Inventory Management

Inventory is the goods or materials a business intends to sell to customers for profit. Inventory management, a critical element of the supply chain, is the tracking of inventory from manufacturers to warehouses and from these facilities to point of sale. The goal of inventory management is to have the right product in the right place at the right time. This requires inventory visibility — knowing when to reorder, how much to order and where to store stock. Inventory can be a company’s most important asset. Inventory management is where all the elements of the supply chain converge. Too little inventory when and where it's needed can create unhappy customers. But a large inventory has its own liabilities — the cost to store and insure it, and the risk of spoilage, theft and damage. Companies with complex supply chains and manufacturing processes must find the right balance between having too much inventory on hand or not enough.

The basic steps of inventory management include: Purchasing inventory Raw materials or components are purchased and delivered to the warehouse. Storing inventory Inventory is stored until needed. Raw materials are moved to production facilities to be made into finished goods and returned to stock areas until ready for shipment. Profiting from inventory The amount of product for sale is controlled. Finished goods are pulled to fulfill orders. Products are shipped to customers.

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