11 Types of Inventory that Every Business Owner should Know


Inventory is an essential current asset that helps keep your production running and meet the market demands effortlessly. It can be either unfinished or final products that are awaiting sale.

While this was a strict definition, there are also other inventory management kinds that exist only to support business operations. Hence, there are around 11 different inventories that can aid businesses in their productivity and growth. 

Types of inventory you must know as a business owner:

Businesses are of three kinds primarily – manufacture, merchandise and services. While a company providing services does not need any stock, the other two are mainly dependent on inventories. 

For example, a merchandising business maintains inventory to sell it on a later date. As for manufacturing companies, their stock comprises many different types which are maintained with a comprehensive inventory management plan.

Goods in the form of raw material-

Every manufacturing business needs raw materials to manufacture its finished products. Hence, it’s important to maintain a sufficient stock of the required raw materials to keep their business up and running.  

Keeping the desired inventory of raw materials also ensures it does not interfere with product planning.

A stock of WIP or work-in-progress-

One of the essential inventory management techniques is work-in-progress or WIP. It primarily comprises of raw materials that have been processed partially. They are also known as semi-finished goods. Though these are half-processed, the goods need to be maintained to keep the production process going. Businesses should keep their WIP at the lowest because selling them at this stage is not possible.

Finished goods stock-

An inventory of finished goods consists of final products for sale. For a company, it is essential to maintain finished goods unless it manufactures specified on-order products.

Supply for operations, maintenance and repair-

Also known as consumables, these types of inventory support day to day business operations. Depending on the type of business you run, this stock may be vivid.

A stock of packing materials-

This stock ensures that the packaging of products for sale or transport is not interrupted. It mainly comprises inventory of primary and secondary packaging of products like packing containers, foil bags, crates, barrels, etc.

Buffer stock-

Businesses maintain a buffer stock to meet any contingent requirement. It is a stock of goods kept over and above general inventories for safety. Hence, it’s also called safety stock.

Goods-in-transit-

Sometimes, sending products from one point to the other takes weeks or months because destinations are far away. Such items that remain in the stage of transportation are called goods in transit.

Anticipatory stock-

A business maintains anticipatory stock when it expects the growth of a remarkable market trend. For example – retailers need an anticipatory inventory before shopping seasons begin to meet the high demands. For manufacturers, this stock is essential to maintain consistency in its operations during periods of low demand for their products.

Cycle stock-

Cycle stock is an inventory maintained to bring a balance between the holding cost and the carrying cost of the existing stock. Cycle inventory affects the financial statements of a business.

Decoupling stock-

In a set-up where the output of one process becomes the input for another, a mismatch of requirement and fulfilment may hamper the two processes. A business maintains decoupling stocks to ensure smooth transit from one process to another.

Merchandise inventory-

A merchandise inventory only consists of goods that are stocked up for sale at a point in the future. Businesses that specifically deal in the purchase and sale of merchandise maintain it.

So, these are the 11 different types of inventory whose purposes state their importance.

Well, maintaining inventory also requires significant investment. If you are in a stringent budget, you can easily cover such financial needs with loans from lending institutions like Bajaj Finserv. Besides providing attractive features, they also come with pre-approved offers on business loans, personal loans, home loans and other such financial products. Pre-approved offers ensure that the process to get financing is easier, simple and less time-consuming. Check your pre-approved offer by providing necessary details only.

Hence, maintain the necessary stock for your business at all times with financing from reputed lenders.

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