Types and classification of existing inventories

Updated: January 2026

 What are the different types of inventories available? Which are the most suitable to meet the specific needs of your company? ... In Xamai, we will help you resolve these doubts.

 

Various types of inventories allow companies to collect and categorize their assets and products using different criteria. Through inventory monitoring, it is possible to identify errors or logistical inconveniences, such as discrepancies in the number of references, defects in the labels, or errors in the selection, among others.

What are the different types of inventories available? Which are the most suitable to meet the specific needs of your company? ... At Xamai, we will help you resolve these and other doubts regarding the choice of the most appropriate inventory according to the categories of your business.

What is inventory in a company?

Inventory or stock in a company refers to the sum of tangible goods that the organization maintains in its possession with the purpose of selling them or using them in the production process. These assets include raw materials, work-in-progress, and finished products in the case of manufacturing companies, or merchandise ready for sale in the case of retail companies.

Inventory plays a fundamental role in business management, as it represents a significant investment of capital and directly affects profitability and operational efficiency. Controlling and optimizing inventory is essential to ensure that a company can meet customer demand, minimize storage costs, and avoid product obsolescence.

How do you know if your company is managing inventory well?

Knowing whether your company is adequately managing its inventory is essential to maintain an efficient workflow and avoid financial losses. Here are some key guidelines and metrics to evaluate your company's inventory management:

 

1. Adequate inventory levels: Having too much inventory can increase storage costs and the risk of obsolescence, while having too little can lead to product shortages and loss of sales. Calculate inventory turnover (the number of times inventory is renewed in a given period) and compare it to the industry to determine if your levels are appropriate.

    

2. Stockout rate: This indicator shows how often you run out of stock of products. The lower, the better. A high stockout rate could mean that you are not restocking your inventory in time.

    

3. Average inventory holding time:: This indicator measures how long a product remains in the warehouse before being sold. A prolonged time can be costly due to storage costs. Calculate this indicator and compare it to the expected lifecycle of your products.

    

4. Accuracy in tracking inventory: Accurately track inventory inflows and outflows to avoid discrepancies. Implementing inventory management systems (such as warehouse management software) can help improve accuracy.

    

5. Cost of working capital: This cost refers to the amount of capital invested in inventory. Reducing this cost to a minimum without affecting the ability to meet demand is essential.

    

6. Storage cost:: Calculate the costs associated with storage, such as space rental, energy, insurance, and labor. These costs should be kept under control.

    

7. Product rotation per SKU: Analyze which products have a high turnover and which have a slower turnover. This can help you adjust your purchases and marketing strategies.

    

8. Order fulfillment and customer satisfaction: Make sure your customers receive their orders in a timely manner and in satisfactory conditions. Excessive complaints or returns may be an indicator of problems in inventory management.

    

9. Orders on hold: Keep a record of pending orders and the reasons behind them. Frequent delays may be a sign of problems in the supply chain or inventory management.

    

10. ABC Analysis: Classify your products into categories A, B, and C based on their importance to your business. Category A products are the most important and should receive special attention in inventory management.

     

11. Demand forecasting: Use historical data and market trends to predict future demand. This will help you plan purchases more accurately.

     

12. Regular review and adjustment: Inventory management is not static; it must be reviewed and adjusted regularly to adapt to changing market and company conditions.

Good inventory management requires balance. You must maintain enough inventory to meet demand without incurring unnecessary costs. Using software tools and data analysis can facilitate this process and allow you to make more informed decisions.
It is also crucial to continuously monitor your inventory metrics and make adjustments when necessary to optimize your supply chain and keep your customers satisfied.

Types of inventory

There are several types of inventory that companies use to manage their assets and products. These inventories can vary depending on the industry and type of business, but here are some of the most common types:

• Raw Materials Inventory: This type of inventory includes the basic materials that a company uses to manufacture its products. For example, a furniture factory would have an inventory of wood, nails, screws, and other materials needed for manufacturing.

   

• Work-in-Process Inventory: It is composed of the products that are in the process of being manufactured but have not yet been completed. This includes semi-finished products and materials that are in the various stages of production.

   

• Finished Goods Inventory: These are the products that are ready to be sold and delivered to customers. For example, finished automobiles in a car factory or electronic devices in an electronics warehouse.

   

• Maintenance, Repair, and Operations (MRO) Inventory: Includes supplies and spare parts that are necessary for the continuous operation of a company, but are not used directly in production. Examples are tools, lubricants, replacement parts, and office supplies.

   

• Inventory in TransitThese are products that are in motion between different locations. For example, goods being shipped from a warehouse to a retail store.

   

• Safety Inventory: Also known as buffer inventory, it is maintained as an additional cushion to cover uncertainty in demand or delivery times. It helps to avoid stockout problems.

   

• Obsolete Inventory: These are products that have become obsolete or are no longer sold. Companies often try to reduce this type of inventory, as it does not generate revenue and can occupy valuable space.

   

• Cycle Inventory: Refers to the practice of regularly counting a portion of the items in inventory instead of counting all items at once. This is generally done in cycles, and the goal is to maintain continuous inventory control.

   

• Perpetual Inventory: It is a real-time tracking system where each time an item is purchased or sold, the inventory record is automatically updated. This allows for precise and constant control.

   

• Distribution Inventory: Refers to the products that a company has shipped to its distributors or retailers, but have not yet been sold to end customers.

   

• Consumable InventoryIncludes items for internal use within a company, such as office supplies, cleaning products, and other consumable items.

Examples and practical cases of inventories

To make the use of inventories much clearer, let's remember that they fulfill a primary function within control, management, and decision-making. Let's look at the most important examples in practice:

A very common example is raw materials inventory In a manufacturing industry, recording materials, supplies, and goods that enter the production process. This allows us to ensure that the production line does not stop due to shortages and, in this way, we can meet demand and maintain balance in the supply chain.

Another practical case is finished products inventory, typical in sales businesses or e-commerce, where, although the products are already available for sale, they must be kept organized by criteria such as classification, labels, prices, or rotation frequency. Models such as physical inventory and online inventory fall into this category. Constant updating avoids losses, discrepancies, or obsolete stock that affect productivity and profits.

We also find examples such as inventory in transit, relevant in logistics and distribution as it includes goods going from the supplier to the warehouse or the end consumer. Although they are not physically available, they are part of the organization's assets and are therefore considered.

And finally, in models such as dropshipping, inventory control changes. The business does not store products, but it does need clear information about availability, orders, and the manufacturer's delivery times.

 

 

SAP as part of inventory management

Managing an inventory using SAP (Systems, Applications, and Products in Data Processing) is a critical task for many companies, as efficient inventory control can improve operational efficiency and reduce costs. Here is a brief explanation of how this process is carried out:

Implementation of SAP:

First, the company must implement an SAP inventory management module, such as SAP Inventory Management. This involves installing the software and customizing it according to the company's specific needs.

Creation of material master:

All products and materials are entered into the system, creating a material master. This includes information such as descriptions, units of measure, suppliers, etc.

Receiving goods:

When new products arrive at the warehouse, employees record the receipt in the SAP system. This automatically updates the inventory and allows for real-time tracking of stock levels.

Management of locations:

SAP allows the assignment of specific locations for each product in the warehouse. This facilitates the quick and accurate location of products, minimizing search time.

Control de movimientos:

Todas las transferencias internas, ventas o devoluciones se registran en SAP. Esto garantiza que el inventario se mantenga actualizado y se puedan rastrear todas las transacciones.

Control de existencias mínimas:

Se establecen niveles de inventario mínimo para evitar agotamientos. Cuando el inventario alcanza este punto, SAP puede generar automáticamente pedidos de reposición.

Reportes y análisis:

SAP ofrece una variedad de herramientas de generación de informes y análisis. Los informes pueden proporcionar información sobre la rotación de inventario, el valor del inventario, tendencias de demanda, entre otros.

Auditoría y cumplimiento:

SAP facilita la realización de auditorías de inventario y garantiza el cumplimiento de las políticas internas y regulaciones externas.

Integración con otros procesos:

SAP se integra con otros módulos empresariales, como ventas y compras, lo que permite una gestión más eficiente de la cadena de suministro.

Optimización continua:

A través del análisis de datos y la identificación de tendencias, SAP ayuda a las empresas a optimizar sus niveles de inventario y mejorar la planificación de la demanda.

La gestión de inventario con SAP implica la integración de datos en tiempo real, automatización de procesos y análisis continuo para garantizar una gestión eficiente y rentable de los recursos.

Si tienes alguna pregunta acerca de la clasificación de inventarios o el mejor método para tu negocio y la forma en la que Xamai puede ayudarte, no dudes en contactarnos.