Inventory represents one of the most critical assets of the business, as this will be the initial source of revenue generation. Inventory refers to the goods that are used within the manufacturing process of businesses. In the recent market, it is a must for retail businesses to successfully run inventory management, which can be considered as the backbone of every business. Yet, how many types of inventory should be included in a manufacturing process?
What is Inventory Management
It is a process of ordering, handling, storing and profiting from manufacturer to customer. A great inventory management of goods not only provides customers flawless experiences but also supports business to increase revenue as well as avoid shrinkage.
Types of Inventory
Every retailer has to handle various types of inventory management, namely:
- Raw Materials: The inventory obtains items used in the manufacturing process. These materials can be either produced or purchased from the supplier.
- Work-In-Progress (WIP) Inventory: The inventory obtains components that are not yet ready for sale, but currently in production.
- Finished Goods: The inventory obtains products that are ready for sale.
- Maintenance, Repair, and Operations (MRO) Goods: The inventory obtains items that are used within the manufacture of products. These items are purchased from the supplier and accounted for in financial records. Items in this inventory can be:
- Production and repair tools
- Cleaning supplies
- Computer systems
- Uniform and safety equipment
- Packing Materials: The inventory obtains materials used to protect and preserve goods during, or while shipping to customers. Items in this inventory can be:
- Bubble wrap
- Packings chips
What is Inventory Control?
Inventory Control allows the system to notify managers when there is any shortage of stock or exceeds. There are several types of Inventory Methods according to the companies and businesses.
Types of inventory methods and techniques
- Periodic Inventory System: The inventory system is recorded manually over a period of time on a scheduled basis.
- Perpetual Inventory System: The inventory system is updated continuously, which saves a lot of time and money, via scanning barcodes or software systems.
- Just in Time Inventory System: Only little inventory is kept on hand, in case retailers need them to manufacture, it’s like just-in-time production.
- Barcode Inventory System: Barcode technology is used rather than manual process.
- Radio Frequency Identification Inventory System: This system uses active and passive technology to manage inventory processes.
What is an Inventory Management System?
Inventory Management System is a tool or software, that tracks different types of inventory across the supply chains. It optimizes the entire journey of the product from order placement to transit till it reaches the customer.
There are different inventory management systems
- Warehouse Inventory Management System (WIMS)
Logistics companies use this system to manage warehouse options.
- Manufacturing Inventory Management System (MIMS)
This system is used to store raw materials and finished products. It helps factory managers to balance the different types of inventory, for a smooth and continuous production process.
- Retail Inventory Management System (RIMS)
It is the most important system for every retail company, as it focuses on planning and prevention of stockout or overstock.
Inventory Management Systems should be the first priority for retailers and manufacturers regardless of the size of their business. There are numerous inventory systems and strategies for the types of inventory to keep your company running things, efficiently and accurately.
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