Inventory management in manufacturing is not just about counting the number of items in storage. It is also a crucial task that clarifies the company’s assets by accurately counting multiple types of goods such as raw materials, work-in-progress items, and finished products, while also calculating their value. 

In particular, in factories, inventory management is directly linked to production control and cost management.  

The Purpose of Inventory Management

The main purposes of inventory management are: 

• To control stock levels. 
• To identify different types of inventory, such as unsold or unnecessary items, and organize them effectively (preventing excess stock). 
• To accurately record inventory at the time of closing books and gain an overview of the company’s financial status (identify end-of-period stock). 

Frequency of Inventory Counting

Inventory checks are typically conducted at the end of accounting periods. Depending on the industry and business model, they may be carried out monthly, quarterly, or semi-annually. 

In manufacturing, inventory counting is performed more frequently because of high stock fluctuations and the large variety of products with relatively small quantities in factories. 

Challenges in Inventory Counting

Inventory management in factories is essential for identifying accurate stock levels and clarifying company assets. However, factories that handle diverse products and have complex processes face many challenges. 

Issues such as unclear management methods, inconsistent data, time-consuming processes, labor burden, and human error can make inventory management inefficient and significantly impact overall company operations. 

Let’s dive deeper into these challenges. 

Unclear Inventory Management Standards

Factories often store a wide variety of parts and materials, but management methods for these items are usually unclear. 

Without standardized storage rules, time is wasted searching for items. Moreover, the lack of fixed storage locations increases the risk of loss or damage. 

Mismatch Between Inventory Data and Actual Stock

Discrepancies between recorded data and physical stock are common in many factories. 

The main reasons are unreported stock movement, delays in updates, or manual recording errors, which all cause data inconsistencies.  

Inventory Management is Too Time-Consuming

Factories often handle huge amounts of inventory, making it extremely time-consuming to check every item. This becomes even more complicated if the count must be performed without halting production lines. 

The longer the counting process takes, the more production activities are disrupted, leading to shipment delays and other issues. 

Workforce Challenges in Inventory Counting

Inventory management requires significant manpower, which makes it difficult to execute. The heavy workload can also lower employee motivation. 

If handled by inexperienced workers, errors are more likely to occur. Additionally, differences in recording methods among workers can result in inconsistent data. 

How to Improve Inventory Management in Manufacturing

In manufacturing, especially in factories, reducing the workload of inventory management is a major challenge. This is because the task depends on small steps prone to errors, requires constant cross-checking, and involves investigating discrepancies between records and actual stock. 

To overcome this, processes must be standardized and continuously improved, making inventory management simpler and smoother. 

Here are several ways to improve inventory counting. 

Conduct Regular Stock Checks

Frequent inventory checks improve management accuracy. By monitoring daily stock movements and performing regular counts, discrepancies between records and actual stock can be minimized. 

However, increasing frequency also increases workload and costs. Therefore, finding the right balance is key.  

Alternatively, manual stocktaking can be replaced with specialized software such as MC Lens, which can be installed directly on Android devices. This solution makes stocktaking easier, saves time and effort, and generates logical results that are easy to store—reducing the need for overly frequent checks. 

How MC Lens works

Add Product Images to Inventory Lists

Including product images in stock lists makes identification easier, especially in environments with many similar items. It also helps new employees quickly recognize different products. 

Label Your Inventory

To improve efficiency and accuracy, items can be marked once confirmed. Using labels, tags, or checklists helps prevent duplicate counting and loss. 

Labeling is particularly useful when dealing with large stock volumes or when locating specific items. With systems such as the MC Label OCR-integrated printing system, you can instantly print and apply labels after scanning.

How MC Label works

Schedule Inventory Tasks

For better planning and efficiency, scheduling tasks in advance is crucial. 

The schedule should include details such as dates, times, responsible persons, and scope of confirmation, and it should be shared with all relevant parties to ensure smooth collaboration. 

By defining and announcing schedules and staff assignments beforehand, the process can be carried out efficiently in one day while minimizing errors such as missed confirmations or duplicate checks. 

Effective scheduling improves the accuracy and efficiency of the entire inventory process. 

Key Points to Remember in Inventory Counting

What should you keep in mind when performing inventory checks? Here are three essential points.

Regularly Review the Inventory Manual

To improve efficiency, regularly review and refine your inventory manual. 

Update information continuously by incorporating on-site feedback and adopting new technologies, recognizing the need for annual improvements. 

The PDCA* cycle should be implemented to identify improvement areas through worker interviews and process reviews. 

PDCA cycle

*PDCA (Plan, Do, Check, Act) is a continuous quality management method that improves processes, enhances performance, and ensures quality. By continually improving the manual, you can boost both efficiency and accuracy in inventory management.

Manage Working Hours Efficiently

Proper time management speeds up inventory tasks. By recording and analyzing working hours, you can identify improvement areas and set clear completion goals. 

If counting takes too long, daily operations may be disrupted. Therefore, staff must be coordinated, schedules set in advance, and tasks completed on time. 

Through time management and targeted process improvements, both efficiency and accuracy can be enhanced. 

Conduct Product Quality Checks

Inventory counting is not just about quantity but also about product quality. Defective products must be managed separately to avoid shipment errors. 

Managing inventory in terms of both quantity and quality ensures consistent product standards and improves customer satisfaction. 

Tools to Support Warehouse Inventory Management

When implementing a solution, it is important to choose one optimized for your business. Careful consideration is required, and consulting with vendors can also be helpful. 

Here are some tools that can streamline inventory management. 

2D Barcodes

Barcodes come in two formats: one-dimensional (1D) and two-dimensional (2D, e.g., QR codes). 

2D barcodes store information both horizontally and vertically. In inventory management, they help reduce manual input errors, update data in real time, and process information instantly. 

Types of 2D barcodes

Pros and Cons of 2D Barcodes

RFID (IC Tags)

RFID stands for Radio Frequency Identification—a technology that automatically identifies IC tags using specialized readers. Unlike barcodes, RFID can read multiple pieces of information simultaneously and, in some cases, even record new data.

Pros and Cons of RFID (IC Tags):

Smartphone-Based Inventory Management Systems

Smartphone applications are low-cost alternatives with similar effectiveness to barcodes and RFID. Inventory can be updated in real time regardless of location, and information sharing becomes easier. 

It is important to carefully select an app that fits your company’s needs. This approach is simple to implement, even for SMEs, at relatively low cost. For example, MC Lens, developed with Japanese technology, supports OCR (text and number recognition) as well as barcode reading (1D, 2D), v.v. 

MC Lens can read a wide variety of characters

Pros and Cons of Smartphone-Based Systems

AI Cameras

AI cameras can automatically count stock using image recognition. By applying AI, inventory status can be monitored in real time, demand forecasts become more accurate, and human error is minimized. 

However, challenges remain, such as high implementation costs, camera blind spots, and the need for skilled operators. 

Pros and Cons of AI Cameras:

Weight Sensors

Weight sensors determine stock levels by measuring weight and calculating quantities. This is particularly effective for items that are hard to count visually, such as powders and liquids, as well as bulk small parts. They allow real-time monitoring and prevent stockouts. 

MC Lens Software

We recommend the MC Lens OCR and barcode recognition application for Android devices. Since it runs directly on smartphones, the implementation cost is lower than traditional inventory tools. 

OCR/barcode results are stored in CSV format, while scanned images are saved in JPEG/PNG/WebP formats in designated Android folders and uploaded to an FTP server. Because data is not stored on the cloud, it remains accessible even without a stable internet connection.

Improving inventory management efficiency not only reduces costs but also enables more accurate demand forecasting, which increases profit margins. In this article, we have explained the key points for streamlining and digitizing warehouse inventory, along with practical recommendations for your business.