Analysis on Inventory Management at Whirlpool
Every organization needs inventory for smooth running of its activities. It serves as a link between production and distribution processes. The investment in inventories constitutes the most significant part of current assets/working capital in most of the undertakings. Thus, it is very essential to have proper control and management of inventories.
The purpose of inventory management is to ensure availability of materials in sufficient quantity as and when required and also to minimise investment in inventories. Raw materials, goods in process and finished goods all represent various forms of inventory. Each type represents money tied up until the inventory leaves the company as purchased products.
Because of the large size of the inventories maintained by firms, a considerable amount of funds is required to be committed to them. It is therefore absolutely imperative to manage inventories efficiently and effectively in order to avoid unnecessary investments. A firm neglecting the management of inventories will be jeopardizing its long run profitability and may fail ultimately. The reduction in excessive inventories carries a favorable impact on the company’s profitability.
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