Inventory is the total number of items (e.g. products or goods or SKUs) that are stored in the warehouses or in the storage rooms at a certain period of time. It is important to know precisely the total amount of goods or products you have in order to manage your business.
You have to ensure the smooth functioning of the supply chain in order to fulfill your clients’ orders in time and to avoid shortages or overstock. Inventory is especially important in retail business when you deal for example with food products, different electronics, and appliances, clothing, and shoes.
But besides the total number of goods in the storage area, inventory can also be the act of counting the goods and products in the warehouse. The inventory provides you with an exact overview of your assets. Therefore, most of the companies take an inventory of their supplies on a regular basis.
There are different purposes for doing inventory. Firstly, it guarantees the availability of goods and products, especially popular ones. The inventory also reveals whether the number of items in the storage room corresponds to the number of items ordered or the number of items sold. If the numbers do not match there might be problems with accounting practices or in the worst case this might indicate to stealing. Besides managing the daily business, inventory also helps to generate numbers for financial reports and tax records.
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