ERP Inventory Management Module

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What is ERP Inventory Management Module?

The ERP Inventory Management Module is a software application designed to help businesses manage their inventory in real-time. It is typically a part of a larger ERP system that integrates various business processes, including inventory management, production, accounting, and sales.

The ERP inventory management module comprises automated processes for tracking, measuring and replenishing inventories. Consequently, organisations can maintain large inventories at different locations without compromising on efficiencies.

Functions of Inventory Management Module

Some of the key functions of the inventory management module of an ERP system are:

  • The module maintains information related to the inventory needs of different departments of an organisation.

  • The module enables an organisation to keep records on the type and quantity of materials issued to the concerned department, etc.

  • The module records both qualitative and quantitative material details at the time of their receipt.

  • The module keeps a record of all internal material transfers in terms of the amount of materials transferred, details of the branch to which the materials are transferred, etc.

  • The module carries out automatic inspection of inventoried materials and offers detailed information on the inspection process.

Sub-Modules of ERP Inventory Management Module

The ERP inventory management module works with its various sub-modules in order to manage the entire inventory management process. Some of these sub-modules of erp inventory management module are as follows

Inventory requisition

This sub-module helps different departments of an organisation to notify their inventory requirements to the inventory department. At the same time, it helps the inventory department to access the details of inventory needed by various departments.

Besides, the inventory requisition sub-module offers information related to the current inventory level, and the minimum and maximum amount of inventory to be purchased. This information helps the inventory department to estimate an optimum inventory level to be purchased.

Inventory order assessment

After the optimum level of inventory is estimated, a purchase order is to be placed by an organisation in order to fulfil inventory requirements identified. However, before a purchase order is placed, the identified inventory requirements are compared with the minimum inventory needed to fulfil the requisition.

Thereafter, the final inventory to be purchased is estimated. The inventory order assessment sub-module also helps to generate a list of potential suppliers to obtain the inventory.

Inventory order placement

After a list of prospective suppliers is generated, the inventory order placement sub-module generates a purchase order. This purchase order comprises the following details:

  • Purchase order date
  • Quality desired
  • Supplier details
  • Name of the department in need of inventory
  • Itemised purchase cost
  • Order shipping mode
  • Payment mode

Supplier pro forma

This sub-module of the ERP inventory management module allows an organisation to collect sales proposals or quotations from its prospective suppliers. A sales proposal or quotation comprises the following particulars:

  • The quantitative and qualitative material specifications provided by a supplier
  • The timeframe in which materials can be supplied
  • The cost of each type of material to be supplied
  • The shipment mode
  • The preferred date and time for the payment of material to be supplied.

Based on the details provided by prospective suppliers, organisations are able to take a rational purchase decision.

Order receipt and inspection

After the order is received, it is properly reviewed and analysed before payment for it is made. This is mainly carried out to ensure that the received materials match with the ordered materials with regard to quality and quantity. Thereafter, if the materials received are as per the materials ordered, organisations accept the order and store materials received in its warehouse.


After the received order is accepted, organisations carry on with the suppliers’ payment. Organisations need to ensure that the correct payment is made to the right person through the right mode. Here, the invoicing sub-module helps in ensuring that the due amount is paid to the rightful supplier safely.

While doing so, this sub-module also maintains a record of essential information related to payment like amount paid, mode of payment, receipt number of payment, etc.

Features of ERP Inventory Management Module

The main feature of an ERP inventory management module is that it enables an organisation to regularly respond to customers’ requirements by tracking inventory levels for quick replenishments.

Some of the other key features of erp inventory management module are as follows:

  • It involves quality check parameters, which help to identify the expected quality level of materials.

  • It helps in continuous inventory analysis, which ensures that an optimum level of stock is always maintained.

  • It helps in extensive inventory monitoring by taking into consideration the rate of inventory consumption.

  • It helps in automatically updating the status of stock on hand, reserved stock, ordered stock, defective and rejected stock, etc.

Benefits of ERP Inventory Management Module

The ERP inventory management module brings flexibility in an organisation’s ways of handling complex storage needs by maintaining production as per schedules and delivering products to customers on time.

Following are the benefits of erp inventory management module:

  • It helps an organisation in continuously tracking the current inventory level and planning the stock to be purchased accordingly.

  • It eases tracking the movement of materials.

  • It provides details of all operations taking place in the inventory management process

Limitations of ERP Inventory Management Module

Although the module enhances overall organisational efficiency, it has certain limitations. Following are the limitations of erp inventory management module:

  • It cannot be completely customised according to various organisational requirements.

  • It calls for high cost, time and efforts of an organisation.

  • It needs previous data and proper user training for its installation, which can be a complex process.

  • It is not so effective for information sharing unless users want to share information.
Article Source
  • Alavudeen, A. and Venkateshwaran, N. (2008). Computer Integrated Manufacturing. (1st ed.). New Delhi: PHI Learning Pvt. Ltd.

  • Graham, D., Manikas, I. and Folinas, D. (2013). E-Logistics and E-Supply Chain Management: Applications for Evolving Business. (1st ed.). Hershey, PA, USA: IGI Global.

  • Small Business –,. (2015). Top Ten Ways to Manage Inventory. Retrieved 14 February 2023, from

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