Financial Intelligence for Supply Chain Managers: Understand the Link between Operations and Corporate Financial Performance

9. Inventory Management

Managing inventory is an essential function for any company. Too little inventory halts production and stifles sales. Having more inventory than necessary creates cash flow issues. Cash that is not tied up in inventory can be used for other business activities such as entering new markets, developing new products and services, and offering training, competitive pay, and benefit packages to employees. Knowing this, managers need to understand the financial and operational implications of effectively managing inventory. It is a balancing act between maximizing customer service levels and minimizing inventory costs. For these reasons, industry and financial analysts closely watch the method in which companies manage inventory. ...