1. Definition
   1. Period-end inventory report
   2. Inventory difference report
2. Types of transactions of inventory fluctuations
   1. Inbound
   2. Outbound
      1. Regular sales outbound.
      2. Abnormal outbound: replacement delivery, sales liquidation, destruction…
   3. Return
      1. Refund order (RE)
      2. Failed delivery (RT)
      3. Return damaged/error goods (~ return for B2B orders)
   4. Abnormal inventory adjustment: When inventory discrepancies are detected, loss or damage during operation.
      1. Positive adjustment: deduct stock.
      2. Negative adjustment: plus stock.
   5. Internal rotation
   6. Transfer SKU: bundle, split, exchange product SKUs.
3. The main causes of inventory differences
   1. The difference in the time of recording transactions fluctuation inventory between the two systems
   2. Operation error

• Untimely or missed recording of inventory adjustment transactions in subparagraph (a)
• Do not make internal monthly adjustment reports to review and evaluate which transactions have been recorded and which have not been (Processing of temporary differences)
  • Data sync failure on WMS systems and accounting systems

Synchronization of inbound and outbound transactions is not 100% guaranteed, leading to skipping transactions in one of the two systems.

Transaction omission errors cause permanent discrepancy, which should be detected and handled in a timely manner.

4. Inventory discrepancy reporting and management solutions

Boxme provides a tool called Insights that helps customers assess and analyze period-end inventory discrepancy for each specific transaction.

Process of implementation:

1. Customers download the period-end inventory report and the detailed inventory movement report by transaction type from the accounting system to SharePoint on a monthly basis; this is then synchronized to the Power BI data warehouse.
2. Boxme automatically synchronizes the period-end inventory report and the detailed inventory movement report by transaction type of the customer to the data warehouse.
3. The Insights system performs comparisons and generates inventory discrepancy reports by transaction type, including:

• Inbound a new shipment
• Outbound
• Return
• Damaged goods adjustment (D)
• Abnormal Inventory Adjustment: When inventory-related variances are detected.
• Internal rotation

At each type of transaction, the Insights system will control and display detailed differences to each specific transaction (according to the transaction code – Referral ID ) .

  From there, customers can classify and assess the causes of differences according to two main groups:

• Temporary Discrepancy: Transactions have been recorded on one system (WMS or ERP), but have not yet appeared on the other system due to update time differences or asynchronous. → These differences will be automatically adjusted in the following periods , without immediate manual intervention.
• Permanent Discrepancy: Transactions do not exist on either system and there is no ability to synchronize later (e.g. lost, wrong operation, or unrecorded transactions). → Need manual processing and root cause identification to adjust metrics , workflows and updates to reports.

Results of the analysis:

• Period-begin inventory: The discrepancy carried forward from the previous period.
• Fluctuation inventory during the period: The system displays detailed discrepancies by transaction type.
• Period-end inventory = Period-begin inventory + Fluctuation inventory during the period

The time inventory difference between the two systems is not necessarily a risk (loss) of the enterprise, but reflects the difference in data in operating processes and management methods. However, it is important for businesses to identify and evaluate unexplained differences, thereby taking appropriate control and management measures.