Inventory management controls how goods are planned, purchased, stored, counted, allocated and replenished across the supply chain. Its aim is to support demand without tying up unnecessary cash or creating avoidable stockouts.
Which inventory records matter?
Key data includes item, location, on-hand quantity, available quantity, allocations, incoming supply, lot or serial details, cost and status.
How is inventory position calculated?
Inventory position = on-hand + on-order − committed or backordered demand
If 600 units are on hand, 400 are on order and 750 are committed, the inventory position is 250 units. Availability timing still depends on when the inbound 400 arrives.
Which policies are used?
Businesses use reorder points, safety stock, min–max levels, cycle counting, lot controls and service-level targets.
What causes inaccurate inventory?
Receiving delays, incorrect picks, unrecorded damage, unit-of-measure errors, returns and timing differences between physical movement and system posting are common causes.
What should be measured?
Track record accuracy, stockouts, turnover, days of inventory, shrinkage, aging, fill rate and forecast error.
