One of the oldest areas of decision-making in production which managers deal with is scientific inventory management. Inventories (supplies) have a big role in business operations of a company. Inventory management is among the most important functions of production management because inventories require large capital and affect the delivery of products to customers. Inventory management affects all business functions, especially production, marketing and finance. Inventories ensure service to consumers which is of vital interest for marketing. Finance department deals with the overall financial situation of the organization, including with assets that are allocated in inventories, and production needs inventories in order to secure the easy flow of production and its efficiency. Today is a hard to imagine any service or production oriented company to operate without inventories. Goal of every corporation is to achieve low costs of production by optimal amount of inventories. There are several systems of inventory management which are used for efficient operations in production. The purpose of this final paper is to explain different systems of inventory management, the very concept of inventories, as well as types of inventories. Besides, the purpose is to show how company Podravka d.d., which operates in food and pharmacy industry, manages its inventories and produces high quality products respecting the principles of sustainable development. The company is headquartered in Koprivnica, and the most famous product of the Podravka is Vegeta.