For any company, managing your inventory is a balancing act. You don’t want to hold large quantities of stock for long periods of time as this ties up your company’s resources (cash, storage space, staff time during stocktake counts, wastage through out-of-date stock, etc.). However, if you run out of stock regularly, you will miss out on sales.
The aim is to achieve optimum inventory levels so you can meet customer demand while keeping your stock holdings at a minimum. Achieving this aim will help to improve both your company’s productivity and profitability.