Inventory management is one of the most important management disciplines in every company that holds inventory. Inventory can provide the capability to meet a customer need, repair a broken machine, assemble products for sale or just keep production going.
For manufacturing organizations, direct inventory (raw materials, works in progress and finished goods) can account for up to 50 percent (or more) of the current assets of the business. Current assets are those investments that are expected to be converted to cash within the next 12 months. For retail and wholesale businesses, the figure is even higher. This type of inventory is part of what is referred to as working capital.