• The scope of inventory management. Inventory management oversees the carrying cost of inventory, replenishment lead time, asset management, inventory valuation, inventory forecasting, inventory visibility, physical inventory, future inventory price forecasting, quality management, replenishment, available physical space for inventory, returns and defective goods and demand forecasting. All of these subsections of inventory management need to be balanced in order to keep optimal inventory levels. This is an ongoing process within a business as it needs to shift and react to the environment around it.
• Inventory management within retail. Inventory management requires a retailer to acquire and maintain an accurate and proper merchandise assortment when dealing with orders, shipping, handling and other related costs to ensure that they are kept in check. This process involves systems that help keep an eye on inventory requirements as well as setting targets, providing replenishment techniques, reporting actual and projected inventory statuses and handling the functions that are related to the management and tracking of material. This material needs to be monitored as it is moved in and out of storerooms and the inventory balances need to be reconciled. Inventory management within retail may also include cycle counting support, lot tracking and ABC analysis.
The main purpose of inventory management is to determine and control stock levels within the physical distribution. To do this it needs to balance the need for product availability alongside the need for minimizing the costs involved in stock holding and handling. All of this helps businesses proceed with their plans to produce and stock materials.