What Is Inventory? Types and Examples Explained

What Is Inventory?

Inventory is everything a business has on hand to sell or use in making products. Think of it as your business’s “stuff” – all the goods, materials, and products you need to keep your operation running. 🏭

Fun Fact: The word “inventory” comes from the Latin “inventarium,” meaning “a list of what is found.”

What Does Inventory Include?

Items ready for sale
Materials used in production
Work-in-progress goods
Supplies for operations

Types of Inventory

1. Raw Materials 🌱

Basic materials used to make products. Examples include:

Fabric for clothing
Wood for furniture
Metal for machinery

2. Work-in-Progress (WIP) ⚙️

Partially completed products, including:

Items being assembled
Products waiting for final touches
Materials in the production line

3. Finished Goods 🎁

Completed products ready for sale, such as:

Items in warehouses
Products on store shelves
Ready-to-ship merchandise

4. MRO (Maintenance, Repair, and Operations) Supplies 🔧

Supporting materials for business operations, including:

Maintenance materials
Repair parts
Operating supplies
Tools and equipment

5. Safety Stock 🛡️

Extra inventory held for emergencies, such as:

Buffer against shortages
Protection from supply chain issues
Insurance against unexpected demand

Inventory