Inventory management is important for keeping inventory numbers stable as well as determining and controlling the levels of stock needed for optimal profit. Good inventory management involves having enough inventory on hand to meet customer demand, yet not too much to exceed inventory turnover goals.
There are many misconceptions when it comes to effective inventory management. Some of these are:
- Sales data is the only thing required for inventory management.
- An inventory control module in the accounting system is sufficient for tracking inventory management.
- If the employees would just do their jobs, inventory management would come naturally.
In fact, inventory management does not rely on sales data at all. The best type of data to use for effective inventory management is accurate demand information as opposed to actual sales.
Inventory control is different than inventory management. Most inventory control modules do not pull enough data or provide enough analysis for effective inventory management. A separate inventory management software program works best. Inventory management is not solely based on employees and their productivity. With proper training and the right tools, such as good inventory management software, managers and their employees will be able to perform their job functions effectively and efficiently. This helps ensure inventory goals are met for the company.