Inventory management
UNIT 1
Meaning/Concept of inventory management
Inventory management refers to the process of storing, ordering, and selling of goods and
services. The discipline also involves the management of various supplies and processes.
One of the most critical aspects of inventory management is managing the flow of raw
materials from their procurement to finished products. The goal is to minimize overstocks
and improve efficiency so that projects can stay on time and within budget.
The proper inventory management technique for a particular industry can vary depending
on the size of the company and the number of products needed.
Objectives of Inventory Management
1. Material Availability
The primary goal of inventory management is to ensure that all kinds of materials are
accessible whenever the production department needs them, ensuring that production is
not stopped or slowed down due to a lack of resources.
2. Better Level of Customer Service
It is impossible to fulfil a received order if you do not have an accurate count of the items in
your possession. In order to meet requests, you must have accessible the appropriate
goods at the right time. Otherwise, you may end yourself in a state of confusion.
,3. Keeping Wastage and Losses to a Minimum
Inventory management is very successful in mitigating losses. When there is no monitoring
system in place, it is very normal for an item to be squandered or misplaced.
4. Maintaining Sufficient Stock
Supplies should be easily available for all stages of production, from raw materials to
completed goods. You need to make sure you have enough of the necessary material on
hand to meet client demand without having to cut corners.
5. Cost-Effective Storage
It eliminates the possibility of keeping extra stock, since the needs are predetermined, thus
eliminating needless storage expenses.
6. Cost Value of Inventories Can Be Reduced
When purchasing products or stock on a regular basis, an organisation may negotiate
discounts and other incentives to lower the overall cost.
Process of Inventory Management
1. Receive and inspect products
The first step in the inventory management process includes receiving your order from the
supplier. Getting this part right is crucial for the following steps to function as efficiently as
possible. The first thing that should be done after the order arrives it to inspect the
products. It's important to check that the quantity product code and serial code are all
correct. You should also ensure handling conditions such as temperature are accurate for
perishables and that all products are in good condition.
2. Sort and stock products
After inspecting the products they must be properly stored in the warehouse and inputted
into your leave management system. At this stage it is a good idea to be strategic about
how products are stored. Warehouse slotting techniques such as organising products
, based on SKU and product type can be beneficial. It is also important to minimize the
distance to bestselling products by storing them where they are most accessible.
3. Accept customer order
The next step in the inventory management process involves accepting customer orders.
The orders will typically go through a point of sale system (POS) which processes the orders
and accepts payments. The POS system will either have a built-in inventory management
feature or be integrated with an inventory management software that will enable the order
details to be viewed by the warehouse staff.
4. Fulfill package and ship order
Once a customer has placed an order the next step is to accurately and expediently fulfill
package and ship the order. If the second step in the process was optimized searching for
and selecting the products in the warehouse should be relatively straightforward. Some
important aspects to consider when packaging the product are the customer
experience durability and sustainability. When shipping the product be sure to send the
customer a confirmation email with tracking information.
5. Reorder new stock
When reordering new stock it is crucial to ensure the timing of new orders and amount of
goods are correct. By leveraging the reorder point formula you can minimize the risk of
both stock outs and dead stock - two problems that negatively impact your bottom line.
Certain inventory management systems automate the process of reordering which saves
time and prevents any mistakes from human error.
UNIT 1
Meaning/Concept of inventory management
Inventory management refers to the process of storing, ordering, and selling of goods and
services. The discipline also involves the management of various supplies and processes.
One of the most critical aspects of inventory management is managing the flow of raw
materials from their procurement to finished products. The goal is to minimize overstocks
and improve efficiency so that projects can stay on time and within budget.
The proper inventory management technique for a particular industry can vary depending
on the size of the company and the number of products needed.
Objectives of Inventory Management
1. Material Availability
The primary goal of inventory management is to ensure that all kinds of materials are
accessible whenever the production department needs them, ensuring that production is
not stopped or slowed down due to a lack of resources.
2. Better Level of Customer Service
It is impossible to fulfil a received order if you do not have an accurate count of the items in
your possession. In order to meet requests, you must have accessible the appropriate
goods at the right time. Otherwise, you may end yourself in a state of confusion.
,3. Keeping Wastage and Losses to a Minimum
Inventory management is very successful in mitigating losses. When there is no monitoring
system in place, it is very normal for an item to be squandered or misplaced.
4. Maintaining Sufficient Stock
Supplies should be easily available for all stages of production, from raw materials to
completed goods. You need to make sure you have enough of the necessary material on
hand to meet client demand without having to cut corners.
5. Cost-Effective Storage
It eliminates the possibility of keeping extra stock, since the needs are predetermined, thus
eliminating needless storage expenses.
6. Cost Value of Inventories Can Be Reduced
When purchasing products or stock on a regular basis, an organisation may negotiate
discounts and other incentives to lower the overall cost.
Process of Inventory Management
1. Receive and inspect products
The first step in the inventory management process includes receiving your order from the
supplier. Getting this part right is crucial for the following steps to function as efficiently as
possible. The first thing that should be done after the order arrives it to inspect the
products. It's important to check that the quantity product code and serial code are all
correct. You should also ensure handling conditions such as temperature are accurate for
perishables and that all products are in good condition.
2. Sort and stock products
After inspecting the products they must be properly stored in the warehouse and inputted
into your leave management system. At this stage it is a good idea to be strategic about
how products are stored. Warehouse slotting techniques such as organising products
, based on SKU and product type can be beneficial. It is also important to minimize the
distance to bestselling products by storing them where they are most accessible.
3. Accept customer order
The next step in the inventory management process involves accepting customer orders.
The orders will typically go through a point of sale system (POS) which processes the orders
and accepts payments. The POS system will either have a built-in inventory management
feature or be integrated with an inventory management software that will enable the order
details to be viewed by the warehouse staff.
4. Fulfill package and ship order
Once a customer has placed an order the next step is to accurately and expediently fulfill
package and ship the order. If the second step in the process was optimized searching for
and selecting the products in the warehouse should be relatively straightforward. Some
important aspects to consider when packaging the product are the customer
experience durability and sustainability. When shipping the product be sure to send the
customer a confirmation email with tracking information.
5. Reorder new stock
When reordering new stock it is crucial to ensure the timing of new orders and amount of
goods are correct. By leveraging the reorder point formula you can minimize the risk of
both stock outs and dead stock - two problems that negatively impact your bottom line.
Certain inventory management systems automate the process of reordering which saves
time and prevents any mistakes from human error.
