6 common commercial uses of the inventory

Inventory management: 6 common commercial uses of the inventory

There are inventories because their items must be available to carry out a process how to meet customer orders or make a product batch. One way to obtain a better appreciation of why inventory is a necessity for companies everywhere is to examine their different uses.

6 types of inventory

1. Security inventory or shock absorber

The security inventory provides a shock absorber against uncertainty. There is often an uncertainty of the demand for products. Without a security inventory, there would be many lost opportunities when unexpected demand peaks are not met due to insufficient stock. Supply uncertainties are another reason to maintain security inventory. A supplier may not comply with any number of reasons. For example, the transport of products could be delayed due to climatic problems or a traffic accident.

2. Inventory of raw materials

If you are a manufacturer or practice a delayed differentiation to minimize your safety stock of finished products, you will have an inventory of raw materials. Raw materials could be sub -coup, subcomponents or possibly elementary things such as minerals, metals and wood. They are the ‘things’ necessary to make your finished product. This allows you to assemble or manufacture your products without the delay of acquiring your raw materials. The appropriate actions control to determine inventory levels in real time is one of the recommended best practices.

3. Inventory of anticipation

When a company anticipates an event that will require more inventory than usual, it acquires an inventory of anticipation. For example, a company can anticipate greater demand because a competitor will disappear and develop an inventory for that event. The inventory can be increased because a supplier is out of business or because the supplier plans to increase its prices in the future.

4. Cycle inventory

The cycle inventory covers normal demand. Lot suppliers are ordered, whose size is determined by factors such as delivery deadlines, bulk prices, shipping costs and orders processing costs. When the lot is used and replaced again, it has ‘delivered’. Companies seek to maximize inventory billing while minimizing associated costs. The cycle inventory does not include the security inventory that covers “abnormal” demand or supply problems.

5. Inventory of finished products

The inventory of finished products is the product you have on hand so that you can immediately respond to customer orders without orders delays or manufacture the products requested in the order. Its purpose is to maintain good levels of customer satisfaction.

6. DECAMPLACATION INVENTORY

Finished products are often produced by the flow of materials through a chain of operations or manufacturing centers. Each operation processes the material in some way before the material proceeds to the following operation center. The decoupling inventory allows the operations centers to work independently. In this way, temporary bottlenecks do not affect downstream operations.

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