According to investopedia, inventory management is the overseeing and controlling of the ordering, storage and use of components that a company will use in the production of the items it will sell as well as the overseeing and controlling of quantities of finished products for sale. A business’s inventory is one of its major assets and represents an investment that is tied up until the item is sold or used in the production of an item that is sold and hence arises a need for inventory management. It also costs money to store, track and insure inventory. Inventories that are mismanaged can create significant financial problems for a business, whether the mismanagement results in an inventory glut or an inventory shortage.
Objectives of Inventory Management :-
- Ascertaining the needs of various department for stores.
- Preparing a correct estimate of quantities of stores to be purchased/manufactured in railway workshops each year
- Obtaining stores of desired quality at competitive price
- Ensuring supply of stores in the required quantity in the most efficient, economical and expeditious manner
- Inventory Management involves maintaining an economic level of investment of inventories
- Receipt, inspection ,stocking, distribution of stores to various consuming centers as and when required are included in Inventory Management
- Identifying and arranging disposal of scrap and other obsolete materials with in the shortest possible time to the best advantages of Railways.
- Developing ancillary industries and indigenous sources of supply to replace the import.
- Finally, Inventory Management involves maintaining a constant touch with the market to ensure steady flow of the materials.
Many big industries and manufacturing houses are today giving high importance to inventory management. Due to the prevalent cut throat competition in this globalized world, inventory management can act as an effective tool for cost cutting and improving the cost competitiveness of the products in the global market.