The process of ordering, storing, using, and selling a company's inventory is known as inventory management. This comprises the storage and processing of raw materials, components, and final goods, as well as their administration.
Inventory is one of a company's most valuable assets. In retail, manufacturing, food services, and other inventory-heavy businesses, inputs and finished items are at the heart of the firm. A shortage of inventory when and where it is needed could be disastrous. On the other side, inventory can be viewed as a risk. Having a large inventory can run the risk of spoilage, theft, damage, or demand shifts. Inventory must be insured, and if it is not sold within a reasonable amount of time, it may be forced to be sold at a discount or destroyed totally.
- Raw materials: Nonperishable?and?perishable?goods?both?fall?within?this?category.
- Work in progress: These are items that are being worked on and not ready to be sold. Example - Glass
- Finished goods: Items that are ready to sell, such as windows, are referred to as finished goods.
- Maintenance, repair, and operations: MRO items are items that are required to keep the production line going, such as tools or spare parts, or consumables that are used to transport products to their final destinations, such as paint.
Types of Inventory Management:
- Just in Time: By keeping only the inventory required to make and sell products, this strategy allows businesses to save money and eliminate waste.
- Materials requirement planning: This inventory management system is sales forecast reliant, which means that producers must have accurate sales records in order to predict inventory needs accurately and communicate those needs to materials suppliers on time.
- Economic Order Quantity: This model is used in inventory management to determine how many units a company should add to its inventory with each batch order in order to lower total inventory costs while assuming continuous demand.
- Days sales of inventory: It's a financial statistic that shows how long it takes a company to turn its inventory, including work-in-progress goods, into revenues on average in days.
Some of the latest trends in inventory Management:
- Implementation of cloud technology: Decision-makers can more quickly respond to and solve inventory issues with cloud-based solutions because all of your company's data is stored securely and centrally and can be accessed from anywhere.
- Internet of things: It makes automated systems for inventory and material management.
- Multi-ware housing: Businesses that invest in smart cloud technology, such as inventory management software, can implement a multi-warehousing strategy.
- 3PL: These services could let firms reach out to more customers or run more efficiently without incurring the costs of infrastructure expansion.
- Application of Artificial Intelligence and Machine Learning: Machine learning could be used to identify damaged products or packaging, ensuring that buyers receive only high-quality products.
- Warehouse Automation using ?Automated guided vehicles?& Automated mobile robots: Both types of vehicles cut down on the time it takes to move things about the warehouse and free up human workers to help fill orders more quickly.
- Connected Omni-Channel Service: Align your channels so that a client may check online to see if a specific item is available in a local physical location, then make a purchase and pick up the item.
- Sustainable supply chain: Use of the green or circular supply chain that worked on the reduce, recycle and reduce principle is given priority
- More resilient local supply chain: With limits on global trade and people mobility, delivering the right items to the right place at the right time has proven difficult.
- Use of data analytics for inventory forecasting: The use of real-time data analytics to make decisions, build a more customer-centric business model and reduce costs while increasing efficiency is a common thread in many of these themes.
The application & implementation of the latest tools and technology will help the company to save cost, decrease inventory levels, manage inventory working capital, and correct information flow.
