Inventory, Sales & Procurement (进销存) with ERP

What 进销存 means

"进" is purchasing (procurement), "销" is sales (orders and fulfillment), and "存" is stock (inventory). Every trading or manufacturing business runs these three flows constantly. Done well, they tell you what to buy, what you can sell, and what you actually have.

Why standalone spreadsheets break

• Stock counts drift from reality as sales and purchases happen faster than anyone updates a file.
• Overselling — promising customers goods you do not have — becomes likely under volume.
• Purchase decisions lag because no one sees true available-to-promise stock in time.
• Finance cannot tie inventory value to the ledger without heavy manual reconciliation.

Core modules ERP unifies

• Procurement — purchase requests, supplier quotes, purchase orders and goods receipts.
• Sales order management — quotations, sales orders, picking, packing and shipping.
• Inventory control — real-time stock levels, lot/serial tracking, cycle counts and multi-warehouse transfers.
• Warehousing — put-away, bin locations and inbound/outbound workflow.
• Integration with finance — every movement posts to inventory valuation and the ledger automatically.

Available stock is arithmetic, not a number you look up

The single most common source of overselling is treating stock as one quantity. A usable system keeps at least four figures separate and recomputes them continuously:

• On-hand — physically present in the warehouse right now.
• Allocated (reserved) — committed to confirmed sales orders but not yet picked.
• Available-to-promise — on-hand minus allocated; the only number sales should quote against.
• In-transit — purchased and shipped but not received, which belongs in forward planning and not in what you can promise tomorrow.

When these collapse into one field, two failures follow in opposite directions: the business sells goods it does not have, or it refuses orders while sitting on saleable stock because nothing is reconciled in real time. Ask a vendor to show the availability calculation updating the moment a sales order is confirmed — batch or nightly recomputation is where overselling comes from.

The valuation method quietly decides your margin

Two companies can sell the identical shipment at the identical price and report different gross margins, purely because they value inventory differently. The method is not a technicality; it determines the cost figure subtracted from revenue on every issue:

• Moving weighted average — recalculates unit cost on every receipt. Purchase price swings are smoothed, which most trading businesses prefer and which Chinese accounting practice commonly applies.
• FIFO — issues the oldest cost first. Ending inventory tracks recent prices more closely, and margins move earlier when purchase prices shift.
• Standard cost — issues at a predetermined cost and posts differences to variance accounts. Best suited to manufacturing, where separating price variance from usage variance helps production accountability.

Whichever you choose, it must be applied consistently and agreed with your accountants, because changing it mid-year restates prior margins. Because every issue also posts to the ledger, this is the point where inventory and finance meet — the mechanism described in our financial and ERP integration guide.

Multi-channel, cross-border and overseas warehouses

Selling across channels is where simple inventory systems fail hardest. Each marketplace, B2B portal and offline account draws from the same pool, and a sale on any one of them must reserve stock everywhere else within seconds — otherwise the same unit is sold twice. The requirement list is specific: channel connectors that sync available quantity rather than raw on-hand, a low-stock threshold with alerting per warehouse, and a rule for what happens when channels compete for the last units.

Cross-border sellers add two more: overseas warehouses whose stock must be visible group-wide while still producing local books, and bonded versus ordinary trade stock that cannot be mixed. Exporters should additionally check that issued quantities reconcile against customs declarations, since the same numbers determine export rebate eligibility. That requirement is covered in our buying guide for Chinese export companies.

Who needs it

Distributors, retailers and trading companies with many SKUs; manufacturers tracking components and finished goods; and any business running multiple warehouses or selling across channels (online, wholesale, overseas). A very small shop with a handful of products can manage with basic inventory software, but the moment channels or SKU counts grow, ERP pays off.

How to choose

• Match the system to your actual flow: make-to-stock, make-to-order, or pure distribution.
• Confirm it handles your units of measure, batches/serials, and multi-warehouse logic.
• Check that sales channels (marketplace, B2B portal) connect without custom coding.
• Verify inventory valuation methods (standard, moving average, FIFO) fit your accounting.

Why stock records go wrong

Inventory accuracy rarely collapses from one big failure. It erodes through small habits, and by the time the count is off by a meaningful margin, nobody can say which habit caused it.

• Documents lag reality. Goods physically arrive and leave before anyone records them, so the system describes yesterday. Scanning at the point of movement is cheaper than an annual correction.
• Inconsistent units of measure. Purchasing buys cartons, sales sells pieces, and the warehouse counts pallets without reliable conversions.
• Negative stock is permitted. Allowing issues below zero hides timing errors instead of exposing them, and produces nonsense valuation.
• No lot or serial traceability. Without it, a quality issue means scrapping the whole warehouse rather than one batch.
• Counting only once a year. Cycle counting high-value or fast-moving items continuously surfaces discrepancies while they are still fixable; an annual shutdown only proves the size of the loss.

Common questions