The Importance Of Inventory Control

Majority of organizations show that inventory is listed and one of their largest assets on their balance sheets. Expenses are typically documented as one of their largets expenses on their income stetments. Within this paper it is shown how much an inherent risk inventory can be if not properly controlled and managed. In looking at the audit world; inventory rank high in being a major audit area of an organization. Inventory can only become less of a risk to an organization by keeping proper inventory records and conducting proper audits. Inventory Control

In today’s society; almost every organization either distributes, sells, or uses some type of material. Inventory control is a necessity to any of these organizations and is correlated

Inventory management is designed to allow a smooth flow of the materials and prevents any major stock outs. Inventory management ensures that the availability of the materials has the sufficient amount needed and minimize the total investment in inventory.Each item in inventory represents money thaty a company has spent and treated as an expese until the material becomes a purchased product. Since many organizations have money tied up in their inventory; it is pertanient that the inventory is managed in a very efficient and effective manner in an effort to avoid unnecessary investments. In the event that an organization has poor inventory management; excessive stock or not enough stock can greatly affect the organizations profit and reputation. For example, having excessive stock can cause loss revenue due to products not selling quick enough and a shortage of stack can cause an organization to lose business. As the example shows; proper inventory management is a must. In order for an organization to be successful in its management of inventory the balancing of inventoy costs with the benefits that is associated with the inventory so that the organization can turn over their volve and obtain the maximum amount of profit. While visiting some local businesses; the managers expplained what they did to control their inventory. These businesses spoke of direct costs associacted with inurance, storage space, taxes and the money that had to be tied up in inventory and how they had to be properly managed and controlled. Others discussed strategies that have made them successful such as increase thieir inventory turnover, maintaining the minimum amount of inventory that keeps them from not sacrificing their performance or delivery of goods, and purchasing the inventory in larger volumes to obtain overall lower purchasing costs. The constant changes in the financial market along with the type of stock vary with the