Businesses create value by supplying their products or services to satisfy customer demand that involves numerous activities and processes across the organization. Operations managers deal with a major issue in any business – how work gets done: setting up processes, uncovering the biggest bottlenecks, fine-tuning processes to save time and money, managing resources for smooth production of value. Inventory Control Management is critical in operations as inventory is a current asset to a firm. Carrying inventory comes with a certain degree of risk. This risk is a component of the cost of carrying inventory.

When a company stocks items in the warehouse, there is always the risk that the items may fall in real value during the period they are stored. If a company stored parts for their work centres or equipment, the parts in the warehouse could be worth far less than the price that was originally paid and any losses, excess, obsolete and miss-managed inventory means a reduction in the company equity.