Effective Inventory Management is Vital for a Smooth Supply chain

1. Effective Inventory Management is Vital for a Smooth Supply chain Inventory management is a vital part of the supply chain that tracks inventory from manufacturers to warehouses and from warehouses to point of sale. To have the right products in the right place at the right time, businesses need to have visibility on their inventory which means businesses should know when to order, how much to order and where to store stock. This allows businesses to identify and respond to trends and ensure that there is always enough stock to meet customer orders and issue warnings in case of a shortage. The stock once sold becomes revenue and before selling is inventory. Hence businesses never want more stock in the warehouse than their sales so inventory management becomes vital for them because it ensures that there are rarely too many or few stocks on hand. This also limits the risk of stock outs, surplus stocks, and inaccurate records. Supply chain inventory management is a sustained key to success and the vital role it plays in supply chains is to balance the demand and supply parameters. The effectiveness of the supply chain inventory management depends on the company's size and it allows the company to create an equilibrium of meeting the customer demands that are usually difficult to predict accurately and maintain a smooth supply of goods and materials. This is usually achieved with strategic information sharing for better inventory management. Inventory is undoubtedly the most vital asset of the company and all the elements of the supply chain converge in inventory management. Little inventory on hand when it is required creates unhappy customers whereas large inventory has its own liabilities, as it comes with the cost to store and insure it, besides the risk of theft, spoilage, and damage. Therefore it is significant for companies with complex supply chains and manufacturing processes to find the right balance between too much and too little inventory.

2. A key function of supply chain inventory management is to keep a record of every new or returned product as it enters or leaves a warehouse or point of sale. Both small and large organizations make use of inventory management to rack their flow of goods. Using the right inventory management technique allows the company to provide the right goods at the right place and at the right time. Inventory management is often overlooked in the supply chain whereas it is quite crucial, as poor inventory management may have repercussions throughout the organization and adversely affect its bottom line. For example, if a supply chain manager for garment manufacturers fails to properly monitor customer demand, then the company may end up with surplus stock from a prior season that will not be ordered by any retailer. Even if the company sells these items at a discounted price, then the glut of discounted products may affect the brand's reputation among consumers and can even impact its profit margins. Thus efficient supply chain inventory management enhances supply chain visibility, boosts profitability, and improves operations by keeping a smooth flow of inventory.