3 Inventory System Design Examples for Efficiency
Effective inventory system design incorporates these essential components:
- Clear data structure for products, suppliers, and customers
- Defined workflows for purchasing, receiving, and fulfillment
- Integration points with accounting, sales, and operations
- Reporting and analytics for inventory optimization
- Stock control processes including stocktakes and adjustments
- Role-based access for different team members
Designing an inventory management system isn’t just about choosing software—it’s about structuring your data, defining workflows, and creating processes that support efficient operations. A well-designed inventory system reduces errors, speeds up fulfillment, provides accurate financial data, and scales as your business grows.
This guide presents three real-world inventory system design examples: one for wholesale distribution, one for manufacturing, and one for multi-location retail. These examples are based on actual BSimple implementations for Australian businesses. You’ll see how different business models require different system structures, but all share common design principles.
Whether you’re implementing a new inventory system or redesigning an existing one, these examples provide practical frameworks you can adapt to your specific business requirements.
Example 1: Wholesale Distribution System Design
A Sydney-based wholesale distributor of chemical and cleaning products needed an inventory system to manage 800 SKUs, 150 B2B customers, and 15 suppliers. Here’s how they designed their BSimple implementation:
Product Structure: Products organized by supplier and category (chemicals, cleaning supplies, packaging materials). Each SKU includes supplier code, barcode, unit size, carton quantity, and GST treatment. Customer-specific pricing stored at the product-customer level to handle volume-based pricing tiers.
Purchasing Workflow: Weekly purchase order cycles for each major supplier based on sales velocity. Auto-Builder reviews all SKUs for that supplier and suggests reorder quantities based on sales from previous 4 weeks, current stock, and target par levels of 2 weeks coverage. Manual review and adjustment before PO approval.
Customer Ordering: Each customer has a dedicated ordering portal showing their custom pricing and available products. Orders submitted through portal create pending orders for review. Once approved, orders enter fulfillment queue and sync to Xero as invoices.
Warehouse Operations: Pick lists generated daily for all approved orders. Warehouse staff pick and pack, then mark orders fulfilled. This decrements inventory and triggers shipping label generation. Quarterly stocktakes using mobile tablets to count and adjust discrepancies.
Financial Integration: All transactions sync to Xero in real-time—customer invoices, supplier bills matched to POs, inventory adjustments as journal entries. GST handled automatically based on supplier and customer GST registration. Monthly profit reports by customer and product category.
This design prioritizes customer service (custom pricing, easy ordering) and purchasing efficiency (automated suggestions with human oversight). Learn more about warehouse management approaches for distribution businesses.
Example 2: Manufacturing System Design
A Queensland coffee roaster needed inventory management for raw green coffee beans, packaging materials, and finished roasted products. They have 30 wholesale customers and direct-to-consumer online sales. Here’s their system design:
Three-Tier Product Structure: Raw materials (green beans from different origins), packaging components (bags, labels, boxes), and finished goods (roasted coffee in various pack sizes). Bill of materials tracks which raw materials and packaging go into each finished product.
Production Workflow: Weekly roasting schedule creates production orders that decrement raw materials and packaging while incrementing finished goods inventory. The system tracks raw material usage rates to ensure adequate bean stocks for planned production runs.
Dual Sales Channels: Wholesale customers order through dedicated portals with their negotiated pricing. Online consumer orders integrate from Shopify, sharing the same finished goods inventory pool. Stock allocations ensure wholesale commitments are met before online stock shows as available.
Purchasing Strategy: Green beans purchased quarterly in large shipments (container loads) based on annual forecasts. Packaging materials ordered monthly using Auto-Builder suggestions. The system tracks lead times for each supplier—12 weeks for imported beans vs 1 week for local packaging.
Quality and Traceability: Batch numbering for finished products tracks which raw material lots were used. This provides traceability for quality issues and enables recall management if needed. Stocktake processes verify both raw material and finished goods quantities quarterly.
This manufacturing design balances production planning with sales forecasting. The multi-tier product structure and batch tracking are essential for food manufacturing compliance. Our inventory management guide covers these manufacturing-specific requirements.
Example 3: Multi-Location Retail System Design
A Melbourne fashion retailer with 4 locations needed inventory management for 1,200 SKUs (products with size and color variants). They balance stock across stores based on local demand while enabling inter-store transfers. Here’s their design:
Variant Management: Each product (e.g., “Summer Dress – Blue”) has variants by size (XS, S, M, L, XL). Each variant is a separate SKU with individual stock tracking. Products organized by season, category, and brand for reporting and purchasing.
Location-Based Stock: Stock tracked separately for each retail location plus central warehouse. Each location has par levels based on local sales patterns—flagship store carries more inventory than suburban locations. Stock transfers between locations documented with transfer receipts.
Retail POS Integration: Sales at each store location sync from POS system to BSimple, decrementing location-specific stock and creating Xero invoices. Real-time stock visibility prevents selling items that are out of stock at specific locations.
Centralized Purchasing: Head office creates consolidated purchase orders for all locations based on total demand. When stock arrives at the warehouse, allocation to each retail location happens based on sales velocity and par levels. Transfer orders move stock from warehouse to stores as needed.
Seasonal Management: End-of-season stocktakes identify slow-moving items for markdown or transfer to higher-velocity locations. Stock aging reports flag products sitting in inventory beyond target turnover periods, informing clearance and purchasing decisions.
This retail design emphasizes location-specific stock control while maintaining centralized purchasing and financial oversight. Multi-location retailers need sophisticated stock visibility that legacy systems struggle to provide. See our retail inventory software page for more retail-specific features.
Common Design Principles Across All Systems
While these three examples serve different business models, they share fundamental inventory system design principles that any efficient system should incorporate:
Single Source of Truth: All three systems use the inventory platform as the authoritative source for stock data. Other systems (POS, ecommerce, accounting) sync from inventory rather than maintaining separate stock records. This prevents the nightmare of conflicting stock data across multiple systems.
Workflow Automation with Human Oversight: Automated processes (reorder suggestions, stock allocations, invoice generation) handle routine tasks, but humans review and approve critical decisions. This balances efficiency with business judgment.
Integration Over Duplication: Rather than re-entering data across systems, these designs integrate inventory with accounting (Xero), sales channels (POS, ecommerce), and operations (warehouse, production). Data flows automatically between connected systems.
Audit Trails and Documentation: Every stock movement, adjustment, and transaction creates documentation with date, user, and reason. This supports both operational accountability and financial audit requirements.
Scalable Structure: These system designs accommodate growth—adding new products, locations, customers, or suppliers doesn’t require redesigning the system. The foundational structure scales with the business.
Whether you’re designing inventory management for wholesale, manufacturing, retail, or other business models, these principles provide a foundation for efficiency and accuracy. Our cloud-based platform is built to support these design approaches with the flexibility to adapt to your specific business requirements.
Frequently Asked Questions
What are the key components of an effective inventory system design?
Effective inventory system design includes clear product data structure, defined purchasing and fulfillment workflows, integration with accounting and sales systems, role-based access control, reporting and analytics, and audit trails for all transactions. The specific structure varies by business model (wholesale, manufacturing, retail), but these core components apply universally.
How do you design inventory management for multi-location businesses?
Multi-location inventory design requires location-specific stock tracking, transfer workflows between locations, location-based par levels and reordering, centralized purchasing with distributed allocation, and consolidated reporting across locations. The system should track which stock is where while providing total inventory visibility for purchasing and financial reporting.
Should inventory system design include automated purchasing?
Effective design includes automated purchase order suggestions based on sales velocity, current stock, and lead times, but with human review and approval. Full automation without oversight can lead to over-ordering during declining sales periods or under-ordering when demand spikes. The best approach combines algorithmic suggestions with business judgment.
How does inventory system design differ for manufacturers vs wholesalers?
Manufacturing inventory design requires multi-tier product structures (raw materials, components, finished goods), bill of materials tracking, production workflows that consume inputs and create outputs, and batch tracking for quality and compliance. Wholesale design focuses more on supplier management, customer-specific pricing, and efficient fulfillment workflows without the production complexity.
What role does Xero integration play in inventory system design?
Xero integration should be fundamental to system design for Australian businesses, not an afterthought. Proper design ensures inventory transactions automatically create appropriate Xero entries—invoices for sales, bills for purchases, journal entries for adjustments. This integration provides accurate COGS, inventory valuations, and GST reporting without manual reconciliation.
Can I implement these inventory system designs with BSimple?
Yes, all three examples in this guide are real BSimple implementations for Australian businesses. BSimple’s flexibility supports wholesale distribution, manufacturing, multi-location retail, and hybrid business models. We provide setup support to help you design and implement the inventory system structure that fits your specific business requirements and workflows.