Introduction:

Inventory management involves overseeing and controlling the ordering, storage, and use of products that a business sells. It’s essential for maintaining the right balance of stock to meet customer demand without overstocking.

Definition:

Inventory management is the process of ensuring that you have the right amount of product available to fulfill customer orders without having too much excess stock.

How It Works / Examples:

Suppose you sell handmade candles. Effective inventory management would involve:

• Tracking Stock Levels: Monitoring how many candles of each scent are in stock.
• Forecasting Demand: Predicting which scents are popular during certain seasons and adjusting stock accordingly.
• Reordering: Placing orders with suppliers in time to replenish stock before it runs out.

Utilizing inventory management software can automate these tasks, providing real-time insights into stock levels.

Why It Matters:

Proper inventory management helps prevent stockouts (running out of products) and overstocking (having too much unsold product), both of which can tie up capital and affect cash flow. For a new ecommerce business, this balance is crucial to meet customer expectations and manage resources effectively.

Additional Resources:

Learn more about Inventory Management on Wikipedia.