The most important inventory types in logistics 

Inventory management is a crucial point in a company's supply chain and logistics. 

Thanks to inventory, it's possible to detect errors or logistic issues such as label discrepancies, discrepancies in reference numbers, while ensuring business efficiency and profitability. 

If you're interested in optimizing inventory management and improving the supply chain, keep reading to learn everything you need to know about the most relevant inventory types in logistics. 

What is the importance of inventories? 

Inventories are key in all companies because they allow for precise control of the goods and materials used to carry out business operations. Additionally, there are other reasons you should consider: 

•  They ensure supply. Inventories ensure that businesses have enough materials to produce their products or services. By maintaining adequate inventory, you avoid production delays and ensure compliance with each customer's demands. 
• They prevent shortages. When there is an inventory shortage, you risk losing customers or sales, which can have a significant impact on the company's profitability. 
• They facilitate production planning and supply chain management. By having a clear view of available materials, businesses can efficiently plan production and minimize storage costs. 
• They improve customer satisfaction. This aspect is important in retail and service industries, where product availability is essential for customer satisfaction. 

How are inventories classified according to logistics? 

There are different types of inventory classified according to different variables:

Inventory according to the fiscal period 

Refers to the period in which inventory is conducted in relation to the company's fiscal year:

• Initial. It is carried out at the beginning of the accounting period and before the acquisition of additional inventory.
• Final. It occurs at the close of the fiscal year or at the end of each year and aims to determine the resources or goods acquired after all commercial operations have been completed. It also defines the initial inventory of the next fiscal period.

Inventory according to periodicity 

• Annual. It is recorded once a year and serves to confirm the data reflected in the accounting file.
• Periodic. It is carried out at different times of the year and includes the counting of all stored references.
• Cyclic or rotating. It also occurs regularly during the year. It differs from periodic inventory by counting some references over others based on their value, turnover, or expiration date.
• Permanent or perpetual. It is continuously carried out because it is responsible for recording each entry and exit of items. It reflects the available stock in real-time. 

Inventory according to functionality 

• In transit. It accounts for products and materials that are circulating to the warehouse or have already been ordered from suppliers. 
• Safety or reserve. Checks the products and raw materials that the business has to assume possible failures in the production process, supplier delays, or increased demand. This inventory represents the company's safety stock and its sole purpose is to avoid crises. 
• Forecast or seasonal. Gathers those stored references that serve to meet future demands. Predictability is what sets it apart from safety inventories, which are intended to cover unexpected contingencies. 
• Decoupling. It is used to differentiate from the inventory needed for two manufacturing processes with different production rates. So that each one operates independently and with a delimited batch of merchandise. 

Inventory according to product type 

• Raw materials. Its purpose is to know the available stock of raw materials used in product manufacturing. 
• Factory supplies. It accounts for materials used in production that are difficult to quantify accurately, such as nuts. 
• Products in the manufacturing process. It reflects semi-finished products that are not yet part of the production plan. 
• Finished products. It combines finished products available for sale. 
• Goods. These are goods purchased for resale without any modifications. 

Other types of inventory 

• On consignment. This type of inventory is found at the point of sale but still belongs to the supplier until it is sold to the final customer. 
• Online. It consists of references that are about to enter the production line. 
• In quarantine. It comprises those references that must be stored for a period of time before they can be used. 

How is inventory planned? 

Inventory planning involves a series of steps aimed at ensuring that inventory levels are adequate to meet market demand and minimize costs associated with product storage: 

• Analyze demand. It is important to know market demand and how it changes over time. This can help predict the amount of inventory needed at different times of the year. 
• Set an objective. Once there is a clear understanding of demand, a target inventory level can be defined to meet requirements without exceeding storage capacity. 
• Conduct an inventory audit. It is necessary to have a clear idea of the products in inventory, as well as their value. This involves coding merchandise to know exactly what products you have and how many. This will allow you to collect a large amount of data that you can then use intelligently to handle inventory more efficiently. For example, you can know which products sell more and in what seasons. 
• Determine the inventory turnover rate. This is equal to the frequency with which products are sold and replaced. Knowing this rate allows you to determine how much inventory will be needed to maintain desired levels.

To comply with this aspect, it is important to have good inventory organization because the idea is to avoid conflicts later on if the data has not been saved. It is also interesting to make a backup of all the information collected about the inventory.

It is better if it is done as the data is entered into the system. 

• Design a replenishment plan. Once the inventory turnover rate and expected demand are known, it is relevant to establish a plan to replenish inventory. This includes scheduling deliveries or placing purchase orders at specific times. 

 
To do this, you need to have a methodology that allows you to organize inventory and know the process that will be followed to fulfill it. A recommendation is to use the First-In First-Out (FIFO) principle, which serves to place perishable goods in the area closest to the shipping points and allocate the rest of the products to the back of the warehouse. 

Another effective method is the use of the ABC system, which consists of assigning a letter to each type of product according to the attention it requires. For example, merchandise A are those that have high value, but low sales, while Bs are the opposite. 

• Monitor and adjust inventory. It is important to regularly monitor inventory levels to ensure that the established objective is being met. If it is too low or too high, adjustments to the replenishment plan need to be made. 

As you can see, different types of inventories ultimately aim to optimize storage and stock management to ensure the best possible service. Therefore, the main logistical challenge for all companies is choosing the inventory type that helps maximize efficiency.