Importance Of A Balanced Inventory Management System (With Infographic)

What is inventory management?

Inventory management is defined as the sourcing, storing, and selling of inventory. Inventory management involves keeping track of raw materials as well as finished goods. Inventory management may seem simple, but the larger your business is, the more complicated the process can become.


Your specific inventory management practices will depend on the channels through which and how your company sells its products. It will also depend on how many materials are required to make the finished goods. Inventory management embraces everything from tracking purchases you make from suppliers, forecasting inventory levels, and determining the price as well as how much inventory should be sold. The goal of inventory management is to have the most efficient amount of stock in the right place, at the right time, and for the best price.


Why is it so critical for small and large organizations?

Most companies are using an inventory management system to enhance their business in numerous ways. An inventory management system helps monitor end-to-end production, analyze and adjust lead times, forecast demand, and produce reports that can improve your bottom line.


Inventory management involves more than simply calculating how many materials you have on hand, it also affects your ability to fulfill orders. Without it, you may misplace materials, have the wrong number of products on hand, or a shortage of raw materials. This means it’s that much easier to have a disruption of the manufacturing process. Without an accurate inventory, you can’t properly track orders, or prepare for expected seasonality.


This can place a tremendous burden on your bottom line. Optimized warehouse operations can save 20% to 50% of warehouse costs (PDF). This can be due to problems such as running out of stock, shrinkage, and the expenses associated with overstocking.


Make sure to check out the infographic below for more information and tips on inventory management.


Balanced Inventory Management System

Infographic created by WSI

You can download the Infographic – WSI Balanced Inventory Management System

Francis Nwokike

Francis Nwokike is a Social Entrepreneur and an experienced Disaster Manager. I love discussing new business trends and marketing tips. I share ideas and tips that will help you grow your business.

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