Inventory management is the management of inventory and stock. As an element of supply chain management, inventory management includes aspects such as controlling and overseeing ordering inventory, storage of inventory, and controlling the amount of product for sale.

1. INVENTORY MANAGEMENT

2. What is Inventory and Inventory Management
Inventory management is the management of inventory and
stock. As an element of supply chain management, inventory
management includes aspects such as controlling and
overseeing ordering inventory, storage of inventory, and
controlling the amount of product for sale.

3. How ToPlan Inventory
Inventory planning is a process to determine the optimal quantity as well as
timing, with the aim of aligning such plans with the organization's capacity to
produce and make sales.
Main Concern of Inventory Management
When to Order?
Decide the Re-order Level – the level of
inventory that triggers a signal to replenish
Stock
How Much to Order?
Decide the Re-order Quantity – the
number of inventory that is required to
maintain the optimum Stock.
This entails:
• Review of Historical Sales
Records
• Tracking Current Market
Trends of Demand and
Supply
• Apply the Seasonality
Factor
• Safety Stock Planning
Market Trend – Demand & SupplyCurve

4. Impact of Inventory on Order Management
Customer places Order
Seller receives Order
and Confirms
Pick-up Product from
Warehouse
Logistics Partner Picks
up and Ships
Seller Packs the Product
Customer
• Satisfaction
• Loyalty
• Good Reviews
• Good Rating
Product Delivered
to Customer On
Time
Order Management
Timely Processed Order

5. Impact of Inventory on Order Management
Customer places Order
Seller receives Order
and Confirms
Product Out of Stock
Logistics Partner Picks
up and Ships
Seller Packs the Product
Customer
• Dissatisfaction
• Negative Reviews
• Negative Rating
Product Delivery to
Customer Delayed
Order
Management
Delayed Order
Procurement from Vendor

6. Impact of Inventory on Order Management
Customer places Order
Seller receives Order
and Confirms
Product Out of Stock
Order Cancelled
Customer
• Unhappy
• No More Visits
Order
Management
Cancelled Order
Unable to Procure from
Vendor

7. ExcessInventory
Leads to
*Capital Block
*Unwanted Inventory
holding Cost
*Obsolete/ Expired Products
Inventory Management
Inventory management helps in balancing out the
two extreme situations so that you have
• Cost Optimisation
• Hedge against Price Increase
• Advantage of quantity discount
• Preparation for seasonal requirements
• Stock in accordance with customer Selection
Out of Stock
Out of Stock
Leads to
*Loss of Sale
*Non-fulfilmentOrders
*Dissatisfied Customers
*Loss of CustomerLoyalty
Excess Inventory
Maintain Inventory Balance

8. Advantages of Inventory Management
Timely Order Fulfilment
Protection from Risk
of delayed or No supply
Prevent Loss of Sale
due Out of Stock
Reduce returns by sending
correct product
Balance the Demand
with Supply
Stay ahead of Competition

9. • If I have 900 Units in Stock on 1st Sep,
i.e. time 0 (Zero)
• Quantity became 0 (Zero) ON 1ST Oct
• The consumption per day can be
calculated as 900/ 30 days = 30/ day
• Vendor has lead time of 10 days, i.e.
he takes 10 days for delivery of
Product, I would need to Order stock
at least 10 days in advance to avoid
the Stock out situation
• To avoid the risk of vendor delays, and
excess demand, I would require to
keep some stock in reserve– this is
Safety Stock say 100 units
Example - Safety Stock
Maintaining Safety Stock helps in managing
 Returns that are damaged/ defective and
need replacement
 Sudden rise in Demand of Product
 Peak Selling Season
 Participation in Promotional Campaigns
 Shortfall due delay in supply from Vendor
-900
Quantity(inUnits)
-30
Safety Stock
Time (in days)
-100

10. Example – Reorder Level
Lead
time
10 days
Seller places
Order with Vendor
Order
Quantity
Order Received
by Seller
30
Safety Stock
-900
- 400
Re-order Level
- 100
Time (in days)
• Stock consumed in the lead time of10days = 10*30 = 300
• If seller wants to keep the safety stock of 100 units
• Toavoid the risk of stock out, Seller will have to reorder when
Stock reaches 300+100 = 400 units
Quantity(inUnits)

11. Maintaining Inventory and Stock
Stock Levels
• Maintain small quantity if supply
is reliable and readily available
• Maintain large quantity if
• Reordering and Delivery takes
time
• Demand for Product is very high
• Participating in Promotional
Campaigns
• Reduce quantity of non-saleable
products
Inventory Management
Excess inventory results in incremental
costs of maintaining inventory and affects
the financials of the company as it blocks
working capital.
Under inventory on the other hand can
seriously hamper the market share. Any
customer order that is not fulfilled due to a
stock out results in poor customer
experience.
Ability to strike a balance in holding lean
inventory is a result of smart planning and
continuous monitoring of the inventory
levels along with quick decision-making.

12. THANK YOU