What Is An Inventory Manager? (Plus How To Become One)
By Indeed Editorial Team
Updated 18 December 2022
Published 27 September 2021
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Inventory managers are essential members of many organisations, especially those with warehouses or distribution centres. Inventory managers often work with mid-level and senior-level managers to achieve specific organisational goals. Learning about inventory managers can help you decide if such a career is the right choice for you. In this article, we discuss what an inventory manager is, describe what their responsibilities are and provide steps to help you become one.
What Is An Inventory Manager?
An inventory manager is a person who is responsible for the stock levels of products. They plan their inventory order sizes and maintain accurate records of inventory quantities. They also determine which items to stock in the warehouse to fulfil customer orders, while ensuring that these items are available when needed.
What Do Inventory Managers Do?
Here is a list of common inventory manager responsibilities:
Receive and store products from suppliers
Prepare for automated shipment of products
Provide inventory tracking information to management to support inventory management decisions
Maintain a high level of accountability in the warehouse at all times
Communicate with stakeholders in the organisation through a variety of methods such as phone, fax and e-mail
Set up local warehousing management systems
Review inventory records
Update warehouse processes, policies and procedures
Provide problem resolution in the warehouse when needed
Track, manage and maintain inventory levels
Order products to meet business needs
Manage inventory costs
Develop inventory controls systems to ensure optimal warehouse performance
Review and analyse inventory management reports in order to make decisions about required levels of products in the warehouse
Develop relational database systems to store information about products in the warehouse
Use management information tools to help analyse data about products in the warehouse in order to make decisions for stock control purposes
Maintain processes that result in efficient inventory movement through the warehouse or distribution center when needed when it is operating at maximum capacity.
Monitor safety regulations in the warehouse when required
Communicate with vendors to resolve issues related to stock levels of products
Communicate with customers when products are not available in the warehouse or distribution center when needed
Update management with information about each shipment that goes out of the warehouse or distribution center
Use training courses, seminars and tools to improve performance in the warehouse or distribution center
Types Of Inventory Management
There are a number of types of inventory management that inventory managers use to ensure goods are available to meet customer demand. They include:
Stock review: This type of inventory management is usually particularly appealing for small businesses. It involves regularly analysing the goods that you have in stock versus what you project your future needs to be. While automated stock reviews can define a minimum stock level, this method requires regular inventory inspections.
Economic order quantity: Economic order quantity (EOQ), is a formula for the ideal amount of inventory a company needs to purchase and includes a set of variables such as demand rate, total costs of production and other factors. The purpose of the formula is to identify the greatest number of product units that need to be purchased to minimise buying.
Minimum order quantity: This type of inventory management applies specifically to suppliers and refers to the smallest amount of stock they are willing to sell. The retailer must be selling to purchase the minimum order quantity in order for the supplier to agree to the sale.
Safety stock inventory: With this method of inventory management, inventory manager order extra inventory beyond what the retailer expects demand to be. This technique is used to prevent out-of-stocks that are caused by unexpected changes in consumer demand.
Reorder point formula: This inventory management technique uses a company's purchase and sales cycles and may vary according to the product. With this formula, the reorder point is usually higher than the safety stock number, as it allows extra lead time for reordering.
FIFO and LIFO: FIFO stands for first in, first out and LIFO stands for last in, first out. With FIFO, they sell the older inventory first to keep the entire inventory as fresh and new as possible. LIFO is used to prevent the inventory from going back as they sell the newer inventory first.
Batch tracking: With this type of inventory management, the company groups and monitors stock with similar traits. This method is beneficial for tracking expired inventory or tracing defective products back to their original batches.
Bulk shipments: This method focuses on reducing the cost of shipping. With this, you palletise your inventory to ship more products at once.
Consignment inventory: With this type of inventory management, the vendor or wholesaler agrees to give the retailer their goods without an upfront payment. The vendor maintains ownership of the goods and the retailer pays for them when they sell.
Perpetual inventory management: This is the most basic type of inventory management technique and involves counting your inventory as soon as it reaches your warehouse. Inventory managers may manually record inventory in a spreadsheet or using pen and paper when using this technique.
Dropshipping: With this type of inventory management, the store does not keep the goods that it sells in stock. Instead, when a consumer purchases a product, the store purchases the item from a third party and has it shipped directly to the consumer. The retailer never handles the product directly.
Cross-docking: This is an inventory management method that involves inbound trucks unloading goods directly into outbound trucks. Using this technique, there is very little or even no storage between the deliveries.
Six Sigma: This is a methodology that focuses on improving the overall performance of businesses, increasing their profitability while decreasing the increase in excess inventory.
Lean Six Sigma: This methodology uses the tools of Six Sigma but focuses on improving the flow of business and increasing word standardisation.
Demand forecasting: With this technique, companies review historical sales data to determine an estimate for customer demand. In order words, the company estimates the number of goods that they expect customers to purchase and then uses this information to determine the amount of inventory they may order.
Lean manufacturing: This methodology specifically impacts a company's management practices. The goal of lean manufacturing is to eliminate waste and activities that do not add value.
How To Become An Inventory Manager
Here is a list of steps you may take to become an inventory manager, with a description of each step:
1. Complete a bachelor's degree
First, you may need a degree in an area related to either the inventory management of the business or a relevant field such as accounting, engineering and business. Alternatively, you can get a degree in general management. These programs often include relevant courses such as economics, statistics and business management.
2. Earn relevant certifications
If you wish to become an inventory management professional, you may want to consider the CIMA certification from the Chartered Institute of Management Accountants. Many employers accept this certification when hiring inventory managers. Other relevant certifications include the Certified Inventory Manager, the Certified Inventory Professional and the Certified Stockroom Analyst.
3. Get experience in the field through an internship or apprenticeship program
One of the most effective ways to learn about inventory management is by gaining practical experience. Many universities offer internship opportunities to students for credit. Apprenticeships are also often available, which provide you with the ability to work with an inventory manager, gaining skills that are relevant to the profession.
4. Gain relevant work experience
Many individuals seeking to become inventory managers have worked in the field for several years prior to becoming managers. Working as an associate inventory manager can be a good step to take before pursuing positions in management and can give you important insight into the skills needed for inventory management. This type of position often involves many of the same responsibilities of a management position, but usually does not include budgetary or other managerial duties.
5. Earn an MBA
Many inventory managers have MBA degrees, which are highly relevant to the field. The MBA provides many tools that are useful for analysing the methods used by different companies to manage inventory. MBA programs often include relevant courses, such as financial accounting, operations management, marketing management and finance.
Explore more articles
- What Is A Property Manager? (With Work Responsibilities)
- What Does A Production Designer Do? (Skills And Salary)
- What Does a Systems Engineer Do? (With Career Advice)
- What Is A Search Engine Evaluator? (And How To Become One)
- What Does An E-Commerce Executive Do? (A How-To Guide)
- What Is A Contingent Worker? (Definition And Types)
- 17 Popular Horticulture Careers (With Duties And Salaries)
- How To Become A Skills Trainer (With Essential Skills)
- What Does A Transcriber Do? (With Salary, Skills and FAQs)
- What Is A Sales And Marketing Strategist? (Plus Duties)
- 3 Tools And Websites For Career Exploration (With Tips)
- What Does An Accounting Manager Do? (With Duties And Skills)