Inventory management definition
Inventory management is crucial to the profitability of any business. An inventory in any business could be finished products, the raw materials, or anything that is used in the production of the final product. A balanced inventory is needed to control the costs of the final product. There are many definitions of inventory management found in the web. A simple search using a good search engine would reveal a lot of such definition of inventory management.
Some of the definition of inventory management states that the inventory is a list of goods and materials available in stock by a business. Another definition of inventory management states that the procedures used in governing the materials that are received, stored, handled, and issued is inventory management. The activities that are taken to bring in the right material to the right place at the right time, in the right quantity to make the final product is considered as inventory management.
The stock of materials used to make the final product should be there in the right quantity at the right time to make profit out of it. Materials for the product that is in demand should be available in stock, not the materials that lie unused. Materials that are not used within a short time and are stored for a longer time would only increase the storage cost which is also factor that decides the final product cost.
Hence storage should be minimal so that it caters to the needs of the production. The right material, to the right place, at the right time, in the right quantity is the most important. Any business that achieves this goal would make good profits than their competitor for the same product. This is what companies are trying to achieve. This is also called as zero inventory.
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