Warehouse & Inventory

Manage inventory in multiple warehouses

Warehouse management is a critical function in organizations where inventories are a significant current asset. Companies involved in manufacture or distribution of products incur substantial expenditure towards materials. Such companies require effective control over procurement, storage and utilization of materials. While purchasing function is involved with the procurement of material supplies, warehouse management is concerned with the management and control of materials in stock.

For effective storage, retrieval and management of inventoried items, it is important that you define your warehouses in the system. Within each warehouse location you may define Stock Areas and Bins so as to have well defined areas for sales shipments, vendor returns, items received on approval and storing items in appropriate places. A Warehouse defined in BusinessAhead represents a physical location (eg: Warehouse - Chennai) or a virtual location (eg: Stocks-in-transit). A stock area is a defined region within a warehouse. It is a collection of bins. A bin is an area within a stock area in which the items are actually stored. Essentially, BusinessAhead allows you to define a hierarchical arrangement of stock areas and bins in each warehouse location.

Each warehouse created will have a unique warehouse code, will be attached to a department, and will record the full warehouse address. The address is used for tax calculation purposes.

Stock Areas and Bins

A stock area is an area identified for keeping a number of bins and each bin may store items in them. Stock areas can be defined in multiple levels without any restriction on the number of levels. This allows you to define locations, warehouses and bins as stock areas. You can also segregate stocks as sale, vendor returns, customer returns, or stocks in transit within these locations based on the nature of stocks. For example, you may define a warehouse called Warehouse - Mumbai and within Mumbai and nearby areas you may be having multiple storage locations. These storage locations can be defined as Stock Areas under Warehouse - Mumbai. A stock area is a general stock level whereas a bin is a detailed stock level. You can have any number of stock areas and bins under a parent stock area. You can define a location as the stock area at the highest level and bins at the lowest level. All stock areas defined within a warehouse are treated as belonging to the same tax jurisdiction.

Stock Area Types

Stock areas can be of two types - Stock and Out. The type Stock signifies that you own the inventory in the stock area. Examples for this type of stocks are:

  • Stocks available for sale.
  • Stocks with consignment agents.
  • Stocks with customers for Sale on approval basis where approval has not been received.
  • Stock of components or production materials in the shop floor.
  • Stocks being utilized for work in process.
  • Stocks identified for return to vendors.
  • Stocks returned by customers.
  • Stock-in-transit from one warehouse to another.
  • Stocks committed or reserved against sales orders.

The type Out denotes that the ownership of the inventory vests with an outside entity. Examples for this type of stocks are:

  • Sold items.
  • Stock received from vendors on sale on approval basis.
  • Returns expected from customers.
  • Stocks returned to vendors.
  • Stock-in-transit from vendor to your warehouse.
  • Stocks received from vendors that have to be inspected and approved for quality.
  • Stocks that have been written off.

Activities at a warehouse include the following:

  • Physical Storage: It includes storing materials in appropriate places, recording their location and periodical checking of stocks.
  • Stock Transfers: Stocks are required to be transferred from one stock area to another or from one warehouse to the other.
  • Tracking Items by Serial Number or Lot Number: The location of an item can be tracked by its serial number or lot number. Example: A serialized item returned by a customer has to be traced to its receipt date and its vendor for returns.
  • Recording Inventory Adjustments: If the physical quantity of stocks differs from the stock as per the books, inventory adjustments may be required to resolve the excess or shortfall in the books.