What is inventory?

Inventory refers to the goods, materials, and products a business holds for the purpose of resale, manufacturing, or fulfillment. It includes raw materials, work-in-progress (WIP) items, and finished goods. Inventory is a key business asset and directly impacts cash flow, supply chain efficiency, and customer satisfaction.

In ecommerce and print-on-demand, managing inventory is essential for meeting customer demand while minimizing storage costs, order delays, and stockouts.

Types of inventory:

• Raw materials – Basic components used in the production process.
  
  
• Work-in-progress (WIP) – Partially finished products still undergoing production.
  
  
• Finished goods – Products ready for sale or shipping to customers.
  
  
• Safety stock – Extra inventory held as a buffer against unexpected demand or supply issues.
  
  
• Excess inventory – Overstock that may lead to storage costs and potential losses.
  
  
• Operating supplies – Non-product materials like office or maintenance supplies, relevant for certain industries.
  
  

Each type plays a unique role in production and fulfillment. Proper classification helps with accurate tracking and financial reporting.

What is inventory management?

Inventory management is the process of tracking, controlling, and optimizing stock levels to ensure smooth operations and cost efficiency. It involves:

• Inventory tracking – Monitoring inventory quantities in real-time
  
  
• Demand forecasting – Predicting future sales to plan stock levels
  
  
• Inventory turnover – Measuring how often inventory is sold and replaced
  
  
• Inventory counts – Regular audits to maintain data accuracy
  
  
• Decoupling inventory – Creating flexibility in the supply chain by separating stages of production
  
  
• Order fulfillment – Ensuring the right products are available when customers place orders
  
  

For print-on-demand businesses, inventory management is often virtual, as products are only created after a customer order is placed. This eliminates storage costs but still requires strong systems for supplier coordination and delivery tracking.

Why is inventory important?

Efficient inventory management helps businesses:

• Avoid overstocking or stockouts
  
  
• Reduce storage and holding costs
  
  
• Improve order accuracy and customer satisfaction
  
  
• Maintain healthy cash flow
  
  
• Optimize supply chain operations
  
  

For small businesses and ecommerce sellers, tools that offer real-time tracking and forecasting are essential to scale profitably.

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