Inventory transfer 101: What it is and 5-step process

When your business is scaling, you may need to manage multiple warehouses. Inventory transfer then is likely to be an activity your business has to do frequently. Below, we’ll look at what inventory transfer is and 5 steps to perform it.

What is inventory transfer?

An inventory transfer, also known as stock transfer or warehouse transfer, is the movement of physical inventory items from one warehouse location to another.

Merchants should track bin location during inventory transfer

Here are some cases that retailers need to do inventory transfer:

  • Improve inventory availability when you sell items via multiple stores and channels. Normally, merchants will have a central warehouse to store products. When receiving requests from stores, warehouse staff will move items from this warehouse to stores. Additionally, if one of the stores lacks a few items while they’re selling well, retailers transfer items from other nearby stores to restock quickly. 
  • Do consignment activities. Some businesses will send their items to partners for consignment purposes. These items haven’t been sold yet and are still assets of the business so merchants need to keep track of these movements as a warehouse transfer. 
  • Manage spoiled, expired, and damaged items. When there are any damaged goods, warehouse staff will have to move them to a separate location. 

Inventory transfer vs. inventory adjustment

inventory transfer vs inventory adjusment

The major difference between inventory transfer and inventory adjustment comes from their purposes. Inventory adjustments are inventory changes made to match an item’s theoretical quantity with their actual on-hand quantity. Inventory transfer is to fulfill sales, manage consignment activities, and separate damaged items with normal products. 

There is also a difference in the frequency of stock transfer and stock adjustment. Merchants can do inventory transfers anytime they need. However, they just perform inventory adjustment after doing the physical stock count. Depending on the needs of business, stock count can be performed at the end of each month or more than once per month.

Inventory transfer process: 5 steps to follow

Let’s walk through the process to perform a warehouse transfer.

Step 1. Plan for inventory transfer

Warehouse managers or the sales department in charge of requesting transfer need to know when to do it, which items should be transferred, as well as what the source and destination are.

You first can keep in mind some following references to decide whether you have to request any transfer or not.

  • Some items are out of stock: If some items are out of stock, you need to find a way to restock. You can request from nearby stores or central warehouses.
  • Low stock notification: When current on-hand inventory is under the minimum level, besides reordering from suppliers, you can request a transfer from other warehouse to fulfill.
  • Demand forecasts: For example, if you predict that some items will have higher demand from customers, to optimize inventory, you can transfer items from stores with lower demand to these stores.
  • Request from consignee: You’ll have to fulfill items to consignee’s site to make sure products are in stock to sell.

After making sure that a transfer is necessary, an inventory transfer proposal is sent to ask for approval. Then, you can go to the next step if inventory transfer is approved.

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Step 2. Create inventory transfer request

Inventory manager or accountant department will create a stock request document and send it to the sending warehouse. A stock request should include the following details:

  • Sending stock (source warehouse)
  • Receiving stock (destination warehouse)
  • Item name
  • Unit of measure (UOM)
  • Quantity to transfer
  • Stock request number

Step 3. Deliver items from source inventory to destination inventory

After receiving a stock transfer request, staff in the source warehouse will print a slip. Then, they check stock to verify whether items are available to transfer. 

Normally, merchants manage inventory by barcode or RFID, so during picking steps, they can scan the barcode or RFID to record items transferred. 

After picking and packing, retailers can transfer items between two warehouses by internal transportation or third-party services. Then, stock in the sending warehouse decreases. 

Step 4. Receive items

When items come to the destination warehouse, staff have to check the quantity to make sure they match with goods delivery slip. 

In the case you transferred 10 items but 3 got lost or damaged on the way, the staff need to record the difference and inform the manager or accounting department.  

They then issue a goods receipt and scan barcodes or RFID to record items received.

Manage warehouse with bin location

Step 5. Put-away

If you locate your goods with different levels like bin, shelf, and rack, you need to transfer items to the right location. Normally, if they use an inventory system to manage items, in this step, they have to record bin code and quantity in each bin. Retailers can easily know the exact location of each item. 

Key takeaways

Inventory transfer is the process of moving items from one warehouse to another warehouse. To perform a stock transfer, you need to go through 5 steps:

  • Plan for inventory transfer
  • Create inventory transfer request
  • Deliver items
  • Receive items
  • Put-away

A stock transfer needs a smooth collaboration of people, process, and tools. Therefore, besides understanding the process, you also need to have the right tools to manage inventory activities effectively. Are you looking for a solution to your inventory transfer? Talk to one of our business consultants and make your warehouse movement easier than ever.