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Inventory Types

Created 2017-03-11

There are many businesses that require inventory management systems. Though not exhaustive, here is a list of 6 common inventory management types:

  1. Manufacturer
  2. Distributor
  3. Point of Sale (POS)
  4. Rental Management
  5. Warehouse
  6. Asset Management

These six types generally follow the Inventory Process though the process might be slightly modified depending on the inventory type.

Inventory Types

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These companies build things. They order raw materials, assemble them, and sell the assembled product. They will almost always assemble the product in batches, so tracking lot numbers is important.


A distributor is the proverbial middleman in the supply chain. They purchase from manufacturers (or other distributors) and resell them to retailers. The advantage of distributors is that they often purchase in bulk quantities. Distributors may also perform some assembly, particularly if they bundle items into kits.

Point of Sale (POS)

Retailers receive finished goods and sell them to the general public. The major modification of the POS system is the user is the picker, sometimes the packer, and the shipper. Consider your local grocery store. You go in with a list (on paper, on your phone, or in your head), you grab a cart, walk up and down the aisles putting items in your cart. That’s the role of a picker in a distribution center or manufacturer (or warehouse, but we have gotten to that type yet).

After you’ve loaded the cart, you go to the checkout center, scan the items, pack them in bags, and pay for the groceries. That’s the invoicing and packing part. Then you take your cart out to the parking lot, load your car, and drive home; shipping!

So a POS system may not need components for Selling, Picking, Packing, and Shipping. (Invoicing may or may not be a part of the cycle - see note in the Inventory Process article.)

Rental Management

Rental management is similar to POS except instead of purchasing an item the customer rents the item. These items could be cars, tools, heavy machinery, books, party supplies, clothing, etc.

An important feature of a rental management inventory system is tracking item availability. When someone rents something, the owner will want to know when they picked it up and when they plan to return it. That way, the owner can schedule the same item for future rentals.

It is not uncommon for rental companies to sell items. For example, you might rent catering equipment but you’d need to purchase the warming burners. If you rent tools or equipment there may be an option to purchase insurance. Thus, rental management systems often have elements of POS systems.


Any one of the above inventory types might have a need to store extra products. They may store the items internally - that is, they own their warehouses - or externally by sending it to a company that stores items for multiple customers.

It is important to keep track of inventory movements in and out of an organization and this is especially true for warehouses. Having a good Transaction Log can be very helpful.</p>

Asset Management

Asset management is an internal inventory system. Generally, all businesses can benefit from an asset management system. Some examples of assets that can be tracked in an asset management system include computers, mobile devices, office furniture, software, and vehicles. Companies invest in inventory for internal use in order to provide quality goods or services to others. Such an investment merits a data system to track its use, location, maintenance, and expected end of life.


Although these six types share many of the same structural elements, each has its own unique features. Knowing which type you’re building will help determine the proper structural elements. Of course, you may have a combination of types as mentioned in the rental management system above. Melding two types of inventory management systems requires flexibility, which is a hallmark of a custom-made solution.