In this stock vs inventory article we will explore inventory and stock in detail and highlight their key differences.
Inventory refers to the assortment of goods and materials that a company holds for various purposes. It can be commonly found in warehouses, storage facilities, and retail stores.
Diversity: Includes raw materials, work-in-progress, and finished goods.
Longevity: Held for extended periods for production and supply chain support.
Valuation: Reported on the balance sheet at cost, which can change.
Purpose: Acts as a buffer against supply and demand fluctuations.
Raw Materials: Materials used in the production process.
Work-in-Progress (WIP): Partially completed products in the production pipeline.
Finished Goods: Completed products ready for sale.
MRO (Maintenance, Repair, and Operations): Supplies for daily operations.
Stock, often called "stock on hand," represents goods available for immediate sale or use. It is commonly found in stores, warehouses and shelves.
Immediately Available: Stock is readily available for sale or consumption.
Constantly Updated: Stock levels change frequently due to sales and restocking.
Customer-Facing: Meets immediate customer demand.
Shelf-Ready: Ready to be placed on shelves without additional processing or preparation.
Although inventory and stock may seem similar, they have some key differences. We will explore these below.
Inventory: Inventory includes raw materials, work-in-progress (items in the process of being made), and finished goods.
Stock: Stock primarily comprises finished products ready for sale or immediate use.
Inventory: Inventory is typically kept for the long term, supporting production and supply chains.
Stock: Stock is geared toward immediate customer demand and quick rotation.
Inventory: Inventory is valued based on its cost, subject to fluctuations.
Stock: Stock is valued at its current market price, reflecting real-time demand and supply.
Inventory: Inventory serves various roles, including production support and risk mitigation.
Stock: Stock primarily fulfills customer orders and drives sales revenue.
Inventory: Inventory can be stored for extended periods, even months or years.
Stock: Stock is intended for rapid turnover, with shorter on-hand durations.
Inventory: Inventory management often operates behind the scenes in the supply chain.
Stock: Stock is customer-facing, visible, and accessible in stores or online.
We hope that our Inventory vs. Stock article has given you a better understanding of the main differences between Stock and Inventory.
