Internal Controls of an Inventory

The investment of a c company in its inventory is probably the biggest one for the business. As we know inventory is a collection of valuable and expensive items that can be stolen or resold by anyone. If the inventory consists of raw materials it is important to keep the track of the quantity of raw materials in order to make sure that they are readily available during production and manufacturing process.

In order to protect the inventory a business needs to implement array of controls in order to avoid theft or the shortage of raw materials required for the production purposes. There are certain steps that can be taken in order to protect inventory such as fence and lock the warehouse where you put inventory items. Along with fencing the inventory you must allow only authorized personals to enter the restricted area of warehouse. The next step you can take to protect the inventory is to control the inventory. This means allotting numbers to all the locations and allotting separate identities to all the items stored within the inventory. Another precaution is to count the entire incoming inventory. An inspection of all the inventory items should be run and if the any item is damage or fail during inspection should return at once. Every Item within the inventory must be tagged having detail information regarding the description, part number and unit of measure of that item.

Another precaution a business can take to control its inventory is to segregate the inventory of the business from the inventory of the customer. The record keeping of the inventory must be standardize so that latest technology can be used to control and protect the inventory of the business.

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