The implications of poor inventory turnover management for companies.

Written by:Diomer Antonio Galán Rincón.

Bachelor's Degree.Public Accounting / MSc.Science of Higher Education.

Inventory management is a central point to avoid financial problems in the organizations, it is a fundamental and indispensable element in the production of the companies, since it is the most liquid current asset and it is the main impulse that moves the organizations, since it is the basis for marketing that allows them to generate profits and sustained growth.

Inventories originated with the Egyptians and other ancient peoples, who used to protect large quantities of food and supplies to be consumed and used in times of drought or calamity. This is how inventories arose, as a way to cope with periods of scarcity and with the clear knowledge of how much merchandise they had stored. In this way it would allow to assure the subsistence of the organizations in time and the development of their operative activities in an objective and correct way.

On the other hand, the inventory turnover is the way to see the assets in a tangible and perceptible way, in many occasions it is not an easy task, but it is not difficult either and although it can be a tedious exercise, it is a fundamental part in the development of the companies, the inventories represent a very large percentage of the investment on the working capital of the companies regardless of their size.

Therefore, an optimal management of inventory turnover will contribute to achieve better results in the closing of the accounting, economic and administrative cycle of companies with benefits in profits and would be maximizing the use of the organization's resources. On the contrary, if a good inventory management is not carried out, storage costs may increase and the capital required for the development of the organization's operations will increase, which will manifest itself in the future in a loss of value.

We can emphasize that effective inventory management, regardless of the size of the organization or company, is essential for rapid growt.

Maintaining an effective rotation of merchandise inventories in stop will bring with it the availability of merchandise in good condition for sale.

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1.- Cabriles G. Ysabel L. (2014). Proposal of a safety stock inventory control system to improve the purchase management of raw materials, spare parts and supplies of Bagres C.A. company.

2- Correa Yusty Julián Alberto (2010). Process of improvement in inventory turnover in Group C. Lozano Frexco S.A.S.