Inventory Management Definition


Learn the inventory management definition and the role of the inventory manager. Find the right balance to manage inventory correctly.



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✏️ Transcript of the video

There is a Japanese woman named Marie Kondo
which teaches people how to be happy at home
having only what you need and like and not be
overloaded with unnecessary items.

When you have unnecessary items you also have unnecessary burdens and this does not lead to happiness.

The same principles can apply in the world of work.

You need to have the right inventory level, neither too much nor too little.

A simple model for dividing a company’s inventory is:

– Raw materials
– Materials In Processing
– Finished products

Inventory management is the set of activities of:

Planning
Coordination
Control

Furthermore, in inventory management, attention must be paid to other aspects such as:

– Purchase
– Handling
– Storage
– Sales

Inventory management is normally entrusted to an Inventory Manager.

The inventory manager must have the following characteristics:



# 1) Planner

He must know how to manage the purchase and production of materials in different parts of the world. The goal is the right inventory at the right times.



# 2) Coordinator

Many departments are involved in inventory management.
Purchasing, Production, Logistics, etc.

The inventory manager must coordinate all departments.



# 3) Controller

The inventory manager must maintain the right level of inventory
which can satisfy the customer’s request but reduce inventory costs.

Often these 2 indicators are conflicting.

To meet customer demand and fluctuations in him you should keep
a level of extra inventory.

On the other hand, the money spent on maintaining this extra inventory represents an additional cost.



# Conclusion

The key to inventory management is finding the right inventory range to balance customer satisfaction and business costs.

You need to have enough inventory but not too much.

The Inventory Manager must be focused on defining the right inventory level and constantly checking it.



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