Inventory Flow Explained
Quick Summary
Inventory management in SIM tracks quantity of physical goods. Stock increases on purchase records and decreases on invoices. Manual adjustments, low-stock alerts, and valuation settings keep quantity and value aligned.
What Is This Feature
Inventory management in SIM tracks the quantity of physical goods a business holds at any point in time. Stock levels update automatically, and the system supports manual stock adjustments and low inventory alerts.
When To Use This Feature
Enable this as part of initial setup if you sell physical products and need stock tracking with valuation support.
What Affects Inventory
| Action | Effect on Inventory |
|---|---|
| Invoice (Sale) | Stock decreases |
| Purchase Record | Stock increases |
| Manual Adjustment | Stock increases or decreases |
| Estimate / Quotation | No effect |
| Sale Order | No effect |
| Purchase Order | No effect |
| Delivery Note | No effect |
Step-by-Step Flow
Flow: Enabling Inventory
- Go to Settings -> Inventory Management and turn it on.
- Enable Low Inventory Alert if needed.
- Select an Inventory Valuation Method.
- For each product, enable Enable Product Inventory and set opening stock and minimum alert level.
Flow: Manual Inventory Adjustment
- Open the product from product list.
- Tap Add Inventory Manually.
- Choose stock increase (stock-in) or decrease (stock-out).
- Enter quantity and reason, then save.
Flow: Automatic Inventory Adjustment
When a purchase record is created, stock quantity for the selected products is automatically updated.
Flow: Low Inventory Alerts
- Go to Inventory and tap Alert.
- Products below minimum alert level appear in this list.
- Use it to prioritize reordering.
Fields Explanation
| Field | What It Means |
|---|---|
| Enable Product Inventory | Per-product switch. Turn on to track quantity for that item. |
| Opening Stock | Quantity available when product is first created. |
| Minimum Alert Level | Reorder threshold for low stock notifications. |
| Stock-In | Increase in quantity from purchases or manual stock addition. |
| Stock-Out | Decrease in quantity from sales or manual stock removal. |
| Inventory Valuation Method | Rule used to calculate stock value and cost of goods sold. |
Manual Inventory Adjustment
Manual adjustment updates stock without creating sale or purchase transactions. Typical use cases:
- Items consumed internally or personally
- Damaged or expired goods
- Free samples
- Corrections after physical stock count
- Lost or stolen goods
- Opening stock corrections
Concepts and Valuation Methods
Why valuation matters: Valuation method affects COGS, reported profit, and value of unsold stock.
Reorder Point: Minimum alert level where reordering should begin to avoid stock-outs.
1. Actual Average Buy Rate (Weighted Average Cost)
Average cost of all purchased units is used for each sale. Best for most businesses with varying purchase prices.
2. FIFO (First In, First Out)
Oldest purchased stock is considered sold first. Useful for perishable goods and time-sensitive stock.
3. Fixed Buy Rate
A fixed cost is used regardless of later purchase price changes. Useful when purchase rates are stable.
Interaction With Other Features
- Reorder Management: Generates purchase actions based on minimum stock levels.
- Batch Upload (Inventory Data): Add or update inventory-related product data in bulk.
- Sales Return: Sales return from invoice updates inventory quantity.
- COGS: Cost of Goods Sold depends on selected inventory valuation method.
Optional Sub-Feature: Physical Stock-Take
Use physical stock-take to reconcile differences between app-calculated inventory and actual stock by adding reconciliation edits.
Also use Reconciliation Edit in the field references section of Inventory Management.
Alternate Terms
| App Term | Also Known As |
|---|---|
| Inventory | Stock, Goods, Merchandise, Stockroom, Store |
| Stock-In | Goods Received, Inward, Purchase Entry, Positive Adjustment |
| Stock-Out | Goods Issued, Outward, Sales Deduction, Negative Adjustment |
| Minimum Alert Level | Reorder Point, Safety Stock Level, Low Stock Threshold |
| FIFO | First In First Out, Queue Method |
| Weighted Average | Moving Average, Average Cost Method, WAC |
| Inventory Valuation | Stock Valuation, Cost Method |