Inventory is a list of goods and materials, or those goods and materials themselves, held available in stock by a business.
Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting.
Management of the inventories, with the primary objective of determining, controlling stock levels within the physical distribution function to balance the need for product availability against the need for minimizing stock holding and handling costs.
The objectives of materials management are primarily focused at achieving efficiency in sales and production by minimizing the investment in inventory without sacrificing quality and continuity of supply of materials obtained at lowest possible price.
Inventory management is a sub-system of an organisation which in turn has a number of sub-systems. The inter related nature of inventory management function and other organizational functions such as finance function, production function, maintenance function etc. will have to be well appreciated. While defining the inventory management function, the objective was stated as one of providing the pre-determined service to customers at a minimum total cost.
Inventory management is a very simple concept – don’t have too much stock and don’t have too little. Since there can be substantial costs involved in straying above and below the optimal range, careful inventory management can make a huge difference in the profitability of a business. Although the concept is simple, the process of getting the right balance can be quite a complex and time consuming task without the right technology.
Inventory Management is very important for Reid and Taylor. It enables the business to meet or exceed expectations of the customer by making the product readily available.
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