In one form or another, stocks will necessarily exist along the entire path of the movement of products from production to circulation. There are several main reasons for their (stocks) creation: saving money on purchases, reducing the cost of transporting goods, providing various guarantees of supply and manufacturing, protecting against a possible increase in prices for various material resources, taking into account seasonal fluctuations in the production and sale of goods, supporting various production cycles and so on.
The essence of classifications
But in logistics, the subject of study is still not the material stocks themselves, but the movement of these resources in time and space. Therefore, the classification of reserves is given as part of their consideration as material flows at specific time intervals in the process of further application of various logistics operations to them.
There are several such gradations. We will consider and characterize them in the article.
Simple stocks
Under simple stocks are meant the most various types of material resources intended for industrial consumption.
The main reasons for their formation are the following:
- Inconsistency of the volume of a single supply to the volume of one-time use, consumption of this raw material or finished goods.
- A big time difference between the manufacture of products and their consumption.
- Climatic conditions of a particular locality.
- The desire to reduce transportation costs.
Productive reserves
Inventory is considered the following:
- Current stocks. They are necessary to ensure production in the interval between the receipt of raw materials, materials for manufacturing.
- Preparatory stocks. Necessary to guarantee the smooth operation of the enterprise.
- Warranty, insurance stocks. Accumulate in case of interruptions in the supply system.
- Inventories. This is a completely finished product in the channels of various areas of circulation.
Main types
All material and inventory can be divided into three large classes:
- Raw material.
- Products that are still at the production stage.
- Finished products.
Destination separation
The following is different here:
- Transitional (or technological stocks). They move from one point of the logistics system to another, from one industry to another.
- Cyclic (or current stocks). They are created during the continuation of the average production period. So-called stocks the size of one batch of goods.
- Productive reserves. Their purpose, respectively, is production consumption. They have already entered production, but have not yet been processed, not used.
- Insurance (or warranty) stocks. As a rule, they have a constant value. They are necessary in case of sudden strong fluctuations in demand for products.
- Inventories. They are in distribution channels. Designed for uninterrupted supply of goods to its consumers.
- "Virtual" stocks. This group includes those that are virtually located at points of sale (for example, in stores), but in fact still remain in warehouses.
- Preparatory (in a different way - buffer) stocks. They necessarily require additional training before transportation and further use in production.
- Seasonal stocks. Characteristic for production, sales, seasonal.
- Carry-over stocks. This is the name of the balances at the beginning of the new reporting period from last year.
- Advertising stocks. Their main purpose is to satisfy consumer demand during advertising campaigns, in the seasons of increasing sales.
- Illiquid reserves. This category includes both unavailable for a long time both inventories and inventories. In some cases, the cause of this is a marriage, damage during transportation.
- State reserves. Such reserves, respectively, are created by states in the event of natural disasters, armed conflicts, man-made disasters and other emergencies.
Locally in supply chains
The classification of stocks by their place in the logistic channel (or chain) is as follows:
- Stocks of various material resources.
- Work in progress stocks.
- Stocks of finished products and products.
- Stocks of packaging packaging and returnable waste.
In relation to the logistic operation
The classification of reserves in this case is represented by their division into the following categories:
- Supply stocks.
- The type of inventory.
- Commodity (another name - sales) stocks.
- Aggregate stocks.
- Transport stocks. They are also called transit. Or supplies on the way.
- Stocks related to cargo handling.
Category Feature
Let us examine some of the components of the classification of inventories in relation to logistics operations.
Stocks in the supply are called those material resources that are in the supply chains from suppliers to manufacturers, manufacturers. Accordingly, they are designed to provide all kinds of production processes.
Production stocks are called stocks of raw materials, containers, packaging, components or other materials that at the time of accounting were not received in the processes of production consumption. It is they that make it possible to ensure uninterrupted operation of the entire manufacturing process.
In turn, production inventories are divided into the following categories:
- Regular (or current).
- Warranty (or insurance).
- Preparatory group.
- Illiquid, obsolete (division into illiquid assets and stocks).
- Seasonal
The production category is taken into account in value and physical units. Its value is affected by the following:
- The need of consumer organizations in these material resources.
- Frequency of materials start-up / continuity of expenditures.
- Transportation.
- Warehouse specifications.
- Seasonality of production and consumption.
Commodity (sales) stocks are called:
- Stocks of finished products and products.
- Transport stocks that are stored ready-made in the warehouses of the manufacturer.
- Accumulated to meet customer demand in the process of wholesale or retail sales.
In turn, sales inventories are presented in the following subcategories:
- Regular (current).
- Warranty (insurance).
- Seasonal
- Preparatory.
- Obsolete (again, the division into illiquid assets and stocks).
The product category is taken into account, analyzed, planned in cost (absolute) and relative (in days of turnover) indicators. They can be taken into account both at the start and at the end of the period.
Transport, transit - this is the name of the reserves on the way. Material resources (both an incomplete production process, and already finished products) that are in the process of transportation between the links of logistics systems. The size of such stocks will be determined by the distance over which goods are moving in space, by the link coefficients of the movement of goods in their circulation. They are also determined by regional or industry specialization, the duration of the goods in transit, the norms of the periods of delivery of goods (measured in days).
Cargo handling is called a specific type of warehouse stock, which is formed without logistic storage operations.
According to the functional purpose
In this classification of reserves, we distinguish the following categories:
- Current stocks.
- Buffer (other names - insurance, guarantee) stocks.
- Seasonal stocks.
- Preparatory stocks.
- Stocks-promotion of finished products.
- Speculative group of stocks.
- Illiquid (or obsolete stocks).
Category Feature
We will learn more about the components of the classification of resources according to their functional purpose.
Current stocks - the main share of inventories or inventories, intended mainly to ensure the continuity of production / sales processes between revenues. As a rule, they are calculated based on supply intervals.
Buffer / insurance / guarantee stocks are needed to reduce risks, which may be associated with fluctuations in the degree of demand for finished goods, failure to fulfill obligations for the supply of necessary material resources, and failures in technological and production cycles. Or in other unforeseen circumstances, when the need cannot be satisfied in the usual way.
The safety stock of products is a constant value. Under normal conditions, she will be inviolable. The norms here are determined on the basis of the average daily consumption of each of the varieties of finished products or material resources.
Preparatory stocks are part of sales, production. They are intended for the preparation of both resources and finished products for personal, industrial consumption. They are usually formed as a result of the following:
- Acceptance of goods.
- Product design.
- Handling.
- Additional levels of preparation for consumption - unloading, drying, cleaning and so on.
The value of preparatory stocks will depend on the amount of time needed to carry out logistics operations to prepare resources or finished products for consumption. The volume of average daily consumption also plays a significant role in the calculations.
What applies to inventory yet? These are seasonal stocks of resources and finished products or products. They are created, supported by clearly perceptible fluctuations in demand, production or transportation. It is seasonal stocks that ensure the normal operation of enterprises for the period of various seasonal breaks.
The value of seasonal stocks of raw materials / finished products will be determined as the product of the average daily consumption of the type of material resource for the period of a break in its receipt or use.
Stocks of promotion of finished products will be formed and maintained in distribution chains for the quick reaction of the company to its marketing policy of establishing the supply of goods to the market. As a rule, such stocks, for the most part, are consumer goods. The purpose of their production is to satisfy a possible sharp increase in demand for this or that manufacturer’s products.
Speculative reserves are created by enterprises in the event of a possible increase in prices.
What applies to illiquid (or obsolete) stocks? These are goods that have not been sold for a long time. There are several reasons for this: deterioration in the quality characteristics of products during their storage, obsolescence, expiration of warranty periods for storage / maintenance, etc.
In relation to the logistics system
The classification of inventories is represented here in certain categories:
- Stocks of buyers, consumers.
- Stocks of sales, sellers.
- Reserves owned by resellers.
By time
The following categories are distinguished in this classification:
- Maximum desired reserves. The economically feasible highest level of stock in this logistics system.
- Current stock. The level of any stock at any time.
- Guaranteed margin. An insurance category is necessary in case of supply disruption.
Stocks are one of the fundamental categories in logistics. Since the concept is very broad, everything called reserves can have several characteristics, depending on the classification used. Each of them reveals important descriptions of stocks in a specific area of production, sales, and so on.