Warehouse Module - Business Requirements

Problem Statement

Organizations managing physical inventory face significant operational challenges:

  • Inventory Inaccuracy: Discrepancy between recorded and actual stock levels
  • Manual Processes: Time-consuming manual counting and record-keeping
  • Product Tracking: Difficulty tracking individual items through warehouse
  • Order Management: Lack of visibility into inbound/outbound movements
  • Scalability: Systems struggle with large inventory volumes
  • Visibility: Limited real-time insight into warehouse operations

Target Audience

User Type Responsibilities
Warehouse Managers Oversee inventory, process orders, manage staff
Inventory Staff Count inventory, receive/ship goods, scan RFID
Accountants Verify inventory accuracy, track variances
Supervisors Monitor operations, generate reports
System Administrators Configure catalog, manage units, system settings

Business Objectives

Primary Goals

  1. Accurate Inventory: Maintain accurate stock levels and variances < 2%
  2. Efficient Processing: Reduce order processing time by 50%
  3. Product Tracking: Enable tracking of individual items through RFID
  4. Visibility: Real-time inventory status and movement visibility
  5. Scalability: Support unlimited products and positions

Secondary Goals

  1. Reduce manual labor in inventory processes
  2. Improve customer satisfaction through faster order fulfillment
  3. Enable data-driven inventory decisions
  4. Support compliance and audit requirements
  5. Integrate with financial systems for accurate costing

Entity Definitions

Position (Aggregate Root)

Represents a catalog item or SKU in the warehouse.

Attributes:

  • Title: Product/SKU name
  • Barcode: Standard or custom barcode
  • Unit: Measurement unit (pieces, kg, meters, etc.)
  • Images: Product photos
  • Quantity: Total available units
  • Status: Active/inactive

Business Rules:

  • Position must have unique title per tenant
  • Barcode unique within tenant
  • Position cannot be deleted if products exist
  • Images are optional but recommended
  • Quantity calculated from product count

Product (Entity)

Individual trackable item instance.

Attributes:

  • RFID Tag: Unique identification
  • Position Reference: Which SKU this is
  • Status: Available, Reserved, Damaged, Missing
  • Creation/Update Timestamps

Business Rules:

  • RFID tag unique within tenant
  • Product status lifecycle: Available → Reserved → Shipped/Damaged/Missing
  • Product is immutable once created (only status changes)
  • Deleted products tracked separately (soft delete)
  • Status changes trigger events

Order (Aggregate Root)

Warehouse movement order.

Order Types:

  • Inbound: Receiving goods into warehouse
  • Outbound: Shipping goods from warehouse

Attributes:

  • Type: Inbound or Outbound
  • Status: Draft, Processing, Completed
  • Items: Line items (position + products)
  • Timestamps: Created, completed

Business Rules:

  • Order must have at least one item
  • Items reference specific products
  • Status progresses: Draft → Processing → Completed
  • Completed orders immutable
  • Cancellation allowed only in Draft state

Item (Entity)

Line item in an order.

Attributes:

  • Position: Which SKU
  • Products: Specific product instances included
  • Quantity: Number of units

Business Rules:

  • Item must reference existing position
  • Products must belong to position
  • Quantity must match product count
  • Items cannot be modified after order completion

Inventory Check (Aggregate Root)

Physical inventory verification event.

Attributes:

  • Name: Check identifier
  • Status: In Progress, Completed
  • Results: Per-position expected vs. actual counts
  • Created By: User who initiated
  • Created/Finished Timestamps

Business Rules:

  • Check records expected quantity from system
  • Check records actual quantity counted
  • Variance = Expected - Actual
  • Check can be marked complete by different user
  • Historical checks immutable
  • Can generate variance report

Check Result (Entity)

Per-position result in an inventory check.

Attributes:

  • Position: Which catalog item
  • Expected Quantity: System recorded quantity
  • Actual Quantity: Physical count
  • Difference: Variance (can be negative)

Business Rules:

  • One result per position per check
  • Captures exact quantities at point in time
  • Difference can be positive (overstock) or negative (shortage)
  • Large variances flag for investigation

Unit (Entity)

Measurement unit definition.

Attributes:

  • Title: Full name (Kilogram, Piece, Meter)
  • Short Title: Abbreviation (kg, pcs, m)
  • Status: Active/inactive

Business Rules:

  • Unit title unique within tenant
  • Abbreviation unique within tenant
  • Cannot delete unit if positions reference it
  • Standard units pre-configured

Business Rules by Entity

Position Rules

  1. Creation: Position must have title; barcode optional but recommended
  2. Uniqueness: Title and barcode unique within tenant
  3. Images: Optional but recommended for product visibility
  4. Quantity: Automatically calculated as sum of available products
  5. Deletion: Cannot delete if products exist (data integrity)
  6. Lifecycle: Position can be deactivated but not deleted

Product Rules

  1. Creation: RFID tag and position required
  2. Status Lifecycle: Available → Reserved/Damaged/Missing (never back to Available)
  3. RFID Uniqueness: Unique within tenant
  4. Immutability: Core attributes never change, only status
  5. Orphans: Products must always reference valid position

Order Rules

  1. Item Requirements: Order must have at least one item
  2. Status Flow: Draft → Processing → Completed (one-way)
  3. Completion: All products must be accounted for
  4. Cancellation: Only allowed in Draft status
  5. Tracking: Order dates track creation and completion
  6. Audit Trail: All order changes logged

Inventory Check Rules

  1. Completeness: All positions must be counted
  2. Timing: Check done at point in time (snapshot)
  3. User Tracking: Records who counted and when
  4. Immutability: Completed checks cannot be modified
  5. Variance Analysis: Variances > threshold flagged for review
  6. Correction: Variances trigger investigation/correction workflow

Inventory Workflows

Inbound Workflow 

flowchart TD
    A["Receive Goods Notification"] --> B["Create Inbound Order"]
    B --> C["Add Items to Order"]
    C --> D["Add Product RFID Tags"]
    D --> E["Scan/Verify Tags"]
    E --> F["Update Product Status<br/>to Available"]
    F --> G["Mark Order Complete"]
    G --> H["Update Position Quantities"]
    H --> I["Inventory Available<br/>for Sale"]

Outbound Workflow 

flowchart TD
    A["Sales Order Received"] --> B["Create Outbound Order"]
    B --> C["Allocate Products"]
    C --> D["Update Product Status<br/>to Reserved"]
    D --> E["Pick and Pack"]
    E --> F["Scan Products<br/>to Verify"]
    F --> G["Update Product Status<br/>to Shipped"]
    G --> H["Mark Order Complete"]
    H --> I["Shipping Fulfilled"]

Inventory Check Workflow 

flowchart TD
    A["Schedule Inventory Check"] --> B["Create Inventory Check"]
    B --> C["For Each Position:<br/>Count Physical Units"]
    C --> D["Record Actual Count<br/>in Check Result"]
    D --> E{"All Positions<br/>Counted?"}
    E -->|No| C
    E -->|Yes| F["Complete Check"]
    F --> G["Calculate Variances"]
    G --> H["Flag Large Variances"]
    H --> I{"Investigate<br/>Issues?"}
    I -->|Yes| J["Create Correction Order"]
    J --> K["Update Inventory"]
    I -->|No| L["Archive Check<br/>Results"]

Product Lifecycle 

flowchart TD
    A["Create Product<br/>Status: Available"] --> B{"Event:<br/>What happens?"}
    B -->|Reserved| C["Update Status<br/>to Reserved"]
    B -->|Damaged| D["Update Status<br/>to Damaged"]
    B -->|Missing| E["Update Status<br/>to Missing"]
    B -->|Shipped| F["Update Status<br/>to Shipped"]
    C --> G["Final State"]
    D --> G
    E --> G
    F --> G

Key Performance Indicators

Inventory Metrics

KPI Target Measurement
Inventory Accuracy > 98% Variance / Expected Qty
Stock Turnover 6x/year COGS / Avg Inventory
Order Processing Time < 2 hours Time from order to completion
Pick Accuracy > 99.5% Correct items / Total items picked
Inventory Check Time 2 hours/1000 items Labor hours to count

Operational Metrics

KPI Target Measurement
Data Availability 99.9% Uptime of inventory system
Product Lookup < 50ms RFID scan to result
Concurrent Users 50+ Simultaneous connections

Data Management

Retention Policies

  1. Active Inventory: Keep indefinitely
  2. Completed Orders: Archive after 2 years
  3. Inventory Checks: Keep 3 years (compliance)
  4. Historical Status: Track permanently (audit)
  5. Deleted Products: Soft delete, keep 1 year

Backup Requirements

  1. Daily incremental backups
  2. Weekly full backups
  3. Monthly archive to cold storage
  4. Disaster recovery test quarterly

Compliance & Audit

  1. Audit Trail: All inventory movements logged
  2. Change History: Who changed what and when
  3. Variance Reporting: Monthly variance analysis
  4. Access Control: Role-based permissions
  5. Data Integrity: Referential integrity enforced

Integration with Other Modules

Finance Module

  • Inventory valuation (FIFO, LIFO, Weighted Average)
  • COGS calculation from inventory movements
  • Variance impact on financial statements

CRM Module

  • Product availability for customer orders
  • Stock levels visible to sales team
  • Backorder visibility

Orders Module (Future)

  • Direct integration with sales orders
  • Automatic inventory reservation
  • Fulfillment tracking

Future Enhancements

  1. Advanced Analytics: Trend analysis, forecasting
  2. Barcode Generation: Auto-generate and print barcodes
  3. RFID Integration: Real-time RFID reader integration
  4. Multi-Warehouse: Support multiple warehouse locations
  5. Kitting: Bundle products into kits
  6. Barcode Scanning: Mobile app for warehouse staff
  7. Alerts: Low stock, expiration date, variance alerts
  8. Reports: Advanced inventory reports and dashboards
  9. Automation: Auto-reorder points, cycle counting
  10. Cost Analysis: Product-level costing and margin tracking

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IOTA SDK - Multi-tenant Business Management Platform