Role of management accounting in supporting internal inventory management

The accuracy of inventory data is critical for a company’s operational efficiency; however, the relationship between management accounting and internal inventory management remains under-researched. This article addresses that gap by examining management accounting as an active tool underpinning the entire inventory cycle. The study employs systematic analysis and synthesis of established frameworks [COSO; Activity-Based Costing/Management; Theory of Constraints], industry best practices [ABC/XYZ analysis; perpetual inventory accounting; PDCA cycle] and relevant scholarly literature. A theoretical model illustrating the integration of management accounting and inventory processes is developed, demonstrating their mutual influence at every stage. The findings show that management accounting fulfills key roles throughout the inventory cycle: in planning—through ABC/XYZ analysis, inventory standard-setting and budgeting; in execution—via perpetual inventory systems integrated with RFID and barcoding; in analysis—by calculating variances and assessing financial impacts; and in adjustment—by providing optimization recommendations and performance metrics. The discussion emphasizes the evolution of inventory management from an isolated procedure into a core element of an integrated inventory control system with management accounting at its center. Practical steps are proposed, including implementation of perpetual inventory, segmental analysis and IT integration (ERP, WMS), while future research directions include development of an integration-maturity model and exploration of digital technologies (IoT, blockchain, AI). The conclusion underscores the need to invest in management accounting capabilities to enhance inventory effectiveness: such integration minimizes risks, optimizes stock levels and strengthens overall business controllability. This article will be of interest to researchers in enterprise management and practicing accountants responsible for inventory accounting.