What is Inventory Management?

Inventory management, an essential part of the supply chain, involves monitoring stock from producers to storage locations and from those sites to the retail outlet. Inventory management seeks to ensure the correct products are available in the appropriate location at the appropriate time.

Inventory control necessitates stock visibility, understanding when to place orders, determining order quantities, and identifying storage locations. Operations for multichannel order fulfillment usually involve inventory distributed across various locations within the supply chain. Companies require a precise understanding of inventory to ensure customer order fulfillment, decrease shipment lead times, and limit stockouts, overselling, and markdowns.

How does inventory management work?

Inventory management involves understanding the location of items, their destination, and when additional supply is necessary. This degree of monitoring includes a series of interconnected activities that start with a physical inventory count or the implementation of an automated tracking system. When stock drops below set minimum levels, new orders are placed with suppliers. Goods are received, inspected, recorded, and stored in designated locations before being utilized in manufacturing or sold to customers.

A lot of these processes can be automated through inventory management software, which integrates demand forecasts, procurement details, production timelines, and warehouse information into one system.