Inventory management is one important aspect of the total management of an enterprise. It is ultimately the responsibility of the top management to achieve trade offs among marketing, finance, production and other functions so as to obtain, as far as possible, an optimized and relatively balanced trade off so as to maximize the overall performance of the enterprise.
This has to be not only in the short-run but also keeping the long run interests
of the Company in view.
Inventory Management refers to maintaining. for a given financial investment, an adequate supply of something to meet an expected demand pattern.
It thus deals with determination of optimal
policies and procedures for procurement. In business management, inventory consists of a list of goods and materials held or available in stock.
Management of inventory or Inventory management is all about handling functions related to the tracking and management of material. Inventory management is very important in the case of Production Oriented Enterprises. However, it is also relevant for the Service Sector. In India, the emphasis in the early years was on production and on acquiring the skills and capability to manufacture a host of items required to meet the vast need of the country which had just achieved independence and had embarked on a program of industrialization. Therefore, attention got focused on marketing and on profitability.
However, now there is a gradual appreciation of the need to keep our enterprises profitable. R D, Corporate Planning, Productivity, etc. are tightly getting their due importance.
In simple terms, productivity is the positive relationship of output viz-a-viz inputs. Inventory management can be considered an important facet of output input management.
This includes the monitoring of material moved into and out of stockroom locations and reconciling