Definition of Inventory Management
The process of overseeing and controlling the ordering, storage, and use of a company’s inventory.
Explanation of Inventory Management
Inventory Management is the process of overseeing and controlling the ordering, storage, and use of a company’s inventory, including raw materials, components, and finished products. Effective inventory management ensures that a business has the right products in the right quantities at the right time, minimizing costs and maximizing efficiency. Key activities in inventory management include tracking inventory levels, forecasting demand, ordering stock, and managing stock turnover. Technologies such as inventory management software, barcode systems, and RFID (radio-frequency identification) help businesses automate and streamline these processes. Proper inventory management reduces the risk of stockouts, overstocking, and obsolescence, improving customer satisfaction and operational performance. By maintaining optimal inventory levels, businesses can meet customer demand, reduce carrying costs, and enhance profitability.