Estimated reading time: 6 minutes
Top 10 Inventory Functions
Stock Entry
Item Master Creation
Item Master Creation is the foundational function where you define a new product, including SKU, Name, Description, Base Price, and Dimensions.
GRN
Goods Receipt Note
Goods Receipt records the arrival of items from suppliers. It updates stock levels immediately and verifies quantity against the Purchase Order.
Stock Adjustment
Manual Corrections
Used to manually increase or decrease inventory to reconcile system data with physical reality (e.g., fixing errors, writing off damaged goods).
Low Stock Alert
Reorder Notifications
The system monitors stock levels. When a SKU drops below its “Minimum Level” or “Reorder Point,” it triggers a notification to restock.
Barcode Scanning
Automated Entry
Allows users to use a handheld scanner to read barcodes, instantly populating item details for faster receiving, picking, or counting.
Cycle Counting
Continuous Auditing
Generates a daily list of a small subset of items to be counted, ensuring the entire inventory is verified periodically without a full shutdown.
Demand Forecasting
Predictive Analytics
Analyzes historical sales data and seasonal trends to suggest exactly how much stock you should order for the coming months.
ABC Analysis
Prioritization
Categorizes items by value/volume: ‘A’ (High Value/Priority), ‘B’ (Medium), and ‘C’ (Low Value). Helps focus security and counting efforts.
Batch Tracking
Traceability
Tracks specific production runs (batches). Essential for perishable goods to manage expiration dates or trace defects back to the source.
Pick, Pack, Ship
Fulfillment Workflow
Generates pick lists (location), packing slips (box contents), and shipping labels. Deducts inventory only when the item is shipped.
GET IN TOUCH
Schedule a free demo
| Functions of inventory management software |
Inventory – Introduction
What supplies and what quantities do you need to own? The role and functions of the stock. What supplies and in what quantities does the company have at a given moment? The importance of inventory management
Here are the top 5 features that you need to look for in an inventory management system:
- Advanced inventory control (SKU, LOT, SERIAL)
- Barcoding and Scanning
- Different units of measurement
- Configurability -Different item types- (BOM, Variations, Kit/Set..)
- Optimization (Low stock nottifications, expiration dates, forcasting, reporting )
Inventories are goods that are found in the warehouses of the company. These are the materials used in the production process or they meet customer demand, and consist of raw materials, materials pulled into the production in process, and finished products. These products usually belong to the company itself and it represents its most important asset.
The role and functions of the stock
Inventory management is a determining point in the strategic management of any organization.
The main function of inventory management is to determine the sufficient amount and type of input products, products in process and finished products, facilitating production and sales operations and minimizing costs by keeping them at an optimal level.
Efficient inventory management is essential to ensure that the business has enough products stored to meet consumer demand. If it is not handled correctly it can result in the business losing money on potential sales that cannot be satisfied or that you waste money taking care of too much inventory. An inventory management system can prevent these types of errors from occurring.
Effects:
Inventory is included in all the important segments of one’s company and has important effects on all the main functions of the company – we mainly have inventories because that allows us to perform the functions of purchasing, production and sales at different levels.
Each function has to generate different inventory demands:
Sales: Costumer demand must be satisfied quickly and completely to avoid the buyer resorting to competition, so you not only must have sufficient inventory to meet market demand, but also, you should consider an additional amount for unexpected requests.
Production: Production and delivery do not usually occur instantaneously, so you must have stock of the product that can be used in a timely manner and that the actual sale does not wait until the completion of the production process.
Purchases: When a significant increase is expected in the prices of basic raw materials, a sufficient quantity must be stored at the lowest price prevailing at the moment. In the same way, if shortages of necessary raw materials are foreseen, it is essential to have a reserve to continue regularly with production operations.
In order for the inventory management process to be successful, it has to represent a combined answer to two very important questions:
What supplies and what quantities do you need to own?
The company workflow determines the quantity of supplies. For a re-seller, this depends on the supply and demand options of the market. For a manufacturing company, it also takes into account the quantity of components within the final product, all components that are part of the final product must be in stock and their quantity is directly related to the final product manufacturing plan. A manufacturing company has the need for those supplies that are the basis for the production of the final product, and the quantity is determined by the amount needed for the production of that final product.
What supplies and in what quantities does the company have at a given moment?
It would be best if an organization could only order what it needed at the time. To accomplish this, you must know the items that make your current inventory and their quantities levels. In the warehouse business every day there are so many changes in the situation, and therefore there are so many opportunities for making mistakes.
The stocks represent a significant investment and potential source of waste that needs to be carefully controlled. If you overstock, you will spend money on the storage, and lose it if inventory is damaged. On the other hand, in the event that there is not enough stock, you may have to stop production until the necessary material is purchased and thus waste time and work. In order to reduce costs and maintain the stock at an optimum level, you will need a system developed to help you decide when and how much stock you need to order.
In Erpag, both of these questions are answered by the back-ordering option and the fulfillment list, e.g. a list of all the items that you need to order and/or produce, taking into account the demand, the current stock levels and the BOMs of the items that need to be manufactured.
The importance of inventory management
Inventory problems can and do contribute to business failures. When a company unintentionally runs out of inventory, the results are not pleasant. If it’s a retail store, it loses the profit for this item. If the firm is a manufacturer, the lack of inventory could cause production to stop. On the other hand, if a company maintains excessive inventories, the additional maintenance cost and potential damage can lead to great loses.
When managing inventory, whether is manufacturing or reselling business, it is necessary to bear in mind two determining factors that affect their level. On the one hand, inventories are necessary to achieve the continuity of the production process, while on the other hand they cause holding costs. Therefore, it is necessary to define the level of supplies that will enable the continuous sales and/or production process to take place, causing the least possible costs. Such a level of inventory is called the optimal level.
Inventories represent a sustained movement of inputs (materials, finished products or merchandise). The level of inventory at each given moment is the result of the difference between the inflow and outflow and the quantity of goods found on the stock from the previous period – it has a great dynamic that is not easy to follow.
A good inventory management software reviews the state of supply and demand, the movement of items and delivery times. The inventory management is supposed to ensure customer satisfaction with minimal costs.
Good reporting and analytical views are essential for inventory management. That is why Erpag was developed as a very report-oriented ERP system, giving you a fulfillment list of all the items that need to be ordered so you can maintain your stock levels.
Inventory Management Functions FAQ
This is the foundational function where you define a new product in the system. It involves inputs for SKU, Name, Description, Base Price, Unit of Measure (UOM), and Dimensions.
This function records the arrival of items from suppliers. It updates stock levels immediately and often verifies the received quantity against an issued Purchase Order.
Used to manually increase or decrease inventory levels to reconcile system data with physical counts (e.g., fixing data entry errors, writing off damaged goods).
This function manages the movement of inventory from one warehouse location to another (e.g., Main Warehouse to Retail Store) without recording a sale.
The system constantly monitors stock levels. When a SKU drops below its defined “Minimum Level” or “Reorder Point,” the system triggers a notification or email.
This function allows users to use a handheld scanner or mobile camera to read barcodes, instantly populating item details for faster receiving, picking, or counting.
Instead of a full annual shutdown, this function generates a daily or weekly list of a small subset of items to be counted, ensuring the entire inventory is verified over a period of time.
This function allows you to combine multiple individual SKUs (components) into a single new SKU (a kit) for sale. It automatically deducts stock from the component items when the kit is sold.
Essential for perishable or regulated goods, this tracks a specific production run of items. It allows you to trace defects back to a specific batch or manage expiration dates.
This tracks unique IDs for individual units (common in electronics). It allows the system to know exactly which specific unit was sold to which customer for warranty purposes.
An advanced function that analyzes historical sales data and seasonal trends to suggest how much stock you should order for the coming months.
The system automatically categorizes items based on value and volume: ‘A’ (High Value), ‘B’ (Medium), and ‘C’ (Low Value). This helps prioritize counting and security efforts.
This function generates official documents sent to suppliers to request goods. It tracks the status of the order from “Draft” to “Sent” to “Received” and “Closed.”
This generates pick lists (telling staff where to find items), packing slips (for the box), and shipping labels. It deducts inventory only when the item is shipped.
This function handles goods returning from customers. It decides if the item should be returned to sellable stock, quarantined for repair, or written off as damaged.
A database function that stores supplier contact details, lead times, minimum order quantities (MOQ), and performance history/ratings.
For global businesses, this converts the cost of goods bought in foreign currencies back to the base currency for accurate inventory valuation reporting.
This puts a “hold” on specific inventory for a confirmed sales order so it cannot be sold to anyone else, even if it hasn’t physically left the warehouse yet.
This allows customers to purchase out-of-stock items. The system tracks these as “Owed” and prompts immediate fulfillment once the new stock arrives.
A financial function that calculates the total value of current assets. It usually supports different accounting methods like First-In-First-Out (FIFO) or Weighted Average Cost.
Recent Comments