Inventory applications are only as good as the events and records that they manage. If a warehousing operation misses a scan or logs a transfer late, the application’s view of the physical environment becomes out of date.
For software architects and developers, the question of inventory accuracy begins with inventory events.
- Capture inventory events
A basic inventory management cycle consists of events such as
• RECEIVED – warehouse stock arrival
• TRANSFERRED – movement between warehouses
• PICKED – removal for fulfillment
• RETURNED – returned goods acceptance
• ADJUSTED – inventory correction
Each of these inventory events holds a product identifier, quantity, transaction time, location (from and/or to), and an identifier of the associated business document. Event types and accompanying data depend on the firm’s needs.
Event records serve the primary purpose of enabling audits – responding to inquiries about why the quantity changed. If the application has to determine the point-in-time quantity, it reconstructs it from the list of processed events.
- Inventory quantity and identification methods
When reading a barcode or RFID tag, always remember that the means of item identification do not ensure inventory accuracy.
The application has to take responsibility for processing and recording a change in quantity. This is where validation and database design come in for ensuring that the inventory application’s logic does not allow errors to happen. For example, using transaction identifiers and avoiding duplicates supports prevention of inventory overstatement due to an incorrectly processed RECEIVED event. The application must recognize duplicates and reject them. Even if scanning the same receiving label twice would not add quantity twice.
- Location and status
The quantity that the firm records as available for sale or use is not always the actual physical inventory.
Inventory management systems have to track quantities by location and status. A separate inventory balance arises for each property or geographic location and different statuses (e.g., available, reserved, damaged, or pending repair).
This approach applies particularly to multilocational businesses.
- Transactions and concurrency
When two employees have picked the same last piece of inventory, the application must handle the second request as an error. Without the proper locking or transaction mechanisms at the database level, an inventory application will allow the second fulfillment to proceed despite availability issues.
Systems engineers have to evaluate the application’s requirements for concurrency and choose the necessary data isolation level or introduce application-level checks and balances.
- Inventory exceptions
It is necessary to design the inventory reporting or alert system to support investigations into rejected transactions, incorrect adjustments, or significant variances between the application’s count and the actual inventory.
Therefore, the application has to support the collection and analysis of inventory exceptions, such as
• Failed inventory transactions or adjustments
• Inventory adjustments or adjustments that were repeated
• Unusual manual adjustments to inventory quantities
• Inventory system connection or synchronization failures
• Varying results from cycle counts and inventory counts
These data assist operations and technical support personnel in identifying and resolving inventory exceptions.
- Hardware and systems inventory exceptions
Barcode scanners, computer programs, and mobile devices involved in automatic inventory management operate in varying physical environments and have differing communication stability. Before finalizing the applications, it is necessary to examine edge cases involving reading integrity, connection stability, and hardware interoperability.
Hardware inventory exceptions include duplicate reading of the same label, incorrect reading, or application freezes or failures. On the systems side, exceptions arise when incorrect data are captured or when communication between peripheral devices and the application is hampered.
The Right Inventory Software Architecture Begins With Physical Inventory Activities
Inventory applications are not simple warehouses with goods and quantity values. These applications have to appropriately capture event data, ensure there are no transaction processing errors, reflect the state of physical inventory locations, and provide visibility into exceptions. Inventory management software architects need to design inventory applications according to the firm’s actual events and needs. Always document the required physical inventory activities at the event level.
To learn about the general concepts and components of inventory management systems, visit The Inventory Master.
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