Last updated August 24, 2023
What is inventory management?
Inventory management refers to the process of overseeing and controlling the inventory of goods, materials, and products within a business. It involves a range of activities aimed at maintaining optimal to meet customer demand while minimizing costs, , and excess stock.
Why is effective inventory management important?
- Ensures that products are available to meet customer demand promptly. This prevents stockouts, which can lead to dissatisfied customers and lost sales opportunities.
- Prevents excess stock accumulation and decreases holding costs and inventory obsolescence.
- Helps free up capital for other business needs and investment, optimizing cash flow.
- Reduces production delays and improving overall operational efficiency.
What factors influence inventory management?
Inventory management is influenced by a variety of factors that impact how businesses plan, control, and optimize their inventory level. Here are some key factors:
Effective inventory management involves assessing these and other relevant factors to make informed decisions about inventory levels, ordering schedules, and replenishment strategies. Businesses that consider these factors strategically can optimize their inventory management practices to meet customer demand efficiently while minimizing costs and risks.