Inventory is one of the most important assets of the company and one of the main sources of revenue and subsequent profits for the shareholders of the company, and there are 4 basic types of inventory types, and therefore there is great importance to inventory management, and in order to control the levels of these types, we rely on managing a warehouse, which is one of the most important methods of enterprise management Which needs strict control so as not to be exposed to any theft, in addition to the need for periodic inventory to ensure that the stock is intact and there is no shortage in the stores, and in this article we will show you what is meant by inventory and what are the most important inventory types as well as the importance of inventory management and its definition.
What Is Inventory?
Before talking about the most important inventory types, we will first need to know what is meant by inventory, which is defined as a group of finished goods, semi-finished goods, or raw goods that are used in production and maintained by the company.
Inventory is placed under a company’s current assets on its balance sheet, and inventory is a barrier between manufacturing and fulfilling orders.
We can define inventory as the goods available for sale, and the raw materials used; to produce goods for sale, which is one of the sources used to generate revenue and profits.
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Types of Inventory
There are many inventory types, and each of them is an important and vital component of the company, and the following is an explanation of the most important 4 inventory types:
1. Raw Materials
They are unprocessed materials that are used to produce a specific commodity, such as aluminum and steel that enters an industry, and flour for the production of bread, among other examples.
Raw materials as one of the inventory types include materials that the company uses as a starting point in its production processes.
2. Work-In-Progress (WIP)
Work-In-Progress inventory is one of the inventory types which partly finished goods that are waiting to be completed or resold, like semi-manufactured aircraft.
It includes unfinished products and the volume of inventory in the process depends on the volume of production operations.
3. Finished Goods
The product that the company has finished producing and has become a finished commodity, such as equipment, clothes, and the like.
Finished Goods as one of the inventory types Includes products that have been completed and are ready to be shipped and sold.
4. Maintenance, repair & operations (MRO)
It is the fourth inventory type and includes all consumables and equipment needed for manufacturing or maintenance, but they are not considered part of the inventory of goods
Inventory Management Trends is one of the most important methods of enterprise management, which needs oversight to ensure that no theft is exposed, as well as ensuring that the stock is sound and that there is no shortage in the stores.
There are a number of modern systems that work on effective inventory management, and they are specialized systems responsible for all operations related to inventory management operations.
Inventory must be managed effectively to ensure that stock quantities are maintained properly and the quality of products is maintained until they reach the consumer.
In inventory management, all processes related to the receipt and delivery of goods, and storage levels are tracked according to the type of inventory.
In addition to tracking and controlling the incoming and outgoing according to the documents and invoices that facilitate the tracking of all daily procedures.
The inventory management system also allows the ability to review the operations that occurred on the stock from selling, importing, or receiving new quantities in the past.
There are also many positive effects that can accrue to all parties in the environment of business operations when using inventory management systems.