Inventory Control Examples: What It Looks Like in Practice

Aleksander Nowak · 2026-02-10 · Inventory Management

See real inventory control examples from manufacturing. Learn how low-stock alerts, FIFO, batch traceability, and recipe-based tracking work.

Inventory Control Examples: What It Looks Like in Practice

Most articles about inventory control explain what it means. This one shows what it looks like.

If you manufacture products, you've probably read plenty of definitions and best practices. But seeing inventory control in action helps more than theory. How does a low-stock alert actually prevent a production shutdown? What happens when you need to trace a quality issue back to a specific batch of ingredients?

This guide walks through real inventory control examples from small manufacturers. These inventory management examples follow a simple format: the scenario, the problem without proper control, the solution with control in place, and the result.

What Is Inventory Control?

Before the examples, a quick inventory control definition. The inventory control term refers to the process of tracking stock levels, managing how inventory moves through your business, and maintaining the right quantities to meet demand without overstocking.

The inventory control meaning goes beyond just counting items. It includes knowing what you have, where it is, when to reorder, and which specific batches or lots were used in production.

For manufacturers, inventory control covers:

Raw materials: Ingredients, components, and packaging you purchase from suppliers.

Work-in-progress: Items currently in production, not yet finished.

Finished goods: Completed products ready for sale or shipment.

An inventory control system can be perpetual (updating in real-time as transactions happen) or periodic (updating only when you do physical counts). Most modern inventory stock control systems are perpetual, giving you accurate data at any moment.

The importance of inventory control becomes clear when things go wrong: stockouts that halt production, expired materials that become waste, quality issues you can't trace, and inventory counts that don't match reality.

Types of Inventory in Manufacturing

Understanding the types of inventory management helps explain the examples below.

Single-type inventory (retail): A store buys finished products and sells them. Inventory control tracks items on shelves.

Multi-type inventory (manufacturing): A producer buys raw materials, transforms them through production, and sells finished goods. Inventory control must track materials consumed, products created, and the relationship between them.

Manufacturing inventory control is more complex because materials change form. When you make a batch of soap, the oils and fragrances don't disappear from your warehouse and reappear as soap bars automatically. Your inventory control system needs to handle this transformation. Let me explain inventory control through real scenarios.

The examples below focus on manufacturing scenarios where this complexity matters.

Example 1: Low-Stock Alert Prevents Production Shutdown

Scenario: A paint manufacturer uses titanium dioxide in 80% of their products. They order it monthly from a supplier with a two-week lead time.

Without inventory control:

The production manager checks the titanium dioxide bin before starting a batch of white paint. The bin looks about half full, so they proceed. Mid-batch, they run out. Production stops. They call the supplier for emergency shipping, which costs 3x the normal rate. The batch sits unfinished for four days.

With inventory control:

The inventory system tracks titanium dioxide with a reorder point set at 50kg (two weeks of typical usage plus safety stock). When inventory drops to 48kg, the system sends an alert. The purchasing manager orders more with standard shipping. The new shipment arrives three days before the existing stock runs out.

Result:

• No production interruption
• No emergency shipping fees
• No half-finished batches waiting

Key inventory control feature: Reorder points with automatic alerts based on lead time and usage patterns. This stock management example shows how a simple alert prevents costly downtime.

Example 2: FIFO Prevents Expired Materials

Scenario: A cosmetics company uses fragrance oils with 12-month shelf life. They receive shipments quarterly and store multiple lots in their warehouse.

Without inventory control:

The warehouse team grabs whichever fragrance oil is easiest to reach, usually the newest delivery near the front. Older lots get pushed to the back. Six months later, someone discovers three bottles of jasmine oil that expired two months ago. That's €400 in waste, plus they're now short on jasmine oil.

With inventory control:

The system tracks each lot with its receipt date and expiration. When production needs jasmine oil, the system shows which lot to use first (the oldest unexpired one). The warehouse team picks Lot 2024-03 instead of Lot 2024-09. Three months later, an alert warns that Lot 2024-03 expires in 30 days. Production prioritizes recipes using jasmine oil to consume it in time.

Result:

• Zero expired materials
• No surprise shortages
• Accurate cost tracking (older lots often have different purchase prices)

Key inventory control feature: FIFO (First-In-First-Out) lot tracking with expiration alerts.

Example 3: Batch Traceability During Quality Issue

Scenario: A food producer makes artisanal hot sauce. A customer reports that a bottle tastes "off" and provides the batch number from the label.

Without inventory control:

The producer knows something went wrong but can't identify the cause. Was it a bad batch of peppers? The vinegar? A problem with the cooking process? They can't trace which ingredients went into batch #2847. To be safe, they recall all hot sauce produced that month: 500 bottles. They notify 12 retailers. The recall costs €3,000 in refunds plus damaged reputation.

With inventory control:

The producer looks up batch #2847 in their system. They see exactly which lots of each ingredient were used:

• Peppers: Lot P-2024-15 from Farm A
• Vinegar: Lot V-2024-08 from Supplier B
• Spices: Lot S-2024-22 from Supplier C

They check other batches that used the same pepper lot. Only batches #2845, #2846, and #2847 used Lot P-2024-15. They recall only those three batches: 45 bottles total. They contact Farm A about the pepper quality.

Result:

• Targeted recall: 45 bottles instead of 500
• Root cause identified (pepper lot from Farm A)
• Cost reduced by 90%
• Customer trust maintained through quick, professional response

Key inventory control feature: Batch traceability linking finished products to ingredient lots.

Example 4: Recipe-Based Material Consumption

Scenario: A candle maker produces 5 product lines using shared ingredients: soy wax, cotton wicks, fragrance oils, and glass jars. Each candle size has a different recipe.

Without inventory control:

After each production run, someone manually calculates how much wax and fragrance was used, then updates the spreadsheet. Sometimes they forget. Sometimes they estimate. By month-end, the spreadsheet shows 45kg of soy wax remaining, but the actual count is 38kg. The 7kg discrepancy could be theft, miscounting, spillage, or just math errors. No one knows.

With inventory control:

Each product has a recipe in the system:

• Small candle: 150g wax, 8ml fragrance, 1 wick, 1 small jar
• Large candle: 400g wax, 20ml fragrance, 1 wick, 1 large jar

When production completes an order for 50 small candles, the system automatically deducts 7.5kg wax, 400ml fragrance, 50 wicks, and 50 small jars. No manual entry needed. Month-end count matches the system within 0.5%.

Result:

• Accurate inventory without manual calculations
• True cost per product (materials actually used, not estimated)
• Discrepancies caught immediately, not discovered at month-end

Key inventory control feature: Recipe/BOM-based automatic consumption during production. This inventory system example shows how automation eliminates manual errors.

Example 5: Cycle Counting Catches Theft Early

Scenario: A small electronics assembler stores components worth €50,000 in their warehouse. They do a full physical inventory once per year.

Without inventory control:

The annual count reveals that 200 microcontrollers are missing (€2,000 value). The shortage could have happened anytime in the past 12 months. Security footage is only stored for 30 days. The assembler has no idea when the loss occurred or who was responsible. They write off the €2,000 and hope next year is better.

With inventory control:

Instead of one annual count, they do weekly cycle counts. Each week, they count one category of components. In week 6, they count microcontrollers and find 15 missing. They review the past week's transactions and security footage. They discover a night-shift worker has been taking components. Total loss: €150 instead of €2,000.

Result:

• Early detection limits losses
• Root cause identified while evidence exists
• Problem fixed before it grows

Key inventory control feature: Cycle counting with variance tracking and alerts.

Common Inventory Control Methods

The examples above use several inventory control methods. Here's a quick overview:

FIFO (First-In-First-Out): Use oldest inventory first. Essential for anything with expiration dates. Example 2 shows FIFO in action.

ABC Analysis: Categorize inventory by value. "A" items (20% of SKUs, 80% of value) get tight control. "C" items (50% of SKUs, 5% of value) get looser control. Focus attention where it matters most.

Reorder Points: Set minimum stock levels that trigger reorders. Factor in lead time, safety stock, and usage rate. Example 1 shows reorder points preventing stockouts.

Batch/Lot Tracking: Assign numbers to groups of materials and finished products. Track which lots went into which products. Example 3 shows traceability during a quality issue.

Cycle Counting: Count small portions of inventory frequently instead of everything annually. Example 5 shows cycle counting catching problems early.

Just-in-Time (JIT): Order materials to arrive when needed, minimizing stock on hand. Reduces storage costs but requires reliable suppliers and accurate demand forecasting.

These methods work together. A manufacturer might use FIFO for perishable materials, ABC to prioritize counting efforts, reorder points for all materials, and batch tracking for compliance.

How Software Handles Inventory Control

The examples above are much harder to execute with spreadsheets. Inventory control software automates the tracking and calculations.

Krafte is built for small batch manufacturers. Here's how it handles the scenarios in the examples:

Low-stock alerts (Example 1): Set reorder points for each material. The system alerts you when stock drops below the threshold, with enough lead time to reorder.

FIFO and expiration tracking (Example 2): Each material lot has a receipt date and optional expiration date. When you produce, the system suggests which lots to use first. Alerts warn before materials expire.

Batch traceability (Example 3): Every production batch records which material lots were used. If a customer reports an issue, you can trace back to exact ingredients and forward to all affected batches.

Recipe-based consumption (Example 4): Define recipes for each product with exact material quantities. When you complete production, the system automatically deducts materials based on the recipe. No manual calculations.

Cycle counting (Example 5): Run inventory counts anytime, compare to system records, and adjust with documented reasons. Track variance over time to spot patterns.

Pricing starts at €7/month. No implementation consultants or lengthy setup. Most manufacturers are tracking inventory within a day of signing up.

Why Inventory Control Matters

The examples illustrate the inventory control importance for manufacturers:

Financial accuracy: Know what you have and what it's worth. No surprises at year-end audits.

Production continuity: Avoid stockouts that halt production. Avoid excess stock that ties up cash.

Quality management: Trace issues to their source. Execute targeted recalls instead of broad ones.

Waste reduction: Use materials before they expire. Catch discrepancies before they grow.

Cost visibility: Know true product costs based on actual material consumption.

Good inventory control management prevents small problems from compounding into large ones. A 1% monthly discrepancy becomes 12% by year-end. A missed reorder becomes an emergency. An untraceable quality issue becomes a full recall.

Frequently Asked Questions

What is inventory control?

How do you define inventory control? It's managing stock levels to maintain the right quantity of materials and products. It includes tracking what you have, where it is, when to reorder, and which batches were used in production. For manufacturers, this covers raw materials, work-in-progress, and finished goods.

What is an example of inventory control?

A cosmetics company tracks fragrance oil lots with expiration dates. The system ensures older lots are used first (FIFO) and alerts before anything expires. This prevents waste and ensures accurate cost tracking. The five examples in this article show different aspects of inventory control in manufacturing.

What are the types of inventory control systems?

The two main types of inventory system are perpetual and periodic. Perpetual systems update inventory in real-time as transactions occur. Periodic systems update only during physical counts. Most modern systems are perpetual, providing accurate data at any moment. The inventory control process varies by system type but always involves tracking, counting, and adjusting stock levels.

What is the difference between inventory control and inventory management?

Inventory control focuses on tracking and maintaining stock levels. Inventory management is broader, including demand forecasting, supplier relationships, and strategic decisions about what to stock. Control is a component of management.

Why is inventory control important for manufacturers?

Manufacturers handle multiple types of inventory (raw materials, WIP, finished goods) and transform materials through production. Without control, you can't track true costs, trace quality issues, prevent stockouts, or maintain accurate counts. The examples in this article show what goes wrong without proper control.

Tags: Inventory Management, Scheduling