The Importance Of Inventory Management

Inventory management is defined as a science based art of ensuring that just enough inventory stock is held by an organization to meet demand (Coleman , 2000; Jay & Barry , 2006). Inventory is the availability of any stock or resources used in an organization. An inventory system is the set of policies that controls and monitor inventory level and determine what level should be maintained, how large orders should be made and when stock should be replenished. Inventory control is the supervision of the storage, supply and accessibility of items to ensure an adequate supply without excessive oversupply (Miller, 2010). Inventory control means availability of materials whenever and wherever required by stocking adequate number and kind of stocks.

Hence, Inventory management involves planning organizing and controlling the flow of materials from their initial purchase unit through internal operations to the service point through distribution (Smaros, et al., 2003). Inventory constitute one of the largest and most tangible investment of any retailer or manufacturing organization. Intelligent inventory management strategies can not only help boost profit but they can mean the difference between a business thriving or barely surviving. Holding inventories at the lowest possible cost and giving the objectives to ensure uninterrupted supplies for on-going operations is the aim of inventory management. When making decisions on inventory, management has to find a compromise between the different cost component, such as the cost of supplying inventory, inventory holding cost and cost resulting from sufficient inventories (Peterson and Silver, 1998; Zipkin, 2000). According to Miller (2010), inventory control is the activity which organizes the availability of item to the customers. It coordinates the purchasing, manufacturing and distribution functions to meet the marketing needs. This role include the supply of current sales items, new product, consumables, spare parts, obsolescent items and all other

In other to attain its organizational objectives, a business is to meet customer’s needs. Customer desire has always been a vital issue in a company not only to maintain sales but also to increase it (Tersine, 1994; Potilen & Goldsby, 2003). Kotler (2002), posits that inventory management refers to all the activities involved in developing and managing the inventory levels of raw materials, semi-finished materials (working-progress) and finished good so that adequate supplies are available and the costs of over or under stocks are low. Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space