What is inventory? Inventory is everything you possess in all of your warehouses, stores, and other locations. It includes not only the finished products you intend to sell, but also two other key types of items that are necessary to keep your business running.
Here are the three types of inventory:
Parts
Parts can be anything from nuts and bolts to flour and sugar. They are any items that can be used to create a finished good, but they will not be sold in their current form. Basically, parts are the raw materials you need in order to make products, so it’s important to keep track of them. But they must be changed or used in some manner to make them more valuable to customers. After all, a computer company wouldn’t ship a motherboard, hard drive, and other equipment to customers and expect them to assemble a computer themselves.Products
Products are the end result of putting together a number of parts. Products can be customizable, so you can add different parts depending on customers’ preferences. They come in all shapes and sizes, from baked goods and frozen ice cream to expensive electronics and vehicles. Obviously, different products have different shelf lives and require varying amounts of storage space. These are all factors that need to be taken into account when deciding how many products to have on hand at any given time.
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