What is "Inventory" meaning?

Inventory is the collection of raw materials, work-in-progress items, and finished goods that a business keeps on hand to produce or sell products. It plays a crucial role in supply chain management and ensuring that businesses have the necessary goods available to meet customer demand without overstocking, which can lead to excess costs.

Example

"The company’s inventory management system ensures that it has enough raw materials in stock to meet production demands while avoiding unnecessary overstocking."

How is "Inventory" used in business?

In business, inventory management is key to efficient operations. Proper management ensures that a company can meet customer demands without holding too much stock, which ties up capital. It also helps in forecasting demand and planning production schedules, leading to better profitability and operational efficiency.

Pro Tip

Use inventory management software to track and automate stock levels, reorder points, and turnover rates. This will help maintain a healthy balance between supply and demand, improving overall efficiency.

Related Terms

Supply Chain, Stock Control, Warehouse Management, Demand Forecasting