Field inventory management commonly known as inventory management is the function of understanding the
stock mix of a company and the different
demand
In economics, demand is the quantity of a good that consumers are willing and able to purchase at various prices during a given time. The relationship between price and quantity demand is also called the demand curve. Demand for a specific item ...
s on that stock. The demands are influenced by both
external
External may refer to:
* External (mathematics), a concept in abstract algebra
* Externality
In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party' ...
and
internal
Internal may refer to:
*Internality as a concept in behavioural economics
*Neijia, internal styles of Chinese martial arts
*Neigong or "internal skills", a type of exercise in meditation associated with Daoism
*''Internal (album)'' by Safia, 2016
...
factors and are balanced by the creation of
purchase order
A purchase order is a commercial document and first official offer issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. It is used to control the purchasing of products and services from externa ...
requests to keep supplies at a reasonable or prescribed level.
Inventory
Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation.
Inventory management is a discipline primarily about specifying the shap ...
management is important for every other business enterprise.
Retail supply chain
Inventory management in the retail supply chain follows the following sequence:
# Request for new
stock
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
from stores to head office,
# Head office issues purchase orders to the vendor,
# Vendor ships the goods,
#
Warehouse
A warehouse is a building for storing goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial parks on the outskirts of cities ...
receives the goods,
# Warehouse stores and distributes to the stores,
# Shops and/or consumers (e.g. wholesale shops) receive the goods,
# Goods are sold to customers at the shops.
Software applications
SaaS
Software as a service (SaaS ) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. SaaS is also known as "on-demand software" and Web-based/Web-hosted software.
SaaS is con ...
inventory management software is a tool to help efficiently manage stock. While the capabilities of applications vary, most inventory management applications give organizations a structured method of accounting for all incoming and outgoing inventory within their facilities. Organizations may save costs associated with manual inventory counts, administrative errors and reductions in inventory stock-outs.
Often tracking stock just through sales and returns is not enough for retailers and does not meet the demands of customers multichannel expectations. Customers expect retailers to have real-time knowledge of stock availability. This can be a challenge for retailers who may have on-line as well as bricks and mortar outlets.
A good
inventory management system
Inventory management software is a software system for tracking inventory levels, orders, sales and deliveries. It can also be used in the manufacturing industry to create a work order, bill of materials and other production-related documents. C ...
will be able to list all stock options with a size colour matrix as well as give live reports on best or worst sellers, supply chain and sales staff.
Many large organizations use sophisticated
ERP system
Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of Business management tools, business management ...
s such as
Oracle EBS an
SAPfor inventory management. Stock modules in these ERP systems provide many of the options needed to manage inventory.
The stock size needs to correspond to the amount of products which are sold. If the stock is too large (especially with
perishable
Decomposition or rot is the process by which dead organic substances are broken down into simpler organic or inorganic matter such as carbon dioxide, water, simple sugars and mineral salts. The process is a part of the nutrient cycle and is ...
goods as fruit, vegetables, ...) there is a risk of financial losses as some of the inventory
may spoil while sitting in the store. To reduce this risk (and keep financial losses as small as possible), there is hence benefit in precisely recording the weekly purchases of the shop's customers. This can be done through
purchases tracking per individual shopper.
12 Sneaky Ways That Big Retailers Track Your Every Move
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See also
* Supply chain management
In commerce, supply chain management (SCM) is the management of the flow of goods and services including all processes that transform raw materials into final products between businesses and locations. This can include the movement and stor ...
* Document automation
Document automation (also known as document assembly or document management) is the design of systems and workflows that assist in the creation of electronic documents. These include logic-based systems that use segments of pre-existing text and/or ...
* Warehouse management system
* Storage management system
Hierarchical storage management (HSM), also known as Tiered storage, is a data storage and Data management technique that automatically moves data between high-cost and low-cost storage media. HSM systems exist because high-speed storage devices, s ...
* Automated identification and data capture
Automatic identification and data capture (AIDC) refers to the methods of automatically identifying objects, collecting data about them, and entering them directly into computer systems, without human involvement. Technologies typically considered ...
* Economic order quantity
Economic Order Quantity (EOQ), also known as Economic Buying Quantity (EPQ), is the order quantity that minimizes the total holding costs and ordering costs in inventory management. It is one of the oldest classical production scheduling models. Th ...
* Economic lot scheduling problem
The economic lot scheduling problem (ELSP) is a problem in operations management and inventory theory that has been studied by many researchers for more than 50 years. The term was first used in 1958 by professor Jack D. Rogers of Berkeley, who e ...
* Newsvendor model The newsvendor (or newsboy or single-periodWilliam J. Stevenson, Operations Management. 10th edition, 2009; page 581 or salvageable) model is a mathematical model in operations management and applied economics used to determine optimal inventory l ...
* Vendor-managed inventory
Vendor-managed inventory (VMI) is an inventory management practice in which a supplier of goods, usually the manufacturer, is responsible for optimizing the inventory held by a distributor.
In traditional inventory management, a retailer (someti ...
* Scan-based trading
Scan-based trading (SBT) is the process where suppliers maintain ownership of inventory within retailers' warehouses or stores until items are scanned at the point of sale. Suppliers, such as manufacturers or farmers, own the product until it is p ...
References
{{Management
Inventory
Corporate development