What is inventory management in simple words?
Inventory management, a critical element of the supply chain, is the tracking of inventory from manufacturers to warehouses and from these facilities to a point of sale. The goal of inventory management is to have the right products in the right place at the right time.
The primary purpose of inventory management is to ensure there is enough goods or materials to meet demand without creating overstock, or excess inventory.
- Fine-tune your forecasting. ...
- Use the FIFO approach (first in, first out). ...
- Identify low-turn stock. ...
- Audit your stock. ...
- Use cloud-based inventory management software. ...
- Track your stock levels at all times. ...
- Reduce equipment repair times.
One of the most valuable assets of a company is its inventory. In various industries, such as retail, food services, and manufacturing, a lack of inventory can have detrimental effects. Aside from being a liability, inventory can also be considered a risk. It can be prone to theft, damage, and spoilage.
Inventory managers oversee the inventory levels of businesses. They lead a team of inventory or warehouse employees to receive and record new stock as its delivered and shipped out. Their duties include recording daily deliveries, evaluating new shipments, and analyzing different suppliers.
Inventory refers to all the items, goods, merchandise, and materials held by a business for selling in the market to earn a profit. Example: If a newspaper vendor uses a vehicle to deliver newspapers to the customers, only the newspaper will be considered inventory.
The best way to keep track of inventory is with an easy-to-use, robust inventory management software system. With inventory management software, you can get real-time alerts, add meaningful pictures to your inventory list, and utilize barcodes and QR codes to automate otherwise tedious, error-prone processes.
Store your inventory records, including purchase invoices and sales receipts, in a fireproof container or safe that does not hold merchandise. Keep copies of your two most recent annual physical inventories away from your business, such as at your home, a bank vault, or your accountant's office.
- Leadership and management.
- Verbal and written communication.
- Organizational and logistics skills.
- Strong attention to detail.
- Problem solving.
- Data analysis.
- Interpersonal ability.
- Team oriented.
Be a leader and a team player
Inventory managers need to be effective leaders. They hire and fire and manage a team of employees, and all the challenges that entails. They need to lead their team. They also need to be able to take direction and work as part of a bigger team.
Who is responsible for inventory management?
An inventory manager is in charge of inventory in a warehouse or similar facility. Inventory managers lead a team of inventory or warehouse workers to receive and record new stock as it comes in and move stock onto trucks or shelves as needed.
The 4 Types of Inventory Management
The types of inventory management are Raw Materials, Works-In-Process, Maintenance, Repair and Operations or MRO and Finished Goods.
In this article we'll dive into the three most common inventory management strategies that most manufacturers operate by: the pull strategy, the push strategy, and the just in time (JIT) strategy.
While there are many types of inventory, the four major ones are raw materials and components, work in progress, finished goods and maintenance, repair and operating supplies.
Inventory refers to all the items, goods, merchandise, and materials held by a business for selling in the market to earn a profit. Example: If a newspaper vendor uses a vehicle to deliver newspapers to the customers, only the newspaper will be considered inventory. The vehicle will be treated as an asset.
Inventory management helps companies identify which and how much stock to order at what time. It tracks inventory from purchase to the sale of goods. The practice identifies and responds to trends to ensure there's always enough stock to fulfill customer orders and proper warning of a shortage.
Two types of inventory are periodic and perpetual inventory. Both are accounting methods that businesses use to track the number of products they have available.
The best way to keep track of inventory is with an easy-to-use, robust inventory management software system. With inventory management software, you can get real-time alerts, add meaningful pictures to your inventory list, and utilize barcodes and QR codes to automate otherwise tedious, error-prone processes.
The FIFO valuation method is the most commonly used inventory valuation method as most of the companies sell their products in the same order in which they purchase it.
The last in, first out, or LIFO (pronounced LIE-foe), accounting method assumes that sellable assets, such as inventory, raw materials, or components, acquired most recently were sold first. The last to be bought is assumed to be the first to be sold using this accounting method.
What are the three stages of inventory?
A company's inventory typically involves goods in three stages of production: raw goods, in-progress goods, and finished goods that are ready for sale.