Inventory Cost Control

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No warehouse wants any excess inventory. Not only would this increase inventory holding cost but also storage cost, service cost, and inventory carrying cost. Extra inventory would also impact opportunity cost, inventory turnover, and inventory level. That's why inventory control is necessary because it ensure the right amount of finished goods is available.

Inventory management software controls costs by helping you make even smarter business decisions than you already are. You can make the most of your current resources and free up money from areas where it is being spent on things that are not of the greatest value to your company and put it into other areas that will lead to more productivity and growth.

That might seem a little vague, but don’t worry because we are about to get into the specifics of how all of this works. Here is how inventory cost control can work in your business:


Controlling costs is hard if you don't preserve your products. If you work with perishable products, like food, medicine, and many others, you need to keep a close eye on their expiration dates. Many companies adopt a first-in, first-out (FIFO) inventory method because this helps them sell older products first before they sell newer ones. This helps prevent products from spoiling. If you allow your products to go bad before you can sell them, you add to your expenses. Cutting down on product spoilage is an effective inventory cost control.


Even if you don’t work with food, but instead focus on vehicles, high-tech gadgets or other complex products, you still need to worry about ordering too many of them. Technology is constantly changing and so are products and models each year. If you don’t sell all the copies of this year’s model before the next one debuts, you’ll either have to sell them at a deep discount or eat the whole cost.


When you use inventory cost control to avoid buying too many products, you not only cut down on product spoilage and decay, you also keep more money in your pocket. With all the money you save, you can grow your business even more by investing in new employees, buying new facilities, and any number of other things. The point is you’re in control when you control your costs.


One of the most important things to do as you manage your inventory is to find the right balance between too much and too little. You already know the benefits of cutting down on inventory levels, but what about keeping an adequate quantity of inventory on hand? If you don’t have enough products to meet demand, you risk displeasing customers and seeing them possibly buy from a competitor. Having too little inventory can cost you just as much, if not more, than having too much. Use automatic reorder points to find that sweet spot right in the middle.


Excess inventory can affect labor cost, fixed cost, unexpected cost, project schedule, cost drivers, performance measurement, and cost overruns. etc. However, controlling costs is not so hard when you have the right tools at your disposal to give you the data you need and make your job more efficient. You can use inventory management software to keep costs down by reducing spoiled and obsolete products, and keeping a healthy balance of products on hand. To learn more get a custom demo of Fishbowl's manufacturing and warehouse management software.


Inventory software helps companies control their carrying costs and other expenses by:

  • Preventing product spoilage, decay, and obsolescence
  • Empowering staff members and avoiding unnecessary expenditures
  • Maintaining a healthy inventory balance

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