What is Inventory Management.

Inventory management refers to the process of ordering, storing and using a company's inventory: raw materials, components and finished products.

Inventory management is the management of inventory and stock. As an element of supply chain management, inventory management includes aspects such as controlling and overseeing ordering inventory, storage of inventory, and controlling the amount of product for sale.

The definition of Inventory Management is easy to understand. Simply put, inventory management is all about having the right inventory at the right quantity, in the right place, at the right time, and at the right cost. But how do you implement the best inventory management techniques to ensure the best results? Read on to find out our insights for inventory management best practices.

How do I calculate the “right amount” of inventory to stock?

Stocking the right amount of inventory is crucial. If you order too little, your customers will start looking elsewhere. If you order too much, there’s a chance you’ll be stuck with lots of extra stock that you’ll be forced to sell at clearance prices, or risk having them become obsolete.

In a poll by GetApp, business owners were asked how they decided when to reorder inventory. A resounding 46% of them decided based on information from previous months. If you’re part of that 46%, you want to make sure you’ve got the right inventory data - which means looking for a solution that’ll automatically track your inventory movements as much as possible.

In fact, even if you chose to use inventory forecasting software (15%) or Excel formulas (13%), you’re still going to need information from the previous months. (If you’re wondering about the remaining 26%, they selected “Other” - we’re still betting information from previous month’s factor in somewhere though!)