What Is Inventory Management (Education, Careers, and More)

Written by Coursera • Updated on

Learn about inventory management methods, technologies, manager jobs, and salaries. In this article, discover how to plan your education and training to start your career in supply chain.

[Featured Image] An inventory manager is standing inside a warehouse.

Inventory management is the supervision of a company’s supply, production, sales, and inventory. It provides critical data to help businesses respond to trends, avoid breakdowns in supply chain management, and maintain profitability. 

Whether you’re interested in pursuing this career path or have your own business, inventory management is important for most of today’s companies. In this article, learn more about inventory management, why it’s important, and the different careers in this field. 

Why inventory management is important 

Inventory management is an important component at the core of a business’s success. It impacts  production, warehouse costs, and order fulfillment. Having effective inventory management helps contain costs and ensure businesses have the correct amount of stock. 

Benefits of inventory management 

Efficient inventory management can streamline production and fulfillment processes for a business. Here are some benefits of an inventory management strategy:

  • Lower costs 

  • Preventing overspending on warehouse storage

  • Minimizing storage needs

  • Reducing loss

  • Forecasting sales trends

  • Ability to meet higher demand

Inventory management methods 

Inventory management methods will vary depending on business structures and sizes but will ultimately enhance operations by reducing waste and managing costs. The following are some common methods used by inventory managers.

Just in time 

Just in time (JIT) inventory management aims to maximize efficiency and lower costs by coordinating inventory arrival with the start of production. The goal of this method is to keep as little inventory on hand as possible and still meet a high production volume level for the product's demand. To have a successful JIT inventory business, you’ll need proper forecasting of needs and close relationships with dependable suppliers.


  • Reduce waste on unnecessary stock 

  • Lower costs by avoiding having unused goods

  • Avoids having more storage space for inventory than necessary

Material requirements planning 

Material requirements planning (MRP) is a supply planning system that helps manufacturing businesses determine the inventory requirements to meet a product’s demand. MRPs function based on demand and bill of materials (BOM) by examining the types of materials needed, the required amount of each material, and the manufacturing completion date. 


  • Gives business a balanced inventory

  • Allows businesses to have right amount of material for production 

  • Eliminates manual processes, like looking up past sales and existing inventory 

MRP process

The planning system starts with identifying a product’s demand and sales forecasting. This data factors into the inventory levels to ensure enough are available for production without shorting supply for another project. The next step is to schedule production based on available materials, labor, and machinery. The last step is to pinpoint issues, such as delays or low stock, and make suggestions for alternate strategies to fulfill production on time.


Economic order quantity (EOQ) is a formula used to calculate the optimal order size to meet demand and stay within budget. EOQ is useful for any business, large or small, that manages inventory. The goal is to reduce the amount of over ordering and waste, lower the cost of storage, and maximize quantity discounts offered by vendors. 

To calculate the EOQ, use this popular version of the formula that consists of the following variables:

  1. D = Demand in units (annual)

  2. S = Order cost

  3. H = Holding costs (per unit, per year)

Formula: EOQ = [2DS/H]

The EOQ calculation helps companies confidently determine the best order size for achieving the highest profitability while meeting their inventory needs.


  • Minimizes storage and holding costs

  • Helps maintain inventory levels that match customer demand

  • Provides specific numbers for how much inventory to hold 

Day of sales inventory

The day sales in inventory (DSI) is a sales monitoring and inventory tracking measurement tool. The DSI is also called the average age of inventory because it calculates how long it takes for a business to sell its inventory and considers how long the current inventory will last.

To calculate DSI, you must first determine the cost of goods sold (COGS). 

COGS = beginning inventory + purchases during a period - ending inventory

This measurement helps companies determine their profits and efficiency with inventory over a specific time period. Using COGS, the following formula calculates DSI:

DSI = (ending inventory/cost of goods sold) x 365


  • Reduce cost from overspending on inventory

  • Effectively manage cash flow

  • Prevent waste from outdated inventory

  • Helps determine the statistical data for a company’s inventory management, tracking, and sales

Inventory management technology

Technology improves inventory management by automating processes and streamlining data entry. The introduction of cloud-based systems increases the accessibility of data and a company’s ability to predict and plan for their inventory.


Supply chain management software (SCMS) is a tool used by manufacturing and production companies to automate the planning, production, and distribution of goods. All stages of production utilize the software, including:

  • Supply acquisition

  • Production

  • Distribution

  • Delivery 

The automation of these processes saves companies time and money. Software products available for SCMS vary significantly given the diversity of companies that need inventory management tools.  

Cloud-based systems

Cloud-based systems offer immediate access to a service provider without needing on-site hardware installation or data storage space. A cloud provides the following features:

  • Real-time tracking of inventory regardless of warehouse locations

  • Provides a central place to manage multiple vendor and supplier relationships

  • Accessible from anywhere in the world

Clouds aid with data analytics by providing live information, improving efficiency, and lowering costs.

Internet of things 

Internet of Things (IoT) is the network of objects that have technology embedded in them to communicate data to their network by means of the internet. Connecting items to the internet speeds the rate of data collection which is used to help improve processes and efficiency for increased profitability.  IoT functions with cloud-based software to provide real-time information.

Inventory managers use IoT with GPS and radio frequency identification (RFID) tags to track inventory as it moves between locations. This tracking relays valuable information about transportation times, environmental conditions, and storage time of inventory in warehouses.



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Data analytics

Data analytics bring meaning and organization for the data collected in the supply chain process. A digitized supply chain gives managers current information to analyze data for the following types of decision making. 

  • Descriptive applies to data for the inventory currently ordered and on-hand

  • Predictive works with forecasting and trends

  • Prescriptive helps to identify disruptions and fix problems quickly 

Analytics improve workflow, planning accuracy, and for better decisions to increase a company’s profits.


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  Key inventory management skills

If you’re interested in the inventory management field, you’ll need to have a well-rounded skill set to effectively work with people, software, inventory, and profits. Below you will see some examples of foundational skills to develop.

Inventory management and supply chain software

Inventory management and supply chain software requires a manager to have computer literacy. The software tools for inventory simplify the process of tracking stock levels. Knowing how to properly use software will help in successfully managing inventory.

Picking-packing procedures

The pick and pack process is the process of gathering items from inventory and packing items for shipment. Knowledge of these procedures are critical to a company’s order fullfilment and its bottom line. Technology is available to increase the efficiency and accuracy of this procedure. 

Mathematical and analytical skills

Mathematical and analytical skills are critical for any inventory management job. Manual tracking and tracking software require mathematical skills to efficiently and accurately keep track of inventory. Reading reports associated with inventory and forecasting trends require quick analytical skills to detect errors, calculate corrections, and make decisions.

Data analysis

Data analysis includes the measurement and monitoring of materials and goods in inventory management. Analytics provide information to make forecasts for demand, revenue, and needs. Managers will need to properly interpret and use data to determine the strengths and weaknesses of a system. Monitoring the inventory operations and making informed decisions are critical for running a profitable business.



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Leadership and communication skills

An inventory manager needs leadership and communication skills to lead, motivate, and successfully direct a team. Managers should be able to speak knowledgeably with management about inventory reports and need to communicate to maintain working relationships with suppliers and vendors.



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Roles in inventory management

From entry level as an inventory associate to leading a team as a demand manager, inventory management is a career field filled with opportunities to learn, grow, and advance.

*All salary data is sourced from Glassdoor as of February 2023

Inventory associate

Average annual base salary (US): $35,959 [1]

As an inventory associate, you will handle the inventory for your company. It will be your responsibility to receive shipments, count stock, document, and keep inventory records, including noting variances between actual inventory in stock and the numbers in the system. This job may include data entry into a computer system and operation of machinery to move or count inventory.

Inventory controller

Average annual base salary (US): $44,137 [2]

Inventory controllers deal with inventory data documentation, including developing systems to organize the information. You will be responsible for monitoring inventory levels to meet a project’s demand. You may also conduct audits, produce reports, and work with teams to ensure order fulfillment logistics run smoothly. 

Inventory analyst

Average annual base salary (US): $55,588 [3]

Inventory analysts, also called purchasing managers, manage a company’s inventory by analyzing sales statistics, trends, and forecasts. As an analyst, your job will be to optimize the efficiency and production of a business’s inventory management. You will oversee inventory tracking, accuracy, reports, and statistics for delivery to management.

Materials manager

Average annual base salary (US): $77,336 [4]

A materials manager works in a manufacturing business to oversee inventory, stock supplies, and maintain vendor relationships. With the project budget in mind, you will need to negotiate with your suppliers to get the best deal while maintaining your product’s quality. Communication and leadership skills are important because you will be responsible for the distribution of resources and will need to convey the information in purchase reports to management.

Demand manager

Average annual base salary (US): $78,320 [5]

Demand managers, also called demand planning managers, lead a team of planners who develop models for accurately drafting a company’s inventory needs. A major responsibility of the planning team is to use inventory trends and demand forecasts. The goal is to produce an accurate prediction with the available data by collaborating with management, supply chain, and sales teams. 

How to work in inventory management 

There are many opportunities to enter inventory management with different education and experience levels. Obtaining a degree, taking courses, and earning certifications can help you advance your career beyond the entry-level and into the more complex roles of analytics and management.

Earn a bachelor’s degree. 

Earning a degree in business, accounting, or management to become an inventory manager can strengthen your qualifications and enhance your resume. According to Zippia, 54 percent of managers have a bachelor’s degree, and 19 percent have an associate degree  [6].

Consider a certification. 

Whether you’re looking to pivot into this field or have just graduated college, certifications are additional qualifications employers look for in strong candidates. In 2023, two of the most sought-after certifications for inventory management include the following:  and  

  • Certified in Production and Inventory Management (CPIM): The CPIM tests your ability to use strategy for increased efficiency in operations. You must have more than two years of education after high school to take the two-part exam. This certification lasts for three years.

  • Certified Supply Chain Professional (CSCP): The CSCP is a comprehensive exam that covers the complete scope of the global supply chain, including sourcing products, logistics, risk, and technology. To take the exam, you must have a bachelor’s degree, professional supply chain experience, or prior certification. This certification lasts for five years.

Next steps 

Take the next steps by learning about inventory management with beginner courses to help you master the basics, or an advanced certification to advance your career. Consider the IIM Calcutta Supply Chain Analytics or Post Graduate Certificate in Strategic Supply Chain Management With AI Professional Certificates to move forward in your career.

Article sources


Glassdoor. "Inventory Associate Salaries, https://www.glassdoor.com/Salaries/inventory-associate-salary-SRCH_KO0,19.htm." Accessed February 10, 2023.

Written by Coursera • Updated on

This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.

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