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Inventory management involves the ordering, storing, and usage of a company's inventory, including raw materials, components, and finished products. It is crucial for cost control, efficient operations, customer satisfaction, and risk management. Effective inventory management techniques and technologies can help businesses optimize their inventory processes and gain a competitive advantage.

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FnM

Inventory management involves the ordering, storing, and usage of a company's inventory, including raw materials, components, and finished products. It is crucial for cost control, efficient operations, customer satisfaction, and risk management. Effective inventory management techniques and technologies can help businesses optimize their inventory processes and gain a competitive advantage.

Uploaded by

freewatch822
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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INVENTORY MANAGEMENT

Introduction
Inventory management is the process of ordering, storing, and using a company's
inventory. This includes the management of raw materials, components, and
finished products. It is a critical part of supply chain management and helps
businesses meet customer demand while minimizing costs.

Importance of Inventory Management


• Cost Control: Helps reduce storage and holding costs.
• Efficient Operations: Ensures the right products are available at the right
time.
• Customer Satisfaction: Prevents stockouts and delays in delivery.
• Risk Management: Helps avoid overstocking, obsolescence, and spoilage.

Types of Inventory
• Raw Materials: Basic materials used to produce goods.
• Work-in-Progress (WIP): Items that are in the production process.
• Finished Goods: Products ready for sale.
• Maintenance, Repair, and Operations (MRO): Supplies not directly part of
the finished product but necessary for production.

Inventory Management Techniques


• Just-In-Time (JIT): Minimizes inventory by receiving goods only as they are
needed.
• ABC Analysis: Classifies inventory into three categories (A, B, C) based on
importance.
• Economic Order Quantity (EOQ): Calculates the ideal order quantity to
minimize total inventory costs.
• First-In, First-Out (FIFO): Sells the oldest inventory first.
• Last-In, First-Out (LIFO): Sells the newest inventory first (not allowed under
IFRS).

Technologies in Inventory Management


• Inventory Management Software: Tools like SAP, Oracle, and QuickBooks
help automate tracking and reporting.
• Barcoding and RFID: Help quickly scan and update stock levels.
• Cloud-based Systems: Enable real-time tracking and data access from
multiple locations.

Challenges in Inventory Management


• Inaccurate Data: Leads to poor decision-making.
• Supply Chain Disruptions: Can result in shortages or excesses.
• Demand Forecasting Errors: Hard to predict consumer behavior accurately.
• Storage Issues: Limited space or improper handling can damage inventory.

Conclusion
Effective inventory management is essential for the success of any business. It helps
balance cost efficiency with customer service, ensures smooth production, and
supports overall business strategy. Companies that invest in modern tools and best
practices in inventory management gain a competitive edge in today’s fast-paced
market.

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