INVENTORY MANAGEMENT,METHODS,TECHNIQUES,TYPES AND BENEFITS

The book entitled Inventory Management, Methods, Techniques, Types And Benefits is a must read. Earlier, the author published article on inventory management in some platforms. In his books entitled corporate finance and corporate finance and investment ,inventory management is one of the chapters. Organizations and individuals that are into manufacturing will find this book useful. Importers that have to warehouse their goods as they are cleared from ports will also find the book useful. The importance of inventory management can not be over emphasized. It helps in reducing cost resulting to increase in profitability. Hayes(2023) posits that inventory management refers to the process of ordering, storing, using, and selling a company's inventory. This includes the management of raw materials, components, and finished products, as well as warehousing and processing of such items. There are different types of inventory management, each with its pros and cons, depending on a company’s needs. We further examined inventory as a concept. The term inventory refers to the raw materials used in production as well as the goods produced that are available for sale. A company's inventory represents one of the most important assets. This is because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders. There are three types of inventory, which includes raw materials, work-in-progress, and finished goods. We also dwelt on inventory methods. Depending on the type of business or product being analyzed, a company will use various inventory management methods. Some of these management methods include just-in-time (JIT) manufacturing, materials requirement planning (MRP), economic order quantity (EOQ), and days sales of inventory (DSI). There are others, but these are the four most common methods used to analyze inventory. We discussed the benefits of inventory. A company's inventory is one of its most valuable assets. In retail, manufacturing, food services, and other inventory-intensive sectors. A company's inputs and finished products are the core of its business. A shortage of inventory when and where it is needed can be extremely detrimental. We examined the concept of work in progress. In production and supply-chain management, the term work-in-progress (WIP) describes partially finished goods awaiting completion. WIP refers to the raw materials, labor, and overhead costs incurred for products that are at various stages of the production process. WIP is a component of the inventory asset account on the balance sheet. These costs are subsequently transferred to the finished goods account and eventually to the cost of sales. We discussed why inventory management matters. As a business owner, you have to deal with lots of numbers and statistics. You calculate daily sales and analyze this data over time to make decisions. You generate equations that display your return on investment to show which products are most profitable. It is important to note that high profitability makes stocking an item worthwhile. Speaking of stock, your more mundane calculations include typing in values for each Stock Keeping Unit(SKU) as you decide what quantities to order, how much of a product you should carry at a time, and when it’s time to reorder. Exciting, right. We dwelt on the concept of working capital management.Working capital management is a business strategy designed to ensure that a company operates efficiently by monitoring and using its current assets and liabilities to their most effective use. The efficiency of working capital management can be quantified using ratio analysis. Absolute figures shown in the financial statements do not usually provide meaningful understanding of performance as well as financial position. Meaning is conveyed by accounting figures only when they are related to other figures. This therefore calls for use of ratio Analysis. The other issues we discussed are Enterprise Resource Planning(ERP) and Supply Chain Management. These are related concepts to inventory management.