Inventory means stock, which refers to the materials, products or goods that an organization keeps or holds for the eventual purpose of sale or resale. This is a short and simple approach to define inventory. The term, inventory management is a kind of science, which specifies the amount of the goods and the area it occurs and the best way to managing area of the warehouse with the goods or materials it has.
It is one of the most imperative parts of business and a number of reasons are there behind it. One of those is that it lets you know that actual figure of the goods or materials that you have in stock in your warehouse. So, it becomes, for you calculate how much you have to order or deliver. If you do not have a proper inventory management, then you would not be able to do so. As a result, you may order more or less number of goods or products or materials.
A good inventory management helps you in getting proper sell records. Let’s make it more clear. Like, it helps you in tracking your sales activities. So, you come to know at what time how much product you have sold out. It truly helps in sales forecasting as well. For example, suppose someone has garment or clothing store and he does not have a right kind of inventory management. During the winter season, he takes an order of some certain amount of winter jackets. However, he cannot able to sell out all of these normally. Hence, he would have some goods in inventory and those will not be sold through the entire year until the winter comes once again. Another situation may occur where he has sold out all the winter jackets quite earlier than the winter month gets over. In both of the cases, the businessperson would have loss and there is no doubt about that.
Here the requirement of an inventory management arises. If the businessperson would have a proper management over its inventory, then he could be able to forecast the sales according to its previous inventory records. As a result, he could have a good sale over the winter season. However, it does not mean that inventory management is a magic and it will give you just exact data. But, it is good enough more or less. Hence, the importance of having proper inventory management is very important for running a business these days.