Inventory flow represents the system companies use to move consumer products or raw materials through the company. Manufacturers, restaurants, retail stores, distribution centers and grocery stores are just a few examples of companies that have inventory flow. These companies often develop a set of procedures to consistently use when managing inventory. Business owners and operational managers are usually responsible for designing the inventory system. Larger business organizations usually have a more intense inventory management process due to the size and scope of their business operations.
Inventory flow begins with purchasing raw materials or consumer products from a supplier. Manufacturing companies often need raw materials to produce valuable consumer products. Raw materials include natural resources such as timber, land and minerals. Most manufacturers produce consumer products and ship these items to distributors. Distributors receive inventory products and hold them in anticipation for retail store orders. Most retailers begin their inventory management process by ordering goods from distributors. Accounting plays an important role in the company’s inventory management system