Inventory Management

                                                                                         

Inventory management is basically the system that involves storage, handling, shipping and sorting of products and merchandise that a company markets. Its functions extend to tracking and checking the materials to and from the place of origin.

Inventory management as well sees to the checking of available stocks and replenishing or replacing those who have run out. Although it may appear as just as simple as stacking materials from one-to-three, there’s more to inventorying materials such as classifying one by one to where the materials are supposed to belong, and that they should (if marketed on groceries or stores) be checked for bar codes, expiry dates, damages, legalities (copyright, wholesale or retail products).

Inventory management covers the physical distribution and the product availability of stocks as well as their handling costs. It is also known as the Inventory Control Management, Inventory Control and Vendor Managed Inventory.

Inventory appears as a current asset on an organization's balance sheet because the organization can turn it into cash by selling it. Some organizations hold larger inventories than their operations require to increase their apparent asset value and their perceived profitability.

In addition to the money tied up by acquiring inventory, inventory also brings associated costs for space, for utilities, and for insurance to cover staff to handle and protect it, fire and other disasters, obsolescence, shrinkage (theft and errors), and others.

Businesses that stock too little inventory cannot take advantage of large orders from customers if they cannot deliver. The conflicting objectives of cost control and customer service often pit an organization's financial and operating managers against its sales and marketing departments. Sales people, in particular, often receive commission payments, so unavailable goods may reduce their potential personal income.

About the author:
Ismael D. Tabije is the Publisher-Editor of www.BestManagementArticles.com, a unique niche-topic article directory that features exclusively business and management topics. For a large dose of inventory management tips, ideas and strategies, see http://inventory-management.bestmanagementarticles.com .

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