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ERP 2.50:Functional Documentation/Warehouse Management



Fundamentally, warehouse management is the physical management of inventory. In some cases, inventory may be stored for an extended time. In other warehouses, that implement just in time practices, inventory experiences rapid turn over and the warehouse functions as a distribution center. A warehouse can contain raw materials, work-in-process inventory, finished goods, supplies, and possibly repair parts. As with other elements in the any distribution system, the objective of the warehouse is to minimize costs and maximize customer service. To do this, efficient warehouse operations perform the following:

The costs of operating a warehouse can be broken down into capital and operating costs. Capital costs are those of space and materials handling equipment. The space needed depends on the peak quantities that must be stored, the methods of storage, and the need for ancillary aisles, docks, offices etc. The major operating cost is labor, and the measure of labor productivity is the number of units that an operator can move in a day. This depends on the type of material handling equipment used, the location and accessibility of stock, warehouse layout stock location system, and the order-picking system used.

Warehouse Setup


Warehouse activities

Operating a warehouse involves several processing activities. The efficiency of a warehouse depends on how efficiently it can perform the following activities:

These are activities that take place in any warehouse. The complexity depends on the number of part numbers, quantities of each part number and the number of orders received and filled.

Inbound Inventory


Outbound Inventory


Physical Inventory

Physical Inventory is a process where a business physically counts its entire inventory. It represents an opportunity to correct any inaccuracies in the records. This helps planners as they are concerned with item detail. The physical inventory is usually taken by the materials manager. A good plan must exist and be followed.

Taking a physical inventory consists of four steps:

  1. Count items and record the count on the ticket left on the item.
  2. Verify this count by recounting or by sampling.
  3. When the verification is finished, collect the tickets and list the items in each department.
  4. Reconcile the inventory records for differences between the physical count and inventory records. Financially, this step is the job of the accountants, but material and personnel are involved in adjusting item records to reflect what is actually in the hand.

Goods Movements

A Goods Movement transfers inventory between storage bins or warehouses:

Bill of Materials Production

A bill of materials is a list that specifies the parts used to build a product. When a company produces a product, it must keep track of the materials and components used in its creation.

The following article includes examples on How to BOM Production.

Incoming Shipments

It is important for a warehouse to manage the receiving and warehousing of raw materials and incoming goods providing companies with real-time information about the state and location of every order and incoming shipment. This enables a company to optimize their inventory. The Openbravo ERP incoming shipments functionality details the type of receipt, delivery location and freight rules of shipments being received by a company.

Generate Average Cost

Average cost is equal to total cost divided by the number of goods produced. It is also equal to the sum of average variable costs plus average fixed costs. Average costs may be dependent on the time period considered. Average costs affect the supply curve and are a fundamental component of supply and demand.

Goods Transaction

There are multiple ways in which inventory can be stored and shipped to and from a warehouse. Goods transaction is a generic term that encompasses all of the different movement types that can accomplish this. Openbravo’s Goods Transaction functionality offers a read only view that shows the user all transactions processed by the warehouse.


Traceability is the ability to verify the history, location, or application of an item by means of documented recorded identification. In logistics, traceability refers to the capability for tracing goods along the distribution chain on a batch number or series number basis. Traceability is an important aspect for example in the automotive industry, where it makes recalls possible, or in the food industry where it contributes to food safety. The Openbravo Traceability Report allows a user to display the full lifecycle of an item showing initial receipt, creation, movement and shipment.

Configuration Manual

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