Even though most people realize that inventory is a necessary aspect of their day-to-day, few people actually take a moment and think about the different types of inventory. Especially if you go into a company and ask them about their inventory management, they may just suggest, “This is the way it has always been.” By looking at the different types of inventory, we are able to have a better understanding of how we can optimize our actual inventory process.
The perishable inventory
This is the type of value that is eventually rendered worthless, it means that over time, it loses its value for your company. This could be a ticket that goes unsold, a bouquet of flowers that withers, or milk that turns sour. In short, we have to manage our inventory to ensure that we sell this product before it expires.
The perishable inventory is commonly associated with grocery stores, but it works with other industries as well. Examples of a perishable inventory include unsold hotel rooms or airline tickets. Once that plane leaves, the airline is unable to get someone to buy that particular ticket.
In order to minimize waste and keep track of their goods, most businesses use an inventory management system in order to prevent their inventory from losing value. One of the best examples are the first-in-first-out inventory tracking systems that we see in grocery stores. This rotates the goods to ensure that older goods (that have pending expiration dates) are pushed to the front. We cannot get away from using perishable inventory.
The non-perishable inventory
When talking about non-perishable inventory, it is important to remember that this is not merely referencing anything that does not ‘go bad’. Even though you might consider a computer to be non-perishable, it is doubtful that the demand is going to be very high for a computer that was innovative in 2007. Just because a dress does not ‘go bad’ with age certainly does not mean that the demand is going to be the same in a few years (or a few months for that matter).
When talking about the service industry, most people only think in intangibles. Most people only think of inventory as a certain amount of tangible goods. However, inventory can go beyond that. It may not be tangible and it is something that may not be a ‘real good’. Some examples might include
- Inventory in your sales office may be the people who are waiting to be serviced. In this context, increasing the flow of sales assistants reduces the actual inventory (the customers who are waiting), and it leads to us servicing people in a timelier manner. While you would not want to reduce someone to ‘just being inventory’, it is essential that you do have a specific grasp on the fact that service inventory goes beyond the tangible goods.
- Oftentimes the context here is not tangible. It is not a ‘real good’ that you point to and say, “That is my good.” For example, empty rooms in a hotel could be considered inventory, but we use far more creative labels such as “occupancy rate” and “unused capacity.” In that specific situation, there is inventory that does not have a demand at that point.
It should be obvious that these different types of inventory all have very distinct methods of inventory management. Without the proper management of the specific inventory style, you are simply unable to optimize your inventory management fully. If you want to know more about how to optimize your inventory, we have professionals who can help you with that.
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