What does proper inventory management aim to reduce?

Proper inventory management aims to reduce excess inventory costs, which can significantly impact a business's overall profitability. Excess inventory can lead to several challenges, such as increased holding costs, storage fees, and potential obsolescence if products become outdated or go out of season. By effectively managing inventory levels, businesses can optimize stock to meet customer demand while minimizing these additional costs.

Effective inventory management allows businesses to align their stock levels with sales trends and consumer behavior, ensuring that they have the right amount of product available when needed without over-investing in inventory that may not sell. This process involves analyzing sales patterns, forecasting demand, and making informed purchasing decisions, which all contribute to maintaining a lean inventory and controlling expenses related to carrying excessive stock.