What does inventory management seek to optimize?

Inventory management primarily seeks to optimize cost efficiency and item availability. This means that the process aims to balance the costs associated with maintaining inventory, such as storage costs, waste, and capital tied up in unsold goods, against the need to have items readily available to meet customer demand. Achieving this balance ensures that a business can operate smoothly without incurring unnecessary expenses while also maintaining the ability to fulfill orders on time.

While improving employee productivity levels, warehouse space utilization, and supplier negotiation strategies are important aspects of overall operational efficiency, they are not the main focus of inventory management. Instead, these areas can be seen as factors that indirectly support the overarching goal of managing inventory effectively to drive down costs while ensuring that products are accessible when needed. Consequently, the optimization of cost efficiency and item availability is at the heart of effective inventory management.