What is Pipeline inventory?

Pipeline inventory matters because it is money already spent that you cannot sell yet. If you ignore it, you risk placing a new order for stock you already have coming, which ties up more cash and leads to overstock when both orders land close together.

Use pipeline inventory to plan your cash flow and your next order. Add it to on hand stock when deciding how much cover you actually have, and subtract it from what you still need to order so you do not duplicate purchases.

Formula

Example

A candle store orders 300 units from a supplier with a 3 week lead time and sells 50 units a week. While those units are being made and shipped, they count as pipeline inventory. Once the box is scanned into stock, those 300 units move out of the pipeline and into on hand inventory.

Common mistakes

• Forgetting pipeline stock when checking inventory levels and reordering too early, which leads to overstock once both shipments arrive.
• Treating pipeline inventory as available to sell before it has actually been received and counted.
• Not tracking pipeline inventory separately per supplier, which hides how much cash is tied up in transit at any given time.

Pipeline inventory and SteadyShelf

SteadyShelf tracks incoming purchase orders by expected arrival date, so you can see what is still in the pipeline for each SKU alongside what is already on the shelf.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

Incoming inventory · Lead time · Lead time demand · On order inventory · Receiving

Full inventory glossary

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