What is inventory management?

A business would stock raw materials needed for the manufacture of goods. This list of materials and goods in stock in a business is called the inventory. Inventory management has to be effective for profitability in any business.

The stocks of raw materials that are made to goods are those that get the profit. If the raw materials are stocked without them moving out to be made as goods then it is of no use. A proper balance should be maintained for good profit. There are procedures in place to see how the materials are received, stored, handled and delivered. This process of management is called the inventory management.


Substantial investments are made to stock materials. If these materials are not handled properly at the right time, it will be a loss to the company. While considering stocking of materials, there are certain costs that are underestimated or overlooked. But these have an impact in the overall cost. Cost of storage is one that is underestimated. Insurance, Taxes, Pricing, and ordering dilemmas should also be considered by estimating the costs.

A balanced stock is necessary to maintain proper inventory.


The turnover should be quick and efficient with quality service. Stock should be up-to-date. Sometimes high volume purchases are good. With all these factors you can control the cost. Organizations should invest in relevant software to keep track of the inventories and help them to maintain a proper level of inventory. Good POS software would also help in maintaining the required inventory for production and this also helps the organization in the purchase of future stocks.


With the advances in the technology it is easy to manage inventories now-a-days. A tracking summary can be reviewed and based on that data the level of inventory needed can be determined. Data collected from the POS includes the trends in the demand for a particular product. Based on this trend the inventories can be maintained to cater to that demand in the market.

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