What Is The Importance Of Inventory Management To A Business?


11 Answers

Nicole Manion Profile
Nicole Manion answered
Inventory management is vital for a business because an inventory very often incurs the biggest expense, and so it needs to be carefully controlled in order for the business to run effectively. Having the wrong inventory, or too much inventory can deplete resources to dangerous levels, so by managing it efficiently, the business will be aware of what stock they need to replenish and what needs to be shifted.

If inventory management is taken seriously and done properly, a business will probably find that it can reduce its costs and increase sales. An effective way of achieving this is by having an inventory management system in place, which will track and maintain inventory so that customer demand can be met. They can also be linked to the accounting or management departments, so that all operations can become more effective, reducing costs and maximising profit.

An inventory management system works by recording customer sales in a real time format, and automatically re-ordering stock when it reaches a pre-determined level. This electronic ordering is called EDI (Electronic Data Interchange) and means that companies will always carry necessary stock, and so will not waste money on ordering what is not needed.

These systems can also differentiate between different styles of the same stock, such as size or colour variations, so a company will not have an excess of one and not enough of the entire range. This process enables management to see what is selling and what is not, so future decisions can be made using facts, rather than hunches, again making inventory more cost effective.

It is also possible to be able to look at trends and see when particular items are selling best, so they can be exploited to realise the most profit.
Lily James Profile
Lily James answered

Inventory Management is the planning, control, organizing and leading the goods and materials required by the business.

Inventory Management is very important for the business. It enables the business to meet or exceed expectations of the customer by making the product readily available.

If managed properly, it can help the organization reduce its costs, achieve economies of scale and prepares the organization for uncertainty.
Ellie Hoe Profile
Ellie Hoe answered
The objectives of inventory management in traditional organizations used to be to maintain a check and balance system for inventories in order to ensure that a sufficient supply is maintained with the required stocks. Inventories give a true position about a company's business as to how well it is performing. The modern inventory management systems follow a procedure called Just In Time System (JIT) which requires to maintain a minimum optimal level of stocks in order to be efficient, reduce the time taken to service the customers and save on overheads. McDonalds is an example of the Just In Time inventory management system.
Anonymous Profile
Anonymous answered
It is important to control stock.
Mukesh Khanna Profile
Mukesh Khanna , Business Analyst, answered

An effortless Inventory Management matters a lot in handling a business inventory because if we will have, a well designed inventory management tool, then from anywhere in a click we can get the detail information of an individual product as well as entire products.

petro soft Profile
petro soft , www.petrosoftinc.com/, answered

Inventory management is one of the major asset of Business, helpful to control stock if you manage your Inventory well you will be able to fulfillment the need of your customer and you never loses sale and customer.

david thomsan Profile
david thomsan answered

Inventory management is important from the view point that it enables to address two important issues:

1. The firm has to maintain adequate inventory for smooth production and selling activities.

2. It has to minimize the investment in inventory to enhance firm's profitability.

Jordan Park Profile
Jordan Park answered

The term inventory refers to the goods or materials used by an organization for the purpose of production and sale.

Inventory management is one of the major asset of Business, helpful to control stock if you manage your Inventory well you will be able to fulfillment the need of your customer and you never loses sale and customer.Inventory management simplify maintaining sufficient inventory for smooth production and sales operations.

Call Tutors Profile
Call Tutors answered

An inventory management system can help you manage your business’s inventory and stock items, keeping track of exactly where your assets are and what they’re worth. The system also analyzes your business’s inventory needs and can even automate your ordering. Inventory management systems are important for many industries including retail, food and beverage, manufacturing, healthcare and more. A well-run system helps you understand your assets and maximize their potential, thus improving your business operations and increasing profits.

an inventory management system oversees all of a company’s inventory and stock items. Through a solid inventory management system, you can track and manage every item of your inventory through its entire lifespan, from a warehouse to a customer’s shopping bag. Most inventory management systems have a few similar elements. First, they have a way to identify each item, usually through a barcode. After each item is coded, the system needs a barcode scanner to track the items as they come in or go out. This can be done with a dedicated barcode scanner or even through a smartphone app. Next, the inventory management system needs software that can keep track of all of the items and help manage them. This software serves as the nerve center. It can analyze data and generate reports, and even link up with other software systems like your accounting software. Another element each inventory management system includes is an inventory valuation method, such as First-In-First-Out (FIFO) or Just in Time. Finally, well-trained employees are needed to keep the system running smoothly.

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