What is Inventory Management?
Inventory is the stock of goods held for doing business. It can be any company’s most valuable asset. It is critical for each company to manage its inventory effectively with no excess stock stored and meeting the client requirements. Inventory management is primarily specifying the placement of stocked goods. The main objective of inventory management in global supply chain management is to keep its products safe.
Why is Inventory Management Critical?
The importance of inventory management in the supply chain is that it is the sustained key to success. Perhaps the most significant role inventory plays in supply chains is balancing the demand and supply parameters.
The effective management of inventory depends upon the size of the company. The measures so adopted, put a company in the position of trying to create an equilibrium of fulfilling the customer demands, which is often difficult to predict with precision and maintaining a sufficient supply of materials and goods. To achieve a balance in inventory management is usually made using strategic plans.
Sales and Operations Planning Processes for Inventory Management
The sales and operations planning processes help to attain effective inventory management. The primary aim of sales and operations planning is to bring the demand management functions together with the operations functions. The significance of inventory management in the demand-supply chain provides updated and direct sales forecasting information, which assists the sales and marketing group in planning for future inventory needs.
Point-of-Sale Data for Inventory Management
Point-of-Sale (POS) data for inventory management is yet another approach of creating an equilibrium in the demand-supply chain in the retail industry. Whenever an item’s barcode gets scanned, it shows that another unit of inventory is out. This information is tracked by the retailer and the vendors. As items from stock are sold out, in some cases, it helps both the retailer and vendor to work collaboratively to determine when reordering is necessary. In essence, inventory management is essential when supply inflows are needed to manage demand outflows.
Effective inventory management solutions are critical as the demand-supply chains need to be balanced. Integrated inventory management systems need to be streamlined and display meaningful data to support critical decision-making. It signifies the importance of inventory management.
One-Year MBA in Global Supply Chain Management
Inventory management is an important component of global supply chain management. IIM Udaipur’s One-Year MBA in Global Supply Chain Management is a comprehensive program designed for the supply chain professionals (with at least three years of experience) who are looking forward to a great career in logistics, supply chain and procurement industry. The IIM Supply Chain Management program at IIM Udaipur provides the interested aspirants with the option of pursuing a dual degree from IIM Udaipur and Purdue University, USA.