Implementation
Warehouse accounting: how to organize and manage in small and medium-sized enterprises
If a manager cannot say for sure whether an item is in stock, and inventory checks regularly reveal unexplained shortages, the problem is not always with the employees. Often, the reason lies in the lack of unified rules: receipts are recorded late, transfers are not tracked, and actual stock levels exist separately from spreadsheets.
Warehouse inventory management helps you know what is stored, where, and in what quantity, allowing you to plan purchases and sales based on up-to-date data. To set it up, you don't necessarily have to implement complex software or hire extra staff right away. Start by counting your items, organizing the product catalog, and clearly dividing responsibilities.
In this article, we will explain how to organize warehouse inventory management from scratch and streamline daily operations. We will cover how to divide responsibilities among employees and maintain inventory accuracy.
You will learn where to start, how to organize goods, and how to choose a tool for inventory tracking. Six practical steps will help you transition from a notebook or Excel to a clear inventory management system within the first month.
What warehouse inventory management is and why a business needs it
Warehouse inventory management is the recording of the receipt, storage, and disposal of goods and materials, specifying their quantity and storage location. It shows which stock is available for sale or use, what needs to be reordered, and where losses occur.
Within a company, this data is connected to sales, procurement, production, and finance operations. If a manager sees outdated stock levels, they might accept an order for an item that is out of stock or turn away a customer even though the needed item is in another warehouse.
Properly organized warehouse inventory tracking helps avoid unnecessary purchases, identify the causes of discrepancies, and plan shipments without constantly double-checking with the warehouse worker. The owner gains the ability to check stock remotely, and the team works with consistent data.
How to organize warehouse inventory management in an enterprise: 6 steps
Organizing warehouse inventory management in an enterprise starts not with choosing software, but with auditing existing stock, analyzing warehouse management requirements, and establishing operating rules. For a company still keeping records in a notebook or Excel, it is enough to plan the transition over the first month.
Step 1. Count everything you have
Start with an inventory audit—a full physical count of goods and materials actually present in the warehouse. Without this, transferring data to a new system will only cement old errors.
During the count, pause stock movement if possible, or record all transactions separately. Divide the warehouse into zones, assign people responsible for counting, and record the actual stock levels of each item. If a product has different variations, batches, or units of measurement, account for them separately.
For example, Excel shows 120 filters of a specific model, but the count reveals 112. Do not change the number without an explanation: record the discrepancy and check recent receipts, shipments, and write-offs.
Result of week one: a list of actual stock with quantities, units of measurement, and recorded discrepancies.
Step 2. Organize your product catalog
A product catalog (nomenclature) is an organized list of goods, materials, and components that the company works with. Each item requires a clear name, a unit of measurement, and, if necessary, an SKU—a unique code for quick search and identification.
Remove duplicates, standardize names, and define rules for creating them. For example, "Air filter 200 mm", "Filter 200", and "Air Filter, 200mm" might turn out to be the same item recorded three times. Make sure it is indeed the exact same product before merging.
For equipment, it is important to distinguish models, power, dimensions, and configurations. For cables—type and length; for fasteners—size and material. If characteristics affect compatibility or price, they must be included in the product card.
Result of weeks one and two: a single catalog without duplicates where employees can quickly find the required item.
Step 3. Give every product its place
Bin location management (address storage) is a system where each item has a designated location in the warehouse. It is especially useful when there are many goods and employees waste time searching or moving boxes around.
First, zone the warehouse: separate receiving, main storage, order picking, shipping, and, if needed, defects and returns. Then label racks, shelves, and bins with codes. For example, address A-02-03 could mean Rack A, Shelf 02, Bin 03.
Assign addresses to items and enter them into your records. If an item is stored in multiple locations, record all addresses and the quantity in each.
Result of weeks two and three: the employee knows where the item is located, and the manager can check its storage location without calling the warehouse.
Step 4. Assign responsibilities and distribute permissions
A specific employee must be responsible for every warehouse operation.
A financially liable person is an employee who is legally entrusted with responsibility for the preservation of assets. A warehouse worker typically receives, stores, and issues goods, but the operating procedures should also define the authority of other team members.
For example, the warehouse worker handles receipts and shipments, the sales manager creates orders and views available stock, the procurement manager prepares supplier orders, and the manager approves write-offs and adjustments. Segment access rights so that not every employee can modify stock quantities or delete completed transactions.
Financial liability procedures must be formalized in accordance with the law. In particular, Article 135-1 of the Labor Code of Ukraine specifies the conditions for entering into a written agreement on full financial liability. Such an agreement cannot be signed with just any employee, but only under conditions stipulated by law.
Result of week three: everyone knows which operations they perform, who approves them, and who has the right to make changes.
Step 5. Agree on the rules
Unified rules define when and how to record the movement of goods. They should be concise, clear, and mandatory for all employees, regardless of shift or warehouse.
Establish standard operating procedures for core operations: receiving, transferring, reserving, shipping, returning, and writing off. Determine which documents confirm each action, who creates them, and who approves exceptions. The golden rule: no movement of goods remains unrecorded by the end of the working day.
If your business works with products that have different batches or expiration dates, establish a tracking procedure. Batch tracking allows you to see which batch an item belongs to. FIFO (First In, First Out) is the principle where goods received earlier are picked first. It is particularly relevant for perishable goods, though the specific picking order depends on the type of inventory.
Result of weeks three and four: a concise operating manual that can be used to train new employees.
Step 6. Choose where to keep records and enter stock balances
The tool should correspond to the number of goods, warehouses, and employees, as well as the complexity of operations. Keeping warehouse records in Excel may be sufficient initially if there are few items, inventory movement is simple, and one dedicated person manages the spreadsheet. However, as the team grows, it becomes harder to avoid duplicate file versions, accidental changes, and delays in data updates.
A warehouse ledger or spreadsheet must contain at least the date, item name or code, operation, quantity received, quantity issued, and current balance. For multiple warehouses, add the storage location, and for control, include the document number and the responsible employee.
If you need to simultaneously see balances, reserves, transfers between warehouses, and links to orders, it is worth considering dedicated software.
For example, in Keruj you can enter the product catalog, create warehouse documents, track stock levels, and reserve items for orders. This helps managers check product availability and allows business owners to monitor stock movement without manually combining several spreadsheets.
After choosing a tool, enter verified opening balances from the inventory count, verify units of measurement and bin locations, and run test transactions.
You can read more about setting up workflows in the article "How to set up a warehouse and inventory management system in Keruj".
Result of week four: accurate opening balances and a tool where the team can run daily operations according to agreed rules.
How to manage warehouse inventory properly
To keep data accurate after rollout, it is essential not only to set up the workflow but also to record every operation consistently. Managing warehouse inventory in an enterprise must rely on clear procedures for receiving, storing, shipping, returns, and regular reconciliations.
Receiving and recording stock
When receiving goods, check the quantity, product names, completeness, and condition of items against the accompanying documents. If the supplier delivered 48 units instead of 50 or if part of the shipment is damaged, record the discrepancy and draw up a corresponding act if required by procedure.
Record the goods into inventory only after verification and receipt processing. Do not add items to available stock before they have been received, and do not postpone paperwork until the end of the week. Otherwise, sales managers might sell items that are not yet physically available.
Storage and internal transfers
After receiving, place the items in the designated zone and record the bin location. Transfers between shelves, warehouses, or departments must also be recorded, even if the company's total stock quantity does not change.
For example, if 10 pumps are moved from the main warehouse to an installation crew, the balance in the first location must decrease by 10, and in the second, increase by 10. Without this record, goods can get lost between departments.
Shipment to customers
Before picking an order, verify available stock taking into account items that are already reserved. Reserving means an item is allocated to a specific order and must not be promised to another customer.
After picking, verify item names and quantities against the order, process the shipment, and immediately update stock levels. If part of the order is shipped later, record the actual shipped quantity and keep the remainder reserved.
Returns and write-offs
Returned items must first be inspected: can they be sold, do they require repair, or should they be separated as defective? Do not automatically return all items to available stock without assessing their condition.
Process write-offs for items that are lost, damaged, or can no longer be used or sold. State the reason, quantity, and responsible person, and obtain the necessary approval according to internal rules. This will help distinguish actual losses from record-keeping errors.
Regular reconciliation against physical stock
Reconciling stock levels shows whether the quantities in the software match physical stock. Do not wait for the annual inventory audit: use cycle counting by checking specific product groups on a schedule.
For example, expensive and fast-moving items can be counted weekly, and the rest once a month or on another schedule depending on risk. If you find a discrepancy, check documents and stock movements, identify the cause, and only then post an adjustment.
5 common mistakes in warehouse inventory management
Even a well-designed workflow will fail if the team regularly breaks the rules. The most common mistakes are:
Backdating transactions. This leads to managers seeing outdated balances and making decisions based on old data.
The same items have different names. Duplicates distort inventory counts and complicate searches.
Internal transfers are not recorded. The item is somewhere in the company, but cannot be located using system data.
Everyone has identical permissions. Anyone can alter stock balances, making it difficult to find the root cause of an error.
Audits are conducted only after a problem occurs. Discrepancies pile up, and their origins become hard to trace.
To avoid these situations, document your rules in writing, restrict editing permissions, monitor procedural compliance, and regularly analyze discrepancies.
Conclusion
Reliable warehouse inventory management begins with actual stock counts, a clean product catalog, and designated storage locations. The next steps are dividing responsibilities, implementing unified rules for stock movements, and choosing a tool that fits the company's needs.
Three rules worth implementing right away:
Record every receipt, transfer, and issue on the day of the transaction.
Assign a person responsible for each process and define access permissions.
Regularly reconcile records against physical stock and investigate the causes of discrepancies.
When these rules become part of daily operations, management gets real-time inventory visibility, and the business becomes less reliant on the memory of individual workers.
