A component of supply chain management, inventory management oversees the flow of goods from manufacturers to warehouses and from these point of sale facilities. A key function of inventory management is to keep a detailed record of each new or returned product when entering or leaving a store or point of sale.
Inventory management is the practice of monitoring and controlling the ordering, storage and use of components that a company uses in the production of the items it sells. Inventory management is also the practice of monitoring and controlling the quantities of finished products for sale. The inventory of a company is one of its main assets and represents an investment that is linked until the item is sold.
Companies incur costs to store, track and secure inventory. Poorly managed inventories can create significant financial problems for a company, whether mismanagement results in excess inventory or a shortage of inventory.
Successful inventory management involves the creation of a purchasing plan to ensure that items are available when they are needed but that they are not acquired too much or too little and that they are kept informed of the existing inventory and its use. Two common inventory management strategies are the just-in-time (JIT) method, in which companies plan to receive items as needed, rather than maintaining high inventory levels, and material requirements planning (MRP, For its acronym in English) Forecasts.