Understanding the 4 Types of Inventory
What are the 4 types of inventory?
In today’s fast-paced supply chain, it’s crucial for companies to efficiently manage their inventory. Start by understanding the four types of inventory in just 58 seconds.
Efficient inventory management is a must for today’s supply chain. The worldwide cost of inventory distribution tops $1.9 Trillion annually. That’s a lot of SKUs!
Knowing the four types of inventory most commonly found in enterprise manufacturing and distribution is critical. They are:
- Raw Materials: Components used to create a finished product.
- Work-in-Progress (WIP) Inventory): Partially completed items.
- Finished Goods: Ready for sale to customers.
- Safety Stock: To cover unpredictable market fluctuations.
Other types of inventory exist, such as MRO inventory and consignment inventory, but these types are only used in specific situations. Knowing the 4 main types of inventory and how to manage them is essential.
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