is not technology. Inventory management planning is ultimately the responsibility of an inventory planner. A lot of historical information needs to be shared with the new leader when someone else takes over the position. Such processes can account for multiple human errors disturbing the entire inventory management process.

Improve Inventory Management With TranZact

It is crucial to arm yourself with inventory planning and control in the constantly evolving business environment. For multiple-channel merchants, TranZact provides a retail-tailored operating system that helps in retail inventory planning and control.

The inventory control and planning software from TranZact is made for Indian SMEs managing numerous online sales channels. It is intended to increase operational scalability and revenues and meet (or exceed) your expectations.

FAQs

What is inventory planning and control?

It is the process of deciding how much inventory to hold, when to reorder, and how to align stock with production and sales needs.

Why is inventory planning important for SMEs?

It directly impacts cash flow, customer service, storage costs, and profitability for small and mid-sized manufacturers.

What are common challenges in inventory control?

Common challenges include poor data quality, forecasting errors, multiple storage locations, and human mistakes.

How does technology improve inventory planning?

Software systems automate tracking, reporting, and analysis, reducing errors and enabling faster decisions.

How often should inventory plans be reviewed?

Most SMEs should review inventory plans monthly, with weekly checks for fast-moving or critical items.