Inventory management is primarily about specifying the size and holding of stocked raw, work in progress and finished goods. It may be executed at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. Inventory management concerns fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, and physical inventory, available physical space for inventory, quality management, replenishment, returns, defective goods and demand forecasting. Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment. Inventory management involves a retailer seeking to acquire and maintain a proper merchandise assortment while ordering, shipping, handling, and related costs are kept in check. Systems and processes that identify inventory requirements, set targets, provide replenishment techniques and report actual and projected inventory status. Handles all functions related to the tracking and management of material.
Thus, it is very essential to have proper control and management of inventories. The management of inventory normally ensures availability of materials in sufficient quantity as and when required and also to minimize investment in inventories. The efficiency of a firm to earn profits depends on its ability to manage working capital. Inventory is the firm’s investment in Working Capital and the risk of holding inventory generally higher than that of other items of Current Assets. It involves many types of costs associated with it viz. acquisition cost, carrying cost etc. It is the only item of Current Assets which has direct influence on the prices and income of a firm.
This research work studies the inventory management system at Hindustan Unilever Limited (HUL). It identifies the key challenges faced by them in inventory management and analyzes the effectiveness of inventory management system executed by them.
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