Inventory Control (SQA National 5 Business Management): Revision Note

Inventory management systems

• Inventory (also called stock) is the total amount of materials and goods a business holds so it can produce products and meet customer demand

• Managing inventory well helps a business avoid both overstocking and understocking (see revision notes here)

Types of inventory

• Good inventory management ensures a business always has enough stock to keep production running smoothly, but not so much that money is wasted on storage

  • The aim is to keep the right balance between cost and availability.

Modern inventory management systems

• Many businesses use technology to monitor and control inventory levels automatically

  • Barcodes or QR codes are scanned at checkout or dispatch

  • The sales information is sent instantly to a central ICT system

  • When stock levels fall to a certain point (called a reorder level), the system automatically alerts staff or places a new order with suppliers

• This process helps the business

  • Restock at the right time

  • Avoid running out of materials

  • Save time by reducing manual checking

  • Make better decisions, as managers can see stock levels instantly and plan ahead