Inventory Management is the science of purchasing, supervising, controlling and dispensing of Stock for Sale which is stored in a facility. It covers all aspects of stock management across the supply chain from the manufacturer to the point of sale manned by the retailer.
What does Inventory management cover?
Inventory Management is a broader topic that covers the following
- System of nomenclature for your inventory items (SKUs) and physical locations
- Movement of inventory from one location to another
- Purchasing Products from Suppliers
- Sale of Products to Customers
- Frequent review and adjustment of Inventory
Efficient Inventory Management is critical for manufacturers, retailers, and brands because it is how they treat their core business and extract value from costs saved and management of products to be sold. This can be achieved by the following:
Strong Fundamentals – Name your SKUs correctly
The way you name your Products and SKUs will determine how Inventory Management is standardized across your company across all team members without any confusion. Note that there is a difference between SKU codes and Barcodes which is important to know.
Know how much Inventory you have
At any time, the hallmark of great inventory management is the ability to know instantly how much stock is available for any given SKU. Sometimes while running a retail business it is common to misplace or miscount items. There is also the issue of pilferage. This along with not knowing how your sales stand against your inventory is a recipe for disaster.
Predictable Stock Holding
Closely monitoring Sales and Purchases across customer segments and seasonality will help you have efficient stock levels and optimize your working capital.
Great Supply Chain
You Suppliers add a great deal of value to your business by ensuring that you never go out of stock for longer than your business allows. Fewer reliable suppliers are always better managed than numerous distributed suppliers.
With the right techniques and the right Inventory Management Software, one can easily control and thrive inventory in a business of any scale.
Note: What is the difference between Inventory Management and Inventory Control?
While managing your stock is Inventory Management, knowing when to buy inventory, how much to buy and optimizing inventory by balancing your purchases and sales for lowest amounts of idle stock in hand is the art of inventory control.