How To Categorize Inventory

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There are a lot of areas that you have to manage when you own a business. One of the areas that you have to organize is your inventory. The inventory contains all the materials that are used for the production of the goods that you are selling. This includes the raw materials, materials that are in the middle of production, and of course, the finished products. It is important that you categorize your inventory so that it will be easier for you to manage.

Here are some of the tips on how you can categorize your inventory:

  • Raw materials. Separate the raw materials from the other items in your inventory. Raw materials are the items that you use in creating your product. This may consist of many different items. Make sure that you label all the raw materials and what they are going to be used for. It is also important that you keep them counted so that it will be easier for you to keep track of your raw materials when they need to be replenished.
  • Incomplete products. This is where you are going to put products that are in the process of completion. There may be some missing parts on the items but they are in the process of being completed. You may further categorize the items under this if there are different stages of development for the products that you have in your business.
  • Finished products. The finished products section of your inventory must contain all the products that have gone through the process of creation. Most of the items here are already ready to go to the market. They must still be sorted out to check for the defective ones so that they will not mix in with the products that are good to go.
  • Defective products. This is where you will put the finished products that are defective and cannot be sold in the market. Some of the parts of the product may still be recycled, depending on the type of product that you are trying to sell.
  • Keep track of everything. Now that you have sorted all of the materials that you have in your inventory, it is important that you keep track of them. If you have a small business, you can make do with a notebook wherein you can store your receipts and keep all the records of your stock. If you have a bigger business, it will be helpful if you make use of an inventory software so that it will be easier for you to just input the data that you need and keep track of your inventory.

These are some of the things that you can do in order for you to categorize your inventory and keep them organized. In any business, it is important to do this so that you can see the flow of cash in your business. This will also be better if you have people who take care of your inventory.


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