Inventory and raw materials

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Inventory and raw materials

Inventory can be broken down into four categories -- raw materials, finished product, work in process and supplies.

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Raw materials are the items that are converted into the finished product during the manufacturing process. Finished goods are the items produced during the manufacturing process. Finished goods are ready for shipment. Work in process is inventory that is in the process of being manufactured.

The item has been pulled from the raw materials inventory, but has not yet been placed into finished goods inventory. Supplies are the items that are consumed during the everyday operations of the business. Supplies include shop rags, bearings, oils, lubricants and office supplies.

Keeping all of these items secure from damage and theft is imperative in order to meet all shipment deadlines and to keep inventory and production costs down. Raw Materials Inventory Security Raw materials are essential for a firm to produce finished goods inventory.

Keeping these raw materials secure is challenging, yet necessary. When raw materials are received at the receiving dock, the receiving clerk should manually inspect the items for damage before placing them in designated bins or warehouse sections.

Limiting access to areas where raw materials are stored is a best practice. Additionally, monthly inventory counts should be conducted to ensure that raw materials are not being stolen or misappropriated. Finished Goods Inventory Security Securing finished goods inventory is a paramount best practice for companies to follow, as these items are ready for shipment to retailers or consumers.

Some companies go as far as to store their finished goods inventory at an off-site warehouse operated by a third party.

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This is not a viable option for all companies, as it can be expensive due to high transportation costs and warehousing costs. If off-site storage is not an option, it is imperative that the finished goods be stored securely in the firm's warehouse or production facility.

Limiting access to these areas by use of swipe cards and monitoring the area with closed circuit cameras are safe and affordable ways to secure this inventory. Work In Process Inventory Security Work in process, or WIP, is usually considered materials that are in the state of being converted from raw materials to finished goods.

While it is primarily considered to be an accounting concept, WIP inventory that has real value must be secured. While it is unlikely that raw materials will be stolen directly from the production line, some companies have closed circuit cameras monitoring these materials.

Business Supply Inventory Security Corporate theft occurs when employees steal items from their employers. As with other types of inventory, one of the best ways to limit theft of supplies is to restrict access to these types of items.

Closed circuit cameras are another effective means of limiting theft of supplies from a company's supply room.Streamline inventory time with Auto-ID technology.

If hours, days or even weeks are spent conducting inventory of raw materials and finished goods, then Auto-ID will help. Using mobile devices (smartphones or tablets) on the shop floor allows manufactures to efficiently track parts and inventory, manage manufacturing process and collect data in real time.

“Sage Inventory Advisor has been the catalyst to turn an inconsistent approach to demand planning into one that is a consistent, focussed business process that also takes less time.". How It Works.

What is 'Inventory'

Inventory is commonly thought of as the finished goods a company accumulates before selling them to end users.

But inventory can also describe the raw materials used to produce the finished goods, goods as they go through the production process (referred to as "work-in-progress" or WIP), or goods that are "in transit.". There are generally five reasons companies maintain inventories.

An introduction to the Porter's generic value chain model, including primary and support activities, and the role of value chain activities in developing a competitive advantage. crude or processed material that can be converted by manufacture, processing, or combination into a new and useful product wheat is raw material for the flour mill —C.

Inventory and raw materials

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Inventory | Definition of Inventory by Merriam-Webster