December 5, 2022

Supplies Vs. Inventory: What Is The Difference?

Most business owners are familiar with the terms' supplies' and 'inventory.' However, many people may need to learn the difference between the two. This post will explain the critical differences between supplies and inventory, and discuss which is better for your business.

What Are Supplies?

Supplies are items that businesses need to carry out their regular operations. These resources aid company personnel carry out their normal duties or generating cash. Due to their use, these objects frequently have a limited lifespan and consequently incur costs for enterprises. Until they are used, supplies are considered current assets in accounting; after that, they are considered costs. Pens, paper clips, and printer ink are typical examples of office supplies used by organizations.

What Is Inventory?

The items in inventory are those that a company makes money from selling to clients. For instance, the books that a bookshop sells to its clients make up its inventory. Items a company produces or buys from suppliers or distributors are considered inventory. Raw materials the company uses to deliver its products can also be referred to as inventory. Businesses may sell these things as-is or combine them to make a new product after purchasing inventory. Typically, companies only want to keep inventory around for a short time because it could result in storage fees or become outdated.

Related: How Much Inventory Should I Have?

How To Manage Supplies?

One Communication Should Reach All

The biggest obstacle to good supplier management in a big company differs from how you handle a handful of strategic suppliers. Instead, it concerns the best ways to interact and work with your more extensive group of non-strategic suppliers.

Keep All You Need To Know In One Place

Your information will probably be dispersed over numerous stakeholders, offices, and individual computers with segmentations ranging from line-of-business to location to category.

Allow Vendors To Handle Their Information

Verify that the platform you select enables vendors to update their information (but in a system where it is easy for them to do so).

Integrate SBM Into Your Contracting And Sourcing Processes.

If suppliers know that your supplier management program is connected with your sourcing and contract management initiatives, both now and in the future, they will be more inclined to participate actively.

Get The Facts Straight And Stick To Them

Errors and redoing work defeat "easy" like nothing else. Make sure you have an automated workflow on the buy side that enables your buying team to authorize modifications to components of the information provided by the supplier.

How To Manage Inventory

Check Your Stock

The first step to managing inventory is to check your stock. Look at what you have on hand and compare it with your records. This will give you an idea of how much inventory you need to order and when.

Track Sales

You also need to track your sales to determine how much inventory you should be ordering. Knowing how many items are being sold can help you plan for future orders so that you don't end up with too much or too little stock.

Order Inventory

Once you know the amount of inventory needed, it's time to order more from your suppliers. Make sure that orders are placed promptly so your stock level is smooth.

Organize Inventory

 After you have your inventory in hand, it's essential to organize it properly. This will make it easier to find items when needed and keep track of them for future orders.

Schedule Regular Audit

 Lastly, schedule regular audits of your inventory, so you know exactly how much is on hand and how much has been sold. This will help you avoid over-ordering or lack of stock, which can hurt your business. 

Analyze Your Most Recent Inventory Stocktake

 Once your inventory is organized, it's crucial to analyze the most recent stocktake. This will give you an idea of how well your inventory management system works and any areas that need improvement. It can also help you identify potential problems before they become more significant.

Decide Which Goods To Buy Again Or Get Rid Of

Finally, it would help if you decided which items are worth buying again and which ones should be eliminated. This will help you save money by reducing the amount of inventory that needs to be kept on hand and focusing on products with higher demand.

Related: How To Calculate Safety Stock For Your Business in 3 Easy Methods

What Is The Difference Between Supplies And Inventory?

Supplies are the materials and items that a business needs to operate. These items can be for producing or selling a product or service.

On the other hand, inventory is the finished products or merchandise a business has on hand. This includes products that are ready to sell and still in production. It also contains products that have been ordered by customers but have yet to arrive.

Inventory helps businesses keep track of their stock and provides them with the ability to fulfill orders and meet customer demand. With the right amount of inventory in stock, companies can avoid purchasing too much or too little, leading to lost revenue or unnecessary expenses.

Supplies are necessary for any business but don't necessarily generate income like inventory. Inventory is a critical component of a company's sales and profitability and should be carefully managed to ensure that it meets both customer needs and financial goals. Companies must maintain enough inventory to process orders quickly without running out of products or delaying shipments. At the same time, however, businesses need to be aware of how much inventory they have to avoid overspending or taking on unnecessary costs. 

Overall, supplies are necessary for the day-to-day operations of a business, while inventory can generate revenue and help businesses meet their financial goals. Managing both effectively is essential for any company's success.

Related: How To Control Warehouse Inventory: 7 Best Practices


The bottom line is that supplies are essential for any business, but inventory is what will help you succeed. We've got just the thing if you're looking for a comprehensive 3PL management tool to keep track of your supplies and merchandise. Check out our latest product and see how it can help streamline your business operations.

Recommended: Inventory Costs- Definition, Types, Tracking, And Calculation

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