Causes of negative inventory in inventory management and corresponding measures

ArticleDirectory

• Buy after selling
• Temporarily estimated warehouse receiving and hongchong
• Inventory Overflow
• Human error
• Software computing error
• Avoid human errors
• Standard Operation
• Reasonable cost estimation to avoid cost exceptions
• Adjust manually by price adjustment ticket

Negative inventory is a common exception in inventory management. Although it is an exception, many negative inventory are not incorrect. Due to the complex causes of negative inventory, and the inventory costs are often abnormal, the negative inventory becomes an unavoidable challenge in inventory management. Next, we will analyze the causes of negative inventory and discuss the countermeasures for the inventory management software to deal with the negative inventory.

Causes of negative inventory

There are many causes for negative inventory, except for human errors, most of which are caused by inconsistent chronological order of book and actual warehouse receiving. If you strictly follow the method of warehouse receiving and warehouse picking, there will be no negative inventory; however, this approach is often not feasible in actual operation, therefore, most inventory management systems allow negative inventory within a certain range. The following summarizes the common causes of negative inventory:

Buy after selling

The purchased item is out of stock. You can borrow it from a nearby merchant or wholesaler to sell it to the customer, and then make up the purchase warehouse receiving ticket afterwards. In this case, the purchase warehouse receiving order is opened first, and then entered into the warehouse receiving order. Therefore, after the warehouse picking order is opened, the inventory of the item becomes negative.

Temporarily estimated warehouse receiving and hongchong

If the purchased goods are delivered but the invoice is not yet delivered, the goods cannot be officially imported into the Warehouse. You can temporarily estimate and import the goods to the warehouse. That is to say, first estimate the warehouse and then store the warehouse at the end of the month, and then re-estimate the warehouse at the beginning of next month until the Warehouse is placed into the warehouse after receiving the formal invoice. The inventory may change to a negative value after the end of the month is red.

Another case is that the input of the warehouse receiving ticket is incorrect. You need to reopen the new warehouse receiving ticket after the red rush. When the old warehouse receiving ticket is red and the new warehouse receiving ticket is not opened, the inventory quantity may be negative.

Inventory Overflow

The actual inventory quantity is greater than the book inventory quantity. At this time, if the actual inventory quantity is used for sales, negative inventory may occur.

For example, the book inventory quantity is 10, and the actual inventory quantity is 15. At this time, 12 books are sold out, and the book inventory is-2.

Human error

There are also some manual errors caused by negative inventory. For example, if the quantity entered during the purchase warehouse receiving is incorrect and the quantity entered is missing, and the actual quantity is used for warehouse picking, negative inventory may occur.

Software computing error

Some inventory management software is incomplete, which may result in leakage calculation and warehouse receiving, resulting in inventory cost exceptions.

Difficulties in managing negative inventory

Negative Inventory means that there is a difference between the book inventory and the actual inventory. This difference may be caused by work errors, or it may be caused by the reverse order of business processes (such as selling before buying. No matter what causes negative inventory, this is an abnormal scenario. After a negative inventory occurs, you should carefully check and analyze the causes to gradually reduce errors and standardize the order of business processes.

Negative inventory may lead to cost exceptions. In the case of negative inventory, the current warehouse is the goods that will be purchased and imported in the future, because it is the goods that will be purchased and imported in the future, therefore, the cost can only be inferred. The root cause of the cost exception is the speculative cost. If the estimated cost is significantly different from the cost of the purchased goods to be imported in the future, the cost of the inventory goods will be seriously affected. If the estimated cost is greater than the actual cost, the inventory cost may be low or even negative. If the estimated cost is less than the actual cost, the inventory cost may be high.

Example:

Warehouse receiving quantity	Warehouse receiving amount	Warehouse picking quantity	Outbound amount	Inventory quantity	Inventory amount
Beginning of period				10	50
		20	100	-10	-50
10	40			0	-10

Negative inventory measures to avoid human errors

If negative inventory occurs after warehouse receiving is strictly followed, it indicates that there is a human error. At this time, check carefully to find out the error and correct it.

Standard Operation

For the negative inventory caused by inventory overflow, you can open a report first, and then open a warehouse order, there will be no overflow.

Reasonable cost estimation to avoid cost exceptions

Pay attention to the cost of warehouse picking in the case of negative inventory. Reasonable estimation of warehouse picking costs can effectively avoid abnormal inventory costs. When estimating the warehouse picking cost, consider future warehouse receiving cost changes, that is, estimate the current Warehouse picking cost based on the future warehouse receiving cost.

Adjust manually by price adjustment ticket

When a cost exception has occurred, manually adjust the inventory cost.