The inventory is a storage space of 16 slots each character has with it no matter if it wears equippment or not.
When a character goes KO from zero Phlegm or very low Blood or dies the character fells down.
Once the character is revived the inventory is emptied on the ground where the character fell down.
This means everyone can pick up the inventory content.
If there are obstacles like cliffs or buildings where the character fell down, inventory items can be impossible to retrieve.
Contrary to the inventory there is the backpack with 8 slots as another personal storage which is equipped and
not emptied upon KO. (Is it on death?)