Inventory Planning and Management

Inventory Planning and Management is a process that enables you to determine the best amount of stock to retain and for how long. This process can be aligned with your sales and production for best results. Inventory Planning has a direct effect on cash flow and profit margins, especially smaller organisations where they rely on a quick turnover of stock. There are two types of inventory planning – periodic and perpetual. Periodic inventory management is when physical counts of stock is carried out at regular intervals to determine stock levels and maintain accurate stock control. Perpetual inventory management updates stock levels on a daily basis and is normally achieved by specific software to control actual stock records. Every organisation should use inventory planning and management controls of some method, to identify stock on hand and keep tighter controls of their cash flow. Physical stock in store helps a business meet demands, however it does have an impact on cash flow so a physical stock count regularly can allow for better management of cash. For some organisations, for example food industries, it may be beneficial to maintain stock levels using a perpetual inventory management process as this will provide for more accurate stock levels which in turn will allow for better control of the sales and cash flow.