Whenever it comes to having inventory for your business, there are four types that you can have. It doesn’t matter what type of product you are working with, these four inventory types are always a constant. Each one has different uses, and you need to know about them to run a successful business.
The 4 types of inventory that every business has includes:
• Raw Materials
• Unfinished Products
• In-Transit Inventory
• Cycle Inventory
Raw materials are any materials that haven’t been manufactured into finished goods. Most warehouses or distribution centers tend to store the raw materials before they are shipped off to be turned into finished products.
Raw materials make up an important part of your inventory, and you should always make sure your business has enough of them. As well as the supplies to package and transport the materials to get them manufactured.
Unfinished products can be any product that is fully made, but not ready to sell to your customers. Products can be unfinished for a number of reasons, but you want to keep your stock of unfinished products small and always know when they will be finished and ready for you to sell.
This inventory encompasses any items that your company owns, but that you don’t have access too. This could be because the items are inside a truck, or being moved from location to location. You’ll need to keep track of the in-transit inventory to make sure everything gets where it needs to go.
By making sure that all your in-transit inventories are accounted for, you can get a good idea of where your items are, and where they are going.
Finally, Cycle inventory goes through the cycle. It is typically a finished product that will go through the chain and towards customers quickly. It all depends on speed and good timing, but if you have a lot of cycle inventory then you have a lot of profits coming in.
However, for all its speed it can be unpredictable at times. The demand for your goods can always change, and it can sometimes be hard to monitor the supply chain. So always treat cycle inventory as a double-edged sword
Managing Your Inventory
If you are a bigger company, then managing all that inventory can become a logistical nightmare. Some of the best ways to manage each of the four inventory types can include using barcodes and feeding all the information into a central computer.
Additionally, having communication with your drivers, workers, and the people on the floor who are spending a lot of time with the inventory can be useful. They will certainly see things that you will not see, and they might be able to help you out.
Finally, you can also look at a Third Party Logistics company to help you manage each type of inventory. Our teams at American Manufacturing Solutions can help you figure out everything, so you can handle all your inventory and get it to your consumers. Contact Us Today