Automated Stock Control

Digital systems – including both hardware and software – exist to support a business, whether it is helping the business operate more efficiently, faster or more economically.

An example of a digital system that supports a business would be the use of automated stock/inventory control systems, which are commonly used in many businesses, such as warehouses, retail stores and distribution centres.

In this lesson, we’ll learn about:

  1. How digital systems support stock control
  2. How the hardware and software are used
  3. What processes are carried out
  4. How the different parts of the system communicate with each other.

1. How Digital Systems Support Stock Control

A digital system is a combination of both hardware and software within an organisation. As discussed in the lesson introduction, they help the business to operate more efficiently, faster or more economically.

How does a digital system support automated stock/inventory control though?

Imagine we were running an online business selling physical products, such as laptops. When an order comes in, either directly or from the company website:

  • The stock levels are checked to see if the order can be fulfilled.
  • If there is not enough stock, the order is rejected.
  • If there is enough stock, the items are marked as sold and ready for despatch.
  • The stock level for the inventory item is updated.
  • The customer will be notified that their order is being processed.
  • The product will be handed over to the logistics department for processing.

The system that manages this process is called an Inventory Management System (IMS).

The overall process is shown in figure 1 below.

Figure 1 – the stock/inventory control process.

Further Thought

Research an inventory management system online and see what kinds of hardware and software services it provides.

2. How The Hardware & Software Are Used

The functioning of an automated stock control system will rely on a number of different pieces of hardware & software. We’ll look at each of these now.

How Software is Used

  • Inventory Management System (IMS) – this software provides an interface for interacting with the database. It will be used to update the inventory items & stock levels and ensure orders for new stock are sent out and we don’t sell stock we don’t have.
  • Stock Checking Database – this is connected to the IMS and will contain the actual data on current inventory items and stock levels.
  • Email System – this is used to send an order confirmation email to the customer when an order is placed, a despatch notice when the item is shipped and a delivery notice when the item has been delivered.
  • Logistics System – this is used to record all shipments of products to customers as well as whether the item has been delivered or not.

How Hardware is Used

  • Stock Database Server – the server that holds the database containing information on inventory items & stock levels.
  • Barcode scanners/readers – this is used to read the barcode on an item and update the stock database.
  • Portable Data Terminals – these are more advanced barcode readers that can have software applications installed on them.
  • Robot Device Pickers – these are machines that will pick up the stock from the warehouse and pass the item to logistics.

Further Thought

Research portable data terminals. What other functions can they provide?

3. What Processes Are Carried Out

A process is defined as an operation of a system that takes a set of inputs and produces one or more outputs.

The processes of the Inventory Management System might include:

  • When stock arrives at the warehouse the boxes are scanned which will update the number of items in stock in the database.
  • When the company receives a customer order, it produces an order request for the IMS.
  • The IMS checks the number of items ordered against the number of items in stock and can carry out one of the following actions:
    • There are enough items in stock to complete the order, so the order is carried out.
    • There are not enough items in stock, so the customer is notified and the order is not processed.
  • The IMS will have a reorder threshold number for each product. If the number of items in stock drops below this number, a request to reorder is automatically created.
  • The IMS checks the number of items ordered against the reorder threshold value and one of the following will happen:
    • The number of items in stock is above the reorder threshold value, so nothing happens.
    • The number of items in stock is below the reorder threshold value, so a reorder request is generated.
  • The barcode scanner will scan the item being picked for dispatch and take this off the stock level in the database.

Further Thought

Can you think of any other processes that might be carried out?

4. How The System Communicates

An automated stock control system needs to be able to communicate with a variety of other systems to work effectively. Many of these will be other systems within the business, but often they will need to also communicate externally, such as to suppliers and customers. This external communication will usually happen via the internet.

Some of the different ways the stock control system will communicate include:

  • The IMS will communicate with the email server to send out an order received/order dispatched email to the customer.
  • The IMS will communicate with its database to check stock levels.
  • The Barcode Scanners will communicate with the IMS to update stock levels.
  • The IMS will communicate with an external company to order more inventory if the levels drop.
  • The IMS will communicate with the logistics system when an order is ready to be dispatched.

Further Thought

Research an eCommerce system online and see if they are designed to work with an IMS. If not, how do you think the two systems communicate?

Lesson Summary

So to summarise what we’ve learnt in this lesson:

  • Digital systems are combinations of hardware and software that exist to support a business.
  • Inventory Management Systems (IMS) exist to track the number of items in a warehouse.
  • Orders are received and passed to the IMS system, which checks the number of items ordered against the number in the database.
  • If there are enough items in stock, the order is processed; if not the order is rejected or put on hold. If the number of items drops below a reorder level value, the IMS will automatically reorder items that are low in stock.
  • The customer will be automatically emailed when the order is placed, processed, dispatched and finally delivered.
  • The stock picker will use a barcode scanner to remove the items from the warehouse, and this will update the item level in the database.
  • The IMS, barcode reader, company eCommerce system and email system all need to work together using local network hardware.