In this fast-paced and ever-changing business environment, what is inventory management? Simply put, it is the science of controlling your company’s inventory. It involves the measurement, analysis, collection, and recording of data related to the supply of a product or service. Inventory management is essentially how you monitor and control your company inventory because it is purchased, manufactured, kept, and utilized.
It also governs the whole flow of products from buying to sale, ensuring that you always possess the correct quantities of the correct item in the correct location in the correct quantity at the correct time. It keeps your company running smoothly by alerting you when your stock levels are low and what is needed to replenish them. This is exactly what is inventory management is – keeping track of your goods and services so that you can operate efficiently.
An inventory manager is responsible for recording and supervising all the stages of a manufacturing or production process. All the equipment and materials being used are recorded in terms of quantity, condition, usage, and so on. When something goes wrong or is not used, then the manager can find out what is missing or broken and fix it before proceeding. This means that an inventory manager is in charge of keeping your production process moving. Therefore, what is inventory management is keeping your operations moving in a smooth manner.
Proper inventory control ensures that your company has a predictable cash flow. A good cash flow makes it easier to meet customer demands and can minimize wastage. The most effective inventory management system is one that is based on real-time information and incorporates all the necessary software modules to make your decision-making process more effective. This includes demand analysis, pricing, forecasting, and detailed operation monitoring.
How do you know what is inventory management? This is actually a very simple process. The supply chain can be analyzed easily by using a WMS. A WMS, or Web-Based Inventory Management System, is a computerized database that keeps track of all the elements of your supply chain. This includes inventory control, planning, purchasing, inventory monitoring, and more.
This can also include a special form of WMS called the Operational Demand Management (ODM). It is a standard format used in all companies, whether manufacturing or retail. Through this type of WMS, manufacturers and distributors can easily identify which items are in high demand and which are low-demand. This would then allow them to make appropriate purchases and shipments.
What is inventory control? This is where your WMS will take a snapshot of the current status of all products and goods in your warehouse. You can then use this data to determine which products and goods should be kept on hand, as well as what should be moved as fast as possible. In addition to determining the current holding costs for each item, you can also determine the amount of inventory you have remaining so you can plan out further expansions or stock rotations. Other uses for this data would be to determine if the quantity of a product should be increased because of a recent increase in demand, or if the change in demand for that item has rendered the item obsolete.
All of these tasks can lead to significant cost savings and operational improvements. In addition to the reduction of lost lead time through WMS analysis, an easy to use WMS can also improve the accuracy of your inventory management systems by identifying which items are not being bought or sold. These systems can also reduce the amount of inventory that sits on-hand because of obsolete or low-demand goods, which leads to either poor customer service or to the closing of sales in your favor.