The important steps which are necessary to be taken to control the inventories:

  • Store material is to be used only on production of proper orders (indents).

  • The balance of the store ledge should be brought up-to-date. It will be a continuous process and applies to the inventory of all the material in the stores.

  • The cost of the material is recorded in the ledger sheets. It also records the cost value of all materials in the store.

  • The value placed upon such inventory is a matter of judgement.

  • The maximum and minimum quantities of all the materials should be determined with a great care. Their limits can be set up only by judgements through experience and careful observations. Such observations often result in a great reduction of inventory, thereby reduction in the blocking of capital and saving in the interest on that capital.

  • Quantities of the materials required can be calculated from the schedule of items mentioned in the contract.

  • Quantity surveyor can help in assessing the exact requirements of the material.

  • Efficient inventory management implies availability of stock of right material, in right quantity, at right place and at the right time. It should be neither more nor less. It eliminates the eleventh hour and emergency buying and avoids unnecessary increase in the cost.

  • Inventory problem of a manufacturing concern may differ from those of a construction organisation.

  • It the case of a manufacturing concern, holding of inventory which would be adequate for a period of about more economic activities of the organisation.

  • Optimum inventory helps in diverting/releasing scarce capital for investment in some other better and more economic activities of the organisation.

  • Cost of storage and handling, deterioration and obsolescence affect the profitability of the project.

  • Investment in the inventories is a major problem in the industry.

  • If there is no proper planning, capital gets locked up.

  • Effective inventory management contributes to increase the efficiency and profit-earning capacity of the organisation.