Inventory Management Terminology Guide

Warehouse

A Warehouse serves as a container for stored goods, ensuring product integrity and maintaining normal business operations. It systematically categorizes and records the status of various goods through clear visual representations, displaying details such as quantity, quality, geographic location, department, order ownership, and distribution levels—forming a comprehensive management approach.

Inventory

Inventory refers to the actual products stored in a warehouse. Maintaining optimal inventory levels involves balancing minimal investment and management costs while ensuring sufficient stock to meet business demands and reduce shortages.

Shipping Order

A Shipping Order is a critical document used by businesses to dispatch products to designated recipients or companies. It serves as proof for pickup, exit, transportation, and acceptance, and is a key record for tracking sales revenue.

Return Order

A Return Order is issued when customers need to return purchased items due to errors or quality issues. This document facilitates the return process and updates relevant records accordingly.

Inbound Order

An Inbound Order verifies the quantity of goods received, acting as a control mechanism for procurement personnel and Suppliers. Without proper inbound tracking, businesses risk fraudulent activities like overstated purchases or missing items. It’s a vital internal management and control document.

Outbound Order

An Outbound Order confirms the quantity of goods dispatched, monitoring inventory outflow. Lack of proper outbound controls may lead to lost or missing items without traceability, causing financial losses. This document is essential for internal inventory management and relates to Warehouses, Inventory, batches, and serial numbers.

Transfer Order

A Transfer Order records the movement of goods between different Warehouses within the same company, reducing stock in the source Warehouse while increasing it in the destination Warehouse. This process helps balance inventory supply and consumption.

Inventory Check Sheet

An Inventory Check Sheet documents periodic or ad-hoc Warehouse audits, recording discrepancies between book quantities and actual physical counts.

Purchase Order

A Purchase Order is a practical procurement plan developed by businesses based on factors like Sales Order volumes, Inventory levels, and in-transit quantities.

Purchase Return Order

When Distributors need to return purchased items to brand owners due to expiration, damage, or slow sales, a Purchase Return Order processes these returns, updating relevant Purchase Orders and Inventory records accordingly.

Serial Number

For large machinery, a Serial Number (or “machine code”) serves as a unique identifier for anti-counterfeiting purposes. Like a personal ID, each device has one distinct Serial Number.

Batch

In fast-moving consumer goods and healthcare industries (e.g., pharmaceuticals, reagents), Batch management is common. Different Batches may vary in attributes due to production processes or materials, or require distinction for Shelf Life or quality tracing purposes. Enabling Batch management effectively addresses these needs.