Inventory planning
Pipeline Inventory (In-Transit Stock)
By the Supply Chain Manager team · Updated October 16, 2026
Pipeline inventory is stock you own or have ordered that is still moving: shipped by the supplier, in transit between warehouses or awaiting receipt.
It is not on the shelf, but it is not missing either. Leaving it out of planning leads to duplicate orders; counting it as available leads to promising goods to customers before they arrive.
Pipeline stock grows with lead time and volume. Moving from a 30-day sea route to a 10-day route, or from a distant supplier to a nearer one, cuts pipeline inventory in direct proportion, which is one reason total cost comparisons between suppliers should include it.
How to calculate pipeline inventory
Average Pipeline Inventory = Average Daily Demand × Transit Time (days)
Pipeline inventory example
Illustrative numbers: 40 units a day of an imported SKU on a 30-day ocean transit means about 1,200 units are on the water at any time. That stock is capital tied up before it ever reaches your warehouse.
Why pipeline inventory matters for distributors
For importers and distributors with several locations, in-transit stock can be a large share of total inventory value. Seeing it clearly is the basis of sensible inventory position and transfer decisions.
Common pipeline inventory mistakes
- Leaving open purchase orders out of the reorder calculation.
- Treating stock in transit between warehouses as available at the destination.
Examples on this page use made-up round numbers to show the calculation. They are not benchmarks or results from real businesses.