Inventory Management ExplainedInventory, stocktaking & material control
Start with the control picture

The material lifecycle, explained plainly

Inventory management is not only buying and selling. A reliable balance depends on requirement planning, procurement, receiving, location, status, issue, return, count, investigation, adjustment and disposal.

Five questions before using any formula

  1. 1
    What exactly is the item?
    Confirm item number, description, revision, lot or serial identity where needed.
  2. 2
    Which unit are we counting?
    Cases, packs, individual units, kilograms, litres and metres are not interchangeable without a controlled conversion.
  3. 3
    Where and in what status is it?
    Available, allocated, quarantined, damaged, in transit and repairable stock serve different purposes.
  4. 4
    Which movements are still open?
    Unposted receipts, issues, transfers, returns and backorders can make the balance misleading.
  5. 5
    How confident are the dates?
    An expected purchase order, return or repair completion is possible supply until confirmed.
A useful balance view

Confirmed projected availability = verified on hand + confirmed receipts + approved serviceable returns + transfers in − allocations − expected demand.

Show uninspected returns, uncertain orders and repairables separately.

Where to go next

Use the Projected Availability Planner, then read Inventory Statuses Explained.

A simple method

Count, reconcile, investigate, improve