Inventory OR Materials Management

 Introduction 

                        Inventory or stock word refers to the goods and materials , that a business holds for the ultimate goal of resale, production or utilization. 

The inventory of a business is the amount or value of its raw materials, work in progress and finished goods.

                  Inventory is the accounting of items, component parts and raw materials a company used in production or sells. As  an accounting term, inventory refers to all stock in the various production stages and is a current assets. 

Types Of Inventory 

                                  There are mainly four types of inventories as per stages of goods or materials. 

(1) Raw Materials  

                                 Raw materials is the goods , which is used for producing or manufacturing of final goods as per clients requirement. 

Eg. In stamping or press components manufacturing company , the raw material is MS Sheets , which is used for making automotive parts.

(2) Work In Progress Materials (WIP) Or Semi Finished Goods 

                                           Work In Progress (WIP) materials are that goods, which is under processing materials. It means it is neither count in raw material category nor finished goods. 

(3) Finished Goods (FG)

                              Finished goods are that type of materials or goods , which is completed all types of production processes. That process are shearing, piercing, forming, welding, powder coating, plating, drilling, milling, etc. 

Finished goods are ready materials for dispatch or distribute to the client. 

(4) Maintenance, Repairs & Overhaul (MRO)

 

                                   MRO materials or goods are count in maintenance department. Which is used for repairing and servicing of machinery or production equipment.  Eg. Electrical parts, General hardware, oil, nut bolts, machines spare parts, etc. 

Inventory Management 

                                                         It is the process, by which we track goods or materials from one end to the other along our supply chain. It means conversion of raw materials to final products & dispatch. To keep the proper and accurate record , we must decide the location & give codes to the each items. while we keep the stock of materials , we must labeled the each category of materials. 

Category of materials are ABC, FIFO, LIFO, FSN, etc.

ABC Category 

                              The materials should be divided in ABC category. This tools used on the basis of materials or goods quantity and rate of goods.

FIFO & LIFO Category

             This tools used on the basis of materials or goods life and its consumption. 

FIFO - First In First Out

LIFO - Last In First Out

FSN Moving Category

 This tool is generally used on the basis of goods or materials movement. 

F - Fast moving materials / goods

S - Slow Moving Materials / goods

N - Non Moving Materials / goods

Objectives Of Inventory Management

                                     The key objectives of inventory management are as follows:

a) It helps to the organization to minimize the capital investment.

b) It helps to the production department uninterrupted production by ensuring timely and enough supply of raw materials.

c) It helps in evading the risk of any kind of loss which occur due to deterioration , obsolescence, etc. 

d) It helps to keep the track of sales of the product and the level of stock maintained. 

e) By inventory management, we can know , how much quantity of materials or goods required to complete the production quantity. 

f) With the help of inventory management , we can give order to the vendor for the right quantity of materials at right time. 

Conclusion 

                                        From the above , here we understand that , inventory management is very important to manufacturing industries and distributors to play in the market safely and earn more profit.  As we know that , inventory or stock of goods calculated in amount. So that we can decide, how much capital or fund we will used to stock the goods in our store. 

                         By inventory management we know the , when we need to place raw materials order to vendor, then right materials will reach at our factory with right quantity and with right time.