Inventory is the list of goods and materials, which are in the stock of a business or company. In accounting, inventories are considered assets. Inventory management is necessary as it helps in smooth running of the company’s day-to-day task and operations. It involves controlling of the assets and stock being produced for the purpose of sale and its main aim is to minimize the total cost, which includes direct costs and indirect costs. Inventory management should be carried out in such a way that it always responds to the requirements of the firm in case of a big organization, or to the individual concerned in case of a small business. The organization, however big or small, should design appropriate and efficient systems that can assist and help you to make right and proper decisions by generating the correct and accurate business reports.
Managing inventory is an important and difficult task especially in big organizations. To manage the inventory, companies require the Inventory Management Software, which is an organized program, which manages the sales, purchases, and payments, reduce holding, and trace the items in detail, of any business organization. It allows the organization in generating invoices, receiving records, purchasing orders, payment receipts, calculating operating costs, track materials both in quantity and value, and formulates and calculates a way or a financial structure which optimizes the profits and reduces the over head costs for the organization. These soft wares are also capable of calculating demand and selling performance of each product, at every store or outlet individually. By understanding how the product will sell on a particular location, enables the organization or retailers to understand which stores and outlets will provide the highest potential for full price sales of the product, and thus they can formulate their strategies accordingly. This process is called Allocation, which provides the manufacturers and retailers with an automated analysis of how much to produce and supply to which store to optimize profits and also equips them to respond quickly if the product or a location is not achieving its goals or are exceeding their goals. These soft wares also performs the task of Replenishment, i.e. to analyze business goals to achieve maximum profits by optimizing sales through merchandise planning, store clustering and deciding what and when to buy and where and when to sell in advance, considering the change in life-cycle, seasons, promotions and preferences of the consumers
