What is the role of inventory management in supply chain operations?

Inventory management plays a crucial role in supply chain operations by balancing the need for sufficient stock to meet customer demands with the goal of minimizing costs. This involves strategically controlling stock levels based on forecasts of customer demand and supply chain capabilities. Effective inventory management helps ensure that products are available when needed without overstocking, which can tie up capital and incur additional carrying costs.

By implementing practices like just-in-time inventory and safety stock analysis, organizations can optimize their operations to respond promptly to market changes while avoiding excess inventory. This approach ultimately leads to greater efficiency and cost reduction, making it essential for maintaining competitive advantage in the supply chain.