Float (Inventory)

Inventory float represents goods that are in motion between locations—shipped from one point but not yet received at another. This inventory is owned but not immediately available, creating visibility and planning challenges.

Types of Float

Supply Chain Float

• Raw materials from suppliers to factory
• Finished goods from factory to distribution
• Inter-warehouse transfers

Order Float

• Products shipped to customers
• Returns in transit back
• Replacements being sent

Why Float Matters

Financial

• Working capital tied up
• Accounting treatment questions
• Insurance during transit
• Risk of loss/damage

Operational

• Not available for orders
• Affects replenishment timing
• Complicates inventory counts
• Can mask true stock position

Calculating Float

Float = Daily Usage × Transit Time

Example:

• Average daily sales: 100 units
• Transit time from supplier: 5 days
• Float = 100 × 5 = 500 units

Float by Supply Chain Stage

Managing Float

Visibility

• Track in-transit inventory
• Include in available-to-promise
• Update systems with ASN data

Reduction

• Shorter transit times
• Faster carrier options
• Strategic facility locations
• Better supplier proximity

Accounting

• When does ownership transfer?
• FOB origin vs. destination
• Insurance coverage

Float in E-Commerce

For direct-to-consumer businesses:

• Packages in carrier network = float
• Returns in transit = float
• Float affects inventory accuracy
• Can sell “in-transit” returns when received