Inventory Management is the management of inventory and stock. The overseeing and controlling of the ordering, storage and use of components that a company will use in the production of the items it will sell as well as the overseeing and controlling of quantities of finished products for sale. A business’s inventory is one of its major assets and represents an investment that is tied up until the item is sold or used in the production of an item that is sold. It also costs money to store, track and ensure inventory. It is a multifaceted procedure, mainly for bigger organizations, but the basics are fundamentally the same regardless of the organization’s size or type. For most retailers, this involves the supervision and controlling of finished items that are prepared to be sold.
Inventories that are mismanaged can create significant financial problems for a business, whether the mismanagement results in an inventory glut or an inventory shortage. As an element of supply chain management, inventory management includes aspects such as controlling and overseeing ordering inventory, storage of inventory, and controlling the amount of product for sale. It is the supervision of non-capitalized assets (inventory) and stock items. Inventory management uses several methodologies to keep the right amount of goods on hand to fulfill customer demand and operate profitably. The goal is to reduce the cost of holding inventory by helping business owners know when it’s time to restock products or buy more materials to manufacture them.