Inventory is generally defined as “stock at a particular location”.  Traditionally inventory for a manufacturing business is classified as raw materials, work-in-progress, finished goods and MRO (Maintenance, Repairs and Operating supplies).  For retail and distribution businesses, majority of the inventory can be labelled as finished goods. For service industries, majority of the inventory can be labelled as consumables.

Effective inventory management plays a critical role in the smooth and efficient running of any business. Reducing excess inventory and investing in the right inventories lead to improved customer service, increased inventory turnover, reduced costs and increased profitability.