5 Reasons Why Inventory Control Matters
For whatever reason, being a “control freak” seems to have a negative connotation. However, when it comes to inventory control, being a control freak is actually a good thing. Having proper inventory management and control procedures in place is a critical factor in your success as a DoD vendor.
What is inventory control?
The objective of inventory control, also known as internal control, is right-sizing your in-stock inventory so as to serve the needs of your customers without keeping excessive supply on hand.
Although it is often confused with inventory management, there are some differences. While inventory control deals with tracking what you have in stock and knowing what is available, as well as understanding the location of your goods and ensuring they are stored properly, inventory management is more concerned with stocking the right amount of goods, knowing when to reorder certain items, and making sure you don’t overpay when you do.
Why should inventory control matter to DoD suppliers?
The importance of inventory management and control cannot be overstated. Cost, efficiency, and DoD process standards are all factors that lead best-in-class defense suppliers to employ strict inventory control procedures.
Here are five reasons to give careful consideration to your inventory control processes.
- The Department of Defense has inventory control standards.
UID and RFID comprise the backbone of the DoD’s inventory control methodology. Defense suppliers are required to use systems like iRAPT and Vendor Shipment Module (VSM) to do business with the government. These systems and methodologies are vital components of the DoD’s supply chain — one that can only reach maximum cost savings if efficiencies are deployed on both sides of the transaction between the government and its vendors.
- Poor inventory control affects your profitability.
Inventory control and management is all about the interplay between too much and not enough. Having too much inventory on hand (especially slower-moving goods) ties up capital and eats into your profitability. When it comes to maximizing profitability, the established philosophies of lean and just-in-time inventory still hold true.
- Lack of inventory causes significant challenges.
The opposite of the above — not having enough of the necessary inventory — causes backorders, delays, and could put your government contracts at risk. In a competitive space where many vendors bid for the same work, you can’t afford to let inventory control issues hurt your performance and potentially damage your firm’s reputation.
- Good inventory control makes you more efficient.
Imagine being unable to find the inventory you need, even though you know it’s somewhere in the warehouse. Not only is this frustrating, but it results in lost time and other inefficiencies. Knowing where inventory is located at all times makes for a more efficient workflow.
- Better control yields better insights.
It’s impossible to make truly data-driven decisions when you don’t have an accurate picture of what’s going on. Knowing what you actually have in your inventory not only saves time; it allows you to make decisions based on the most accurate data possible.
Diligent inventory control practices are a vital component to your success as a DoD supplier. Odyssey provides a DoD-approved software solution for managing iRAPT and VSM compliance, simplifying the inventory control procedures you’re required to complete as a defense supplier. Learn more about how our solutions can streamline and automate these time-consuming processes: see a personalized demo.