In cost accounting, bin cards are physical or electronic records used to track inventory levels in a stockroom, warehouse, or another storage facility.
The card typically contains the item’s stock number, description, location, current inventory level, and minimum and maximum levels that should be maintained.
Bin cards can be used to track inventory levels manually or electronically. In the manual system, a stock clerk or other designated employee physically inspects the inventory and updates the card accordingly. In the electronic system, sensors or other devices are used to track inventory levels and update the card automatically.
Benefits of Bin Cards
The main advantage of using bin cards is that they provide a real-time view of inventory levels, which can help to improve stock management and avoid stockouts. They can also help identify inventory usage patterns, which can be useful in planning future production or purchasing.
Another advantage of bin cards is that they can be used to trigger reordering when inventory levels reach a certain point. For example, if the minimum level of inventory is 10 units and the current level is 9 units, the bin card can be used to generate a purchase order for the 10th unit automatically.
Bin cards help maintain accurate records of stock quantities by providing a clear breakdown of products received, issued, and remaining. This reduces the chances of errors or miscounts compared to relying solely on manual counting methods.
By maintaining careful records of stock levels on bin cards, it becomes easier to identify when items need to be replenished. When the quantity mentioned on the card reaches a certain reorder level or minimum threshold level, it serves as a trigger for placing new orders in time.
For new employees who need to become familiar with product locations and inventory management methods, bin cards are a great teaching tool. Bin cards’ straightforward and organised design makes learning easier, shortening training time, and increasing accuracy.
Also Read: What is Abnormal Process Loss?
Disadvantages of Bin Cards
1. Inaccuracy: Bin cards are highly dependent on manual entry, and hence susceptible to human errors. If not updated properly or at regular intervals, incorrect information can cause variations between the actual stock and the stock as indicated on the card.
2. Time-consuming: The maintenance of bin cards is a demanding task, most notably for entities with substantial inventories or rapid stock movement. The regular updating and alignment of data across numerous bin cards can present difficulties and necessitate significant exertion.
3. Limited accessibility: Generally, physical bin cards are found in particular storage spaces. This restricted access can produce lags in acquiring current details regarding product accessibility, most notably for groups operating remotely or in various sites.
4. Lack of real-time updates: Bin cards typically provide the most up-to-date information on stock levels only when they are updated by hand. This can cause delays in identifying deficits or excesses, potentially impacting the completion of orders and the contentment of customers.
5. Lack of integration with modern systems: The significance of bin cards may diminish as a more number of firms transition to digital inventory management systems and automated solutions. The integration of bin card data with these modern systems may prove challenging and inefficient because of the manual aspect of data updates and reconciliation.
Conclusion
While bin cards may be useful in specific situations and for smaller entities with fewer inventory demands, the limitations mentioned highlight the disadvantages of relying mainly on manual record-keeping methods. To mitigate these disadvantages, establishments often integrate bin card systems with digital inventory management systems that offer real-time updates, automation, and advanced reporting functionalities.
