Inventory management
Inventory management

Complete guide to inventory management

Inventory management helps companies identify what stock to order and when to order it. Stock is tracked from the time it is purchased to the time when it is sold. By identifying and responding to trends, the practice ensures that there’s always enough inventory to fulfil customer orders. This helps prevent shortages from occurring. Inventory turns into revenue when it’s sold. Although it is a balance sheet asset, inventory (before it sells) ties up cash. A large inventory will, therefore, cause a reduction in cash flow. Efficient document management is a need for inventory turnovers, and since all modern businesses go paperless, a suitable document format should be chosen, and a tool to render PDF in HTML is a need.

Good inventory management software helps in measuring the turnover of inventory of your business. Inventory turnover refers to the amount of stock sold within a given timeframe. Companies do not want to have more stock than sales. An insufficient inventory turnover can lead to dead stock.

What are the benefits of inventory management?}

An organization’s inventory management helps limit the risk of stockouts and inaccurate records by ensuring there is never too much or too little stock on hand. To comply with SEC rules and the SOX Act, public companies must track inventory. Compliance can only be demonstrated through documentation.

Advantages of Inventory Management

Inventory management ensures that you’ll be able to fulfil any open orders as well as raise your profits. This includes:

1 Money Saver

The ability to understand stock trends allows you to know where and how much of something you have in stock so that you can make the most of it. 

Additionally, you’re able to pull stock from any location to fulfil orders, meaning you can keep fewer inventories at each location and have less unsold stock at each location before it’s obsolete. All of these features result in decreased costs tied up in inventory and fewer unsold items before they’re obsolete.

2 Boosts Cash Flow

Stocking up on inventory you will sell will keep cash flowing in your business, as long as it is properly managed.

3 Customers are happy:

To develop loyal customers, they need to receive the items they want without having to wait.

Challenges of inventory management

It comes to inventory management, the biggest challenges are having too much inventory you can’t sell, not having enough inventories to fulfil orders, and not knowing what items you have and where they are. 

Other difficulties include:

1 Knowing what you have and where it is

It is impossible to know when to refill stock or which stock moves well without accurate stock details.

2 Ineffective Processes

Work can be error-prone and slow due to outdated or manual processes.

3 Demand from customers changes constantly

The needs of customers are constantly changing. How would you know when their preferences changed and why, if your system cannot track trends?

4 How to optimize warehouse space

If products are difficult to locate, the staff is wasting time. By mastering inventory management, the problem can be resolved.

How Do Inventory Management Systems Work?

The inventory of a company consists of all the raw materials, components, and finished goods that are sold or used in production. It is considered an asset by accounting. On the balance sheet, the correct valuations are recorded based on the information about stock levels.

Process for managing inventories

A manufacturer who produces on-demand must manage their inventory from the moment they receive a customer order until they ship it. As an alternative, you will place POs for raw materials or components as soon as you forecast your demand. Analyzing sales trends and storing products in warehouses are also part of the process.


Understanding the stock levels and stocks’ locations in warehouses is the aim of inventory management. Instore Stock Management App tracks products from suppliers through the production process to the customer. A warehouse’s inventory management system tracks stock receipts, pickings, packings, and shipments. Inventory planning is sometimes based on formulas and analysis. Other times, it is based on procedures. Regardless of the approach, accuracy is emphasized in all methods. Companies use different methods depending on their needs and stock.