How to Calculate Raw Materials Inventory Value

Jonny Parker
December 13, 2023

“Inventory” usually refers to finished goods that are sold to consumers. There are, however, many different types of inventory. For example, those who produce or manufacture their own products will have something called “raw materials inventory” in their supply chain. 

This type of inventory is first in line in procurement, receiving, and storage before any of the other products in the supply chain. Raw materials are incredibly critical in the high-quality production of finished products, as without them, the production process is literally at a standstill. 

What is raw materials inventory?

Briefly put, raw materials inventory refers to materials used to create finished goods. They differ from what businesses would sell to customers directly or as-is but are essential to completing your finished goods inventory. 

After raw material procurement from a manufacturer or supplier, a business keeps them in storage until required for the manufacturing process. As the raw materials move through the manufacturing process, they become work-in-progress inventory during the process of becoming new products.  

After its completion, the final pro