The main function of inventory management is to establish a buffer between supply and demand, so as to alleviate the contradiction between user demand and enterprise production capacity, between final production demand and raw materials, between production and processing procedures, and between manufacturer demand and raw material suppliers. Inventory is the stagnation and storage of anything with economic value, and it is an idle resource for later use.

For a long time, inventory, as the material guarantee service link of enterprise production and sales, has played an important role in enterprise management. Holding a certain inventory helps to ensure normal, continuous and stable production, prevent supply interruption, and also help to meet customer needs with good quality and quantity. Maintain corporate reputation and consolidate market share.

Reasonable control of inventory

Problems caused by excessive inventory: increasing warehouse area and inventory storage cost, thus increasing product cost; Occupy a lot of working capital, resulting in sluggish funds, which not only increases the burden of paying interest, but also affects the time value and opportunity income of funds; Causing tangible and intangible losses of finished products and raw materials; Causes a large number of idle enterprise resources, affecting its rational allocation and optimization; It covers up all kinds of contradictions and problems in the whole process of enterprise production and operation, which is not conducive to improving the management level of enterprises.

Problems caused by too little inventory: the decline of service level, affecting sales profit and corporate reputation; Insufficient supply of raw materials or other materials in the production system, which affects the normal production process; Shorten the ordering interval, increase the ordering times and increase the ordering (production) cost; It affects the balance of production process and the integrity of assembly.