What is Inventory Management?
Inventory management helps businesses in determining when to place orders for what types of goods and in what quantities. It records inventory from acquisition to the sale of items. To guarantee that there is always enough inventory to satisfy client requests and enough notice of a shortfall, the practice looks for and reacts to patterns.
Well, inventory is one of the most essential assets for a corporation since its turnover generates income for the organization. Therefore, it is necessary to understand inventory management adequately.
Inventory management is the process of following a product’s progress from the factory through the inventory and finally to the retailer’s cash register. Inventory management is concerned with ensuring that the appropriate items are available at the right time in the correct location.
A firm that has too much merchandise has overstock. Businesses with excessive inventory risk running into financial difficulties as a result of the restricted flow of cash. This overstocked inventory, which is also termed dead stock, will frequently lie in storage, unable to be sold, and eat into a business’s profit margin.
However, poor customer service might result if a company lacks enough inventory. A lack of inventory indicates that a firm may lose sales. Telling clients they don’t have anything, and repeatedly backordering things, might encourage them to transfer their business elsewhere.
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What is Inventory Management
Importance of Inventory Management
- Inventory management is crucial to a company’s health since it helps make sure there are seldom too much or too few goods on hand, lowering the danger of stockouts and erroneous records.
- Investing in inventory that sells ensures that money is always flowing through the firm with appropriate inventory management.
- Making sense of the data you’re surrounded by is made easier with inventory management. Inventory management can assist you to examine and separating the items between well-performers and shelf-eaters. This boosts revenue creation and frees up financial flows.
- An organized and monitored inventory makes it easier to discover order and, as a result, makes it possible for you to ship the goods fast.
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