A Guide to Setting Up Inventory Management in ERPNext Software for Retailers

Shajeer

    

06/03/2025

Inventory management is vital for retailers looking to maintain stock levels, minimize wastage, and ensure that their operations run smoothly. ERPNext software for retail offers a comprehensive set of tools to manage inventory efficiently.

Here is a guide to walk you through the steps to set up and manage inventory within ERPNext software for retail so you can optimize your stock and improve your business operations. offers a comprehensive set of tools to manage inventory efficiently.

Step 1: Configure Item Master

The Item Master is the foundation of inventory management in ERPNext. It defines the items you sell and sets up essential information for tracking and stock management.

• Go to Items > New Item
• Enter basic details like Item Code, Item Name, and Item Group.
• Choose item types (Stock, Non-Stock, or Service).
• Set default units of measure (e.g., pcs, kg).
• Optional: Configure reorder levels, batch tracking, and serial numbers for better control.

Step 2: Set Up Warehouses

Organizing your stock across multiple locations or warehouses is crucial for accurate inventory management. ERPNext allows you to set up multiple warehouses, making it easier to manage inventory at different locations.

• Navigate to Stock > Warehouses > Create New Warehouse
• Assign a Warehouse Code, and link to a Parent Warehouse if applicable.
• Add details like warehouse location.
• Save your warehouse structure.

Having warehouses set up helps you keep track of where each product is stored, improving organization and logistics management.

Step 3: Input Opening Stock Balances

To ensure your inventory is accurately tracked from the start, input your current stock levels. ERPNext allows you to enter your opening stock balances, which is critical for establishing accurate inventory records.

• Go to Stock > Stock Entry > New Stock Entry
• Choose the purpose: Opening Stock.
• Select the items and input the quantities.
• Save and Submit the entry.

Once this step is done, ERPNext will track stock movements and ensure that your opening balances are reflected in the system.

Step 4: Configure Stock Settings

Fine-tuning your stock settings ensures that you can manage and monitor your inventory effectively. These settings include options for serial numbers, batch tracking, and material requests.

• Navigate to Stock Settings under the Stock Module.
• Enable features like Manage Serial Numbers, Manage Batches, and Auto Material Request.
• Choose inventory valuation methods such as FIFO, Moving Average, etc.
• Save your settings.

Step 5: Link Inventory with Other Modules

For smoother operations, it is essential to link your inventory with other modules such as Sales, Purchase, and Manufacturing.

Sales Module: Link items to sales orders and invoices.

Purchase Module: Connect inventory with purchase orders to streamline restocking.

Manufacturing Module: Connect raw materials to finished products for better BOM (Bill of Materials) tracking.

These links ensure that stock movements are recorded correctly in all modules and that there's a seamless connection between sales, purchasing, and manufacturing.

Step 6: Automate Reordering

To avoid stockouts and ensure you always have enough stock, set up automatic reordering in ERPNext. This feature helps you stay ahead of demand and manage stock more effectively.

• Go to Item > Reorder Level
• Define reorder thresholds for each item.
• Enable automatic Material Request generation for automatic replenishment.

Step 7: Test Your Setup

Before fully launching your system, it is important to test everything. A test run helps identify any setup issues and ensures that your inventory processes work smoothly.

• Create stock entries, purchase orders, and sales invoices.
• Confirm that items are being tracked correctly.
• Check that reorder levels are working and stock movements are recorded accurately.

You can create a fully functional inventory management system in ERPNext by following these steps. Whether you're tracking stock across multiple warehouses or automating your reorder process, ERPNext software for retail offers the tools you need to manage your stock efficiently and reduce wastage.