Inventory is a list of goods and materials, or those goods and materials themselves, held available in stock by an enterprise. In other word, inventory is stored accumulation of material resources and physically located that are used in a transformation process and/or activated as asset.
On the other hand, Store is an establishment that stocks goods for sale to customers/consumers or gathers materials for the purpose of using as an input for production processes. Enterprises build stores to ensure a balanced flow of materials in order to keep the business running.
Effective Store or Warehouse Management is a key part of the supply chain and primarily aims to control the movement and storage of materials within a store or warehouse and process the associated transactions, including shipping, receiving, put-away and picking.
Many enterprises spend a lot of time and efforts for developing sales projections and budgets for expenses. Each month these forecasts are compared to actual sales and expenses. If sales are lower, or expenses higher than what was projected; management usually takes corrective action to ensure that the company remains profitable. Unfortunately, few enterprises maintain budgets and projections for what is probably their largest asset, inventory. It is also noticed that many enterprises do not give due importance in maintaining proper utilization of store or warehouse where inventory is kept or preserved.
An organization’s inventory can appear a mixed blessing, since it counts as an asset on the balance sheet, but it also ties up money that could serve for other purposes and requires additional expense for its protection. Besides, enterprises sometimes make store or warehouse without doing proper analysis and thus some portion of that store or warehouse remain unutilized.
Some organizations hold larger inventories than their operations require in order to inflate their apparent asset value and their perceived profitability. The hottest buzzword in inventory these days is zero inventory. It’s a cross between absolute zero and the speed of light. Neither is truly attainable in many cases.
Many enterprises have limited funds available to invest in inventory. We cannot stock a lifetime supply of every item. In order to generate the cash necessary to meet expenses and earn a profit, we must sell the material we’ve bought or produced. The inventory turnover rate measures how quickly we are moving inventory through our warehouse or store.
Considering this reality, many enterprises recognize that they need to know how to control and manage their largest asset, inventory. They also now realize that effective utilization of store or warehouse can contribute a lot to the organization. Inventory can be transformed back into cash through sales. Organization cannot be successful (or perhaps even survive) unless it understands this relationship and its details processes.
Conventional knowledge is sometimes unable to detect whether we should keep too little inventory or too much inventory or maintain just the right amount of inventory. Thus we need to make in-depth analysis of total supply chain process to ascertain optimal inventory. Effective inventory and store management is inevitable for today’s competitive business world. Please keep in mind, “It’s easy to turn cash into inventory, but the challenge is to turn inventory into cash”.
Please combat this challenge and learn Inventory and Store Management and contribute to your organization you work or you own.