An inventory control system is a system the encompasses all aspects of managing a company's inventories; purchasing, shipping, receiving, tracking, warehousing and storage, turnover, and reordering. These functions must be performed in sequence in order to have a well-run inventory control system.
Automation can dramatically impact all phases of inventory management, including counting and monitoring of inventory items; recording and retrieval of item storage location; recording changes to inventory; and anticipating inventory needs, including inventory handling requirements. Many analysts indicate that productivity and hence profitability gains that are garnered through use of automated systems can be further increased when a business integrates its inventory control systems with other systems such as accounting and sales to better control inventory levels. Key components of an integrated system are general ledger, electronic data interchange, database connectivity, and connections to a range of vertical business applications.
New technologies have greatly improved the tools used to manage inventories. Powerful computer systems that are linked into networks are now able to receive information from handheld devises. The wireless handheld devices scan bar codes on inventory items and send data to a tracking database in real time. The newest trend in the area of inventory control and management are vendor-managed inventory (VMI) systems and agreements. In a VMI system distributors and/or manufacturers agree to take over the inventory management for their customers. Based on daily reports sent automatically from the customer to the distributor, the distributor replenishes the customers stocks as needed.