Inventory management oversees and controls the flow of goods and materials in and out of business.
What is inventory management?
Inventory management involves controlling and overseeing a company's inventory ordering, storage, and use. This includes raw materials, work-in-progress (WIP), and finished goods.
What is the aim of inventory management?
Inventory management aims to ensure that inventory levels are sufficient to meet customer demand while minimizing the costs associated with carrying excess inventory.
How to do better inventory management?
• Accurate demand forecasting is critical to effective inventory management, and companies should use historical sales data, market trends, and customer feedback to forecast future demand.
• Setting reorder points triggers the purchase or production of additional inventory when the current stock reaches a certain level, helping to ensure that inventory levels remain sufficient to meet customer demand without carrying excess inventory.
• Utilizing inventory management software, like a warehouse management system (WMS) or an enterprise resource planning (ERP) system, can help automate inventory tracking and streamline inventory management processes.
• Regularly monitoring inventory levels and conducting physical inventory counts can help to identify discrepancies and prevent stockouts or overstocking.
• Implementing just-in-time (JIT) inventory management involves only ordering or producing inventory when needed, minimizing waste, and reducing carrying costs.
• Optimizing warehouse layout can improve inventory management by reducing the time and effort required to locate and retrieve inventory.
• Analyzing inventory data can help companies to identify trends, inefficiencies, and opportunities for improvement, which can be used to optimize inventory levels, improve forecasting accuracy, and reduce costs.
By implementing these best practices, companies can achieve excellent inventory management and ensure that inventory levels are sufficient to meet customer demand while minimizing the costs associated with carrying excess inventory.