25 Types of Inventory & How to Manage Them

Imagine losing $1.1 trillion simply because your shelves are missing when customers arrive. That’s the cold, hard truth US retailers lose every year to stock outs, IHL Group says. Managing inventory isn’t a chore—it’s the lifeblood of your company. US companies carried $2.58 trillion in inventory in March 2025, according to the US Census Bureau.

It represents the goods and materials a company holds to produce products, fulfill orders, or support operations. But not all inventory is the same, different types of inventories serve unique purposes in the supply chain.

That’s why having the right knowledge about inventory types is crucial. Whether you are a small store owner or a large warehouse one, this guide provides easy, practical tips to maximize your stock. In this blog, we’ll explore 25 types of inventory, their roles, and how businesses can manage them effectively to optimize costs and efficiency.

 

Why these Types of Inventory Matter

Inventory management is the heartbeat of every US business, no matter if it is a small store or a big factory. As of March 2025, US firms had $2.58 trillion in their hands but poor use of it costs them $1.2 trillion every year. They lose it in two of the other things in the hand. Knowing them can help you not only get rid of them, but also sell faster, and leave more room to sell things. Whether used for safety in case there is a lot of work, or just in time when everything is just about to be used.

These types of inventory help you make your customers happy and your money enough. Whether you’re a small business or a massive warehouse, the 25 types of inventory help you:

• Control stock to keep just what you need.
• Predict demand to match customer wants.
• Save storage space to cut costs.
• Sell fast to boost cash flow.

“Understanding every inventory type helps US businesses stay competitive”

Dr. Mark Evans, a supply chain expert with APICS

The 25 Types of Inventory

We explain each of the 25 types of inventory with US examples, detailed insights, financial impacts, and easy tips to manage them well.

1. Raw Materials Inventory

Raw Materials are the first step in making things. These are not things that are ready to be sold but are used to make the things that can be sold, like metal to make a car or powder to make bread. It is very important to find good suppliers that will bring the raw stuff on time and keep it in the right place so it will not be late or get bad.

Tip: Use material requirements planning apps like SAP to order only what your production needs, cutting storage costs by 15%.

 

2. Work-in-Progress (WIP)

WIP is products being made but not yet complete, like half-built cars or partially sewn clothes. WIP keeps US plants running, preventing assembly lines to come to a halt. Overbalance WIP jams up space, taking $70 billion out of manufacturers annually, IndustryWeek reports. Not enough WIP leads to delayed deliveries, as experienced in 2024 chip shortages. A US electronics company may have 10,000 partially assembled tablets waiting for displays, potentially losing $200,000 in delays. Difficulties are production bottlenecks, machine failures, and shortages of parts.

Example: Half-assembled Ford Mustangs or partially stitched Nike sneakers.

3. Finished Goods

Finished goods are ready-to-sell products. These drive retail and production sales, but US retailers lose $45 billion annually in unsold inventory, says Deloitte. A US supermarket chain may have 3,000 packs of yogurt available, at risk of expiring if sales are slow. There are too few, and they lose customers; too many tie up capital. Disruptions involve changing fashions (e.g., 2024’s decline in demand for smartwatches) and storage costs ($600 per pallet per year).

4. Safety Stock

Safety stock is extra inventory for unexpected demand spikes. It avoids stockouts, which cost US retailers $1.2 trillion annually. A US hardware retailer would maintain 500 more batteries for hurricane season, but overstocking costs $15,000 every month in storage. Challenges include volatile demand (e.g., 2024’s mask shortages) and lengthy lead times.

Example: Toys at Target during holidays or masks at CVS during flu season.

5. Cycle Inventory

Cycle inventory is stock ordered regularly to meet steady demand. It keeps US stores adequately supplied but costs $800 per square foot annually to store overordered items. A US pharmacy may order 250 toothpaste tubes per week with the risk of shortages if demand is high. Difficulty includes managing order quantities and seasonal fluctuations (e.g., cold season medicine spikes).

Example: Soap at Rite Aid or paper towels at Costco.

6. Buffer Inventory

Buffer inventory is extra stock for broad risks, like supply disruptions. Unlike safety stock,  it accounts for greater uncertainties, such as weather or tariffs. Excess buffers are costing US food manufacturers $18 billion annually in spoilage, according to Food Dive. A US bakery may carry 2,000 pounds of flour for drought risks. Issues include expiring dates and forecast errors.

Example: Sugar for a US candy maker or steel for a car plant.

7. Anticipation Inventory

Anticipation inventory is stock for known busy seasons. US retailers apply it to occasions such as Black Friday, which made $9 billion in 2024. A US toyshop may buy 4,000 action figures for December, but excess stock requires 50% discounts, losing $25,000. The issues are overestimating demand (e.g., the poor Halloween sales in 2024) and post-season warehousing.

Example: Christmas decor at Hobby Lobby or school supplies at Staples.

8. Decoupling Inventory

Decoupling inventory stores parts to keep production smooth. It keeps a single slow step from stopping production. Overstock decoupling costs US manufacturers $35 billion annually, according to APICS. A US furniture producer may stockpile 12,000 chair legs, potentially risking $60,000 in overstock. Imbalances in production and shortages of parts are issues.

Example: Batteries at a Tesla factory or screws at a Whirlpool plant.

9. Pipeline Inventory

Pipeline inventory is stock in transit to you. Also referred to as transit inventory, it’s essential to US e-commerce, with $260 billion in pipe inventory annually. Delays, such as 2024 port strikes, incur $600 million per week. A US retailer may wait for 3,000 dresses, suffering stock outs. Challenges are shipping delays and tracking errors.

Example: Shoes shipped to Nordstrom or gadgets to Best Buy.

10. MRO Inventory

MRO (Maintenance, Repair, Operations) inventory includes supplies for equipment upkeep. It avoids downtime at a cost of US factories of $80,000 per hour. Unused MRO squanders $22 billion annually, states Plant Services. A US brewery may carry 250 spare valves, in turn holding $12,000. Problems are monitoring infrequently used parts and emergency requirements.

Example: Oil for Coca-Cola bottling machines or tools at a GM factory.

11. Seasonal Inventory

Seasonal inventory targets specific seasons. US retailers carry it for brief selling windows, but inventory not sold costs $40 billion annually, according to NRF. A US outdoor retailer may order 600 kayaks for summer and risk $20,000 in leftovers. Problems involve weather changes (e.g., soft 2024 winters) and timing of clearance.

Example: Winter boots at DSW or Halloween candy at Walgreens.

12. Consignment Inventory

Consignment inventory is supplier-owned stock in your store, paid after sale. It has lower risk, which means US retailers save 30% in initial costs. A US boutique can stock 400 products owned by the suppliers, gauging demand. Problems are tracking sales and supplier conflicts.

Example: Handmade jewelry in a US gift store or books in a bookstore.

13. Vendor-Managed Inventory (VMI)

VMI is stock managed by suppliers for you. It reduces US retailers by 25% for restocking labor, according to Supply Chain Dive. A US convenience store may allow a supplier to handle 500 snack bags a week. Difficulties encompass supplier mistakes and communication flaws.

Example: PepsiCo restocking drinks at Sheetz or Frito-Lay at 7-Eleven.

14. Perpetual Inventory

Perpetual inventory tracks stock live with technology. It detects errors in real time, saving US stores 35% on theft or miscount losses. A US supermarket may scan 25,000 items a day, catching $6,000 in weekly mistakes. Obstacles are tech expense and training.

Example: Scanners at Costco or Home Depot.

15. Periodic Inventory

Periodic inventory counts stock by hand at set times. It’s cheap but costs $8,000 annually in errors for small businesses, particularly with valuables. An American antique shop may tally 700 vases annually, losing daily theft. Drawbacks are time-consuming counts and inaccuracy.

Example: A craft store checking shelves annually.

16. Obsolete Inventory

Obsolete inventory is stock that won’t sell, like outdated products. It takes up space, with US retailers paying $55 billion annually, according to NRF. A US electronics store may carry 250 old tablets, losing $50,000. Issues include forecasting trends (e.g., 2024’s failure of VR headsets) and disposal fees.

Example: Old smartphones at T-Mobile or expired snacks at Dollar General.

17. Excess Inventory

Excess inventory is too much stock taking up space. It takes $900 per pallet to hold each year, and US apparel retailers lose $30 billion. A US retailer could hold 3,000 additional sweaters, worth $15,000. Difficulties are caused by inaccurate forecasting and sluggish sales.

Example: Unsold Easter eggs at CVS or coats at Nordstrom.

18. Transit Inventory

Transit inventory is stock moving through the supply chain. It’s similar to pipeline inventory, with $210 billion worth of US transit inventory annually. Delays, such as in 2024’s shipping congestion, average $700 million per week. A US retailer will wait on 2,000 chairs, risking stock outs. Issues include delays in customs and tracking gaps.

Example: Furniture to Ashley Home Store or toys to Toys “R” Us.

19. Service Inventory

Service inventory is non-physical slots, like appointments or bookings. Vacant positions cost US business US$18,000 per month, particularly in hospitality. A US salon could deal with 150 weekly positions, losing US$3,000 if not utilized. Issues are no-shows and overbooking.

Example: Massage appointments at a spa or hotel rooms at Marriott.

20. Retail Inventory

Retail inventory is stock for store sales. US retailers monitor it to satisfy demand, but overstock costs $65 billion annually. A US pet store may carry 4,000 bags of cat food at risk for $7,000 overstock. Threats include shoplifting ($100 billion annually) and trend changes.

Example: Cosmetics at Sephora or tools at Tractor Supply.

21. Manufacturing Inventory

Manufacturing inventory includes all stock for production. It includes raw materials, WIP, and finished goods, but poor management costs $100 billion annually, according to APICS. A US tire factory may handle 20,000 parts, at a cost of mistakes of $60,000 per month. Problems include part shortages and delays.

Example: Parts at a Boeing factory or tools at Caterpillar.

22. Spare Parts Inventory

Spare parts inventory fixes equipment. Downtime costs $200,000 an hour, but parts waste amounts to $18 billion annually. A US refinery could have 150 spare valves taking up $25,000. Problems arise in anticipating failures and overstocking.

Example: Backup turbines at a power plant or rollers at a steel mill.

23. Drop-Ship Inventory 

Drop-ship inventory is shipped directly by suppliers to customers. US e-commerce saves 40% of storage costs, but frustrated buyers hate delays. A US online store could sell 600 drop-shipped rugs. Issues include untrustworthy suppliers and quality control.

Example: Lamps on Amazon or Etsy.

Tip: Choose trusted suppliers with Oberlo for fast delivery. Check ratings weekly.

24. Cross-Dock Inventory

Cross-dock inventory moves quickly from incoming to outgoing trucks. It saves US logistics companies $8 billion annually in storage. A US warehouse may cross-dock 4,000 boxes per day, but mistakes cost $12,000 a week. Issues range from timing mistakes to labor expense.

Example: Packages at FedEx or Amazon hubs.

25. Just-in-Time Inventory

Just-in-time inventory arrives only when needed. It reduces stock by 50%, but disruptions, such as the 2021 $230 billion chip shortage, stop production. A US factory may purchase 1,500 seats per day. Issues are with suppliers’ reliability and world disruptions.

Example: Parts for Toyota’s US factories.

Tip: Keep backup suppliers with Kinaxis to avoid disruptions. Monitor supply chains with AI.

Want to learn more on common inventory systems used in businesses. Check out this 12 Types of Inventory Management Systems

US Inventory Trends in 2025

US companies are getting inventory in line. Inventory in March 2025 was at $2.58 trillion, an increase of 2.5% from 2024, yet a 1.34 stock-to-sales ratio indicates efficiency, according to the Census Bureau. Trends are:

• E-commerce Surge:
  Online stores such as Etsy utilize drop-ship inventory, with sales expected at $1.2 trillion.
• Resilient Factories:
  Companiesemploy just-in-time inventory amid 2024 port congestion.
• Holiday Rush:
  Stores carry anticipation inventory for Black Friday, generating $9 billion in 2024.

To improve operations, check out the benefits of using inventory management applications

Simple Tips to Manage Your Inventory

Conclusion

The 25 types of inventory are your key to unlocking a smarter, more profitable US business. From raw materials fueling production to just-in-time inventory slashing costs, each type offers unique ways to avoid stockouts, clear excess stock, and meet customer demand. In 2025, U.S. businesses will manage an estimated $2.58 trillion in inventory, according to the U.S. Census Bureau. Yet, with $1.2 trillion lost annually to inventory mismanagement.

By understanding these categories and implementing tailored strategies, businesses can optimize their supply chain, reduce costs, and enhance customer satisfaction. Tools like demand forecasting, real-time tracking, and inventory management software are essential for staying competitive in today’s dynamic market.