Importance of Inventory Management? Step to Guide
Inventory can be defined as the stock of goods or commodities that are reserved at any given period for meeting future demands. In the today’s scenario non availability of a single material which contributes production, even by 1 % will leads to critical situation, can cause the production stopping or stop the movement of finished goods in any industry.
Concepts of Inventory
Inventory management is a critical operation in supply chain process. The manufacture companies use raw material and work on it to create finished goods that are stored as inventory. All movable goods that are used in production including raw material is inventory. Inventory is the most important asset held by many organizations. It is very important to manage the inventory not only for good management but also for smooth production and to survive in business especially in today’s competitive era.
Inventory management is very important for all type of businesses. It is a continuous process of supervising the flow of goods from raw material supplies to manufacturers to warehouse till the point of sale. According to the Science Direct publication website (accessed in 2020) in past two decades there has been increase interest on review paper of inventory management.
The publication of articles on inventory management have seen increase of over 525%, as the number of published articles increased from 2,544 in 1998 to 13,381 in 2020.
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Types of Inventory Management
Need for Inventory Control
1) Effect of control at raw material.
2) Effect of control of finished goods.
3) Effects of uncontrolled of another inventory.
Classification of Inventory
1) Direct Inventories
2) Indirect inventories.
Vital Significance of Inventory Management
Effective inventory management is indispensable for business success across industries. It optimizes cash flow, meets customer demand, minimizes costs, improves efficiency, enhances decision-making, and mitigates risks.
- Cash Flow Optimization: Balancing stock levels with financial resources prevents capital from being tied up unnecessarily and maximizes revenue potential.
- Customer Demand Fulfilment: Accurate inventory management ensures timely order fulfilment, enhancing customer satisfaction and loyalty.
- Cost Reduction: Minimizing holding costs through efficient inventory control strategies such as JIT systems leads to reduced storage expenses.
- Operational Efficiency: Streamlined procurement, storage, and distribution processes boost productivity and minimize manual errors.
- Informed Decision-Making: Inventory data analysis informs strategic decisions on pricing, product assortment, and supply chain optimization.
- Risk Mitigation: Proactive inventory control measures help mitigate risks such as stock obsolescence and supply chain disruptions, safeguarding operations and reputation.
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Improve Your Inventory Manager Skills
Inventory management holds significant importance within the core syllabus of mathematics. It involves mathematical concepts such as optimization, probability, and statistics to ensure efficient stock control, demand forecasting, and cost minimization.
Lingaya’s Vidyapeeth stands out as the premier college for advancing degrees in mathematics. It offers comprehensive B.Sc in Mathematics and M.Sc in Mathematics programs, providing students with higher education opportunities to master mathematical principles essential for effective inventory management and various other applications in industry and academia.
Priyavada
Assistant Professor (Mathematics)
School of Basic & Applied Sciences
Lingaya’s Vidyapeeth
Top B.Sc. Maths Hons College in Faridabad
