What Are the 6 Main Types of Inventory?

Inventory management is something that any business that deals in products will have to face eventually. As a term, inventory covers any and all goods that may be held for the purpose of selling or manufacturing goods to be sold. As you can imagine, especially for businesses with a large number of products, this inventory tends to make up a sizeable portion of the business’ overall assets, meaning that management of said inventory will be an important facet in ensuring the business’ efficiency and longevity.

For these reasons and more, senior managers and business managers are often tasked with overseeing the functions that make up inventory management directly, thereby ensuring that all tasks are completed with a strong understanding of the business’s larger processes. So, to support those who have found themselves in this situation for the first time, we at ICS have put together a guide to some of the primary inventory classifications and what the intentions behind each of them are.

Why Are There Multiple Forms of Inventory?

Classifications within inventory allow business owners and managers to segment their stored products and components by the role they serve within the business as a whole. This classification may be dictated by seasonal changes, manufacturing areas, or simply how the products are intended to perform as sale items. Therefore, by understanding the different facets of these systems, it will hopefully allow you to perform your duties with more efficiency.

Pipeline Inventory

Also known as transit inventory, this form of inventory takes its name from its state within the transportation process. Naturally, as a business selling products, you’re likely to have stock being moved from one site to the next at any given time. This stock, as it is being transported from place to place, is what we are referring to when we discuss pipeline inventory.

Although this may seem like an odd classification to make given how temporary a state it is, any merchandise that is delivered using trucks, rails, or even the ocean can take weeks to reach their destination. So, when you’re trying to work out the specifics of your inventory, factoring in those pieces that are in motion will be essential to an accurate review.

Anticipation Inventory

There are a number of materials and items that go into the smooth running of a business, particularly one within the manufacturing industry. These materials often come from external sources, meaning that they are subject to changes and issues outside the control of the company itself, such as price increases or shortages due to unforeseen circumstances. Because of this, many companies will buy more than they need while making orders, providing them with a surplus in the event that certain materials become unavailable or difficult to source.

This surplus is referred to as anticipation inventory due to it being stored in anticipation of difficult circumstances, and is a staple of manufacturing. After all, depending on your product schedule, a delay in materials for even a week can cause widespread issues across both your business and your clients. So, by having this anticipation inventory on-hand and well stocked, you can avoid potential future dangers and concerns.

Buffer Inventory

Similarly to anticipation inventory, buffer inventory is a surplus of products in anticipation for future orders, rather than a surplus of the raw materials used to create them. This can be beneficial for hitting deadlines and offer you a way to get ahead of future order size increases. Your buffer inventory is your safety net in cases where being able to think ahead will be essential to your business’ continued success.

Decoupling Inventory

Decoupling inventory is an interesting addition to the overall inventory pipeline, existing as a cushion for the assembly and manufacturing process which can shield the product line from potential issues. It is a separated store of materials aimed at ensuring that there is no unnecessary downtime with machines, allowing one part of the manufacturing process to keep going while another is slower, or impeded for one reason or another.

Decoupling inventory also avoids situations where one part of the process going faster than others leads to a pileup with which other areas of manufacturing can’t keep up. By having this inventory surplus, you can ensure the most optimal process across your entire factory or operation.

Maintenance, Repair, and Operating Supply Inventory

As the name suggests, MRO inventory is comprised of items that exist to ensure the swift maintenance and continued production capabilities of the business’ infrastructure as a whole. These operational items are important to keep track of, as things including lubricants, uniforms, safety equipment, screws, and industrial cleaning equipment can cause major issues if understocked.

Cycle Inventory

Finally, we have our inventory that is for the normal, standard demands of a particular time period. Your cycle inventory is the stock of basic items required for the smooth running of your operation under traditional means and constraints, not counting any issues which may arise over time due to unforeseen circumstances or changes with order values. This inventory will be checked and restocked at regular intervals throughout the year, and should therefore be reviewed to ensure that you stock is keeping up with any additional demand for your cycle inventory.


Whilst many of these inventory forms may seem similar, there are important distinctions to be made for those looking to run their business effectively. At ICS, we provide a wealth of various CribMaster-optimised inventory management systems for factories, warehouses, worksites, and more. To learn more, explore our blog, or request a quote today to organise an inventory management solution for yourself.