Continuing on from our last lesson, in this post we look at the basic types of inventory out there.
Basic Types of Inventory
For retailers, warehouse distributors and wholesalers it’s important to understand the types of inventory used in the supply chain. Below are four primary inventory types you should know, plus other inventory that are important to business.
Raw Materials
This is inventory that can be made into products. These are usually unprocessed with the intention they will be made into finished products.
Finished goods
Inventory that is ready for people (consumers) to purchase.
Work in progress (WIP)
This is inventory that is in the process of being made into a product.
MRO (Maintenance, repair and overhaul)
Inventory that is not part of the production line, but contributes toward the finished good such as consumables or computers.
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Other Type of Inventory
Transit Inventory
This is inventory that is in the process of being delivered from one place to another.
Anticipated Inventory
This is inventory that is kept in excess of current demand. This inventory is kept in anticipation that it will be needed in the future, when times are busy i.e. Christmas.
Buffer Inventory
This is extra inventory that is stored for uncertainties in demand and supply. Having too much “safety” or “buffer” inventory may mean increased costs for storage or “holding” this stock.
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