Raw materials inventory consists of the basic components and substances used in the manufacturing process to produce finished goods. Effective management of raw materials is essential to ensure production continuity while minimizing excess stock that ties up capital and storage space.Balancing raw materials inventory requires accurate demand forecasting, supplier coordination, and consideration of lead times. Overstocking raw materials increases carrying costs and risk of obsolescence, while understocking can cause production delays and missed delivery deadlines. Strategic inventory policies help maintain optimal raw materials levels aligned with production schedules.
