DIO (Days Inventory Outstanding)
(Avg inventory ÷ COGS) × period days
↓ Lower is better
Scenario · Inventory & Supply Chain · For supply-chain, warehouse and procurement leaders
SAP Business One Inventory and Supply Chain Solution: Accuracy, Turnover, Batch Control and Working Capital
Manage inventory accuracy, turnover, batch control and working capital
SAP Business One posts goods receipts and issues in real time, instantly updating stock and valuation; with bin locations, batches, serial numbers and cycle counting, book-to-physical differences are found and cleared in the same period — implementation clients typically lift inventory accuracy from 70% to 95%.
Inventory accuracy↑
From 70% to 95%; daily accuracy reaching 100%
Real result from MTC-delivered SAP Business One clients
Dead-stock reduction↓
Slow-moving item storage period cut 57%
Real result from MTC-delivered SAP Business One clients
Inventory reconciliation→
System quantity matches physical stock
Inventory accuracy and control
SAP Business One Gold Partner MTC · Delivering since 2009 · 760 clients served
Inventory accuracy, turnover and working-capital issues
Differences between system and physical inventory
System quantities do not agree with physical warehouse quantities.Management impact: This affects available-stock decisions, shipment planning and inventory valuation.
Slow-moving inventory ties up working capital
Slow-moving and overaged items are not identified and reviewed consistently.Management impact: Excess inventory increases holding costs and working-capital requirements.
Batch, expiry and serial-number records depend on manual work
Batch, expiry and serial-number information is maintained manually or in Excel.Management impact: Complete records may not be available promptly for traceability or recall.
Incomplete bin-location rules and stock-location records
Storage locations are not maintained under consistent bin-location rules.Management impact: Picking time, shipment accuracy and new-user training are affected.
Business Process and Controls
Inventory controls for receipts, issues, transfers, counting and delivery
Goods receipts and issues update inventory quantity and valuation when posted. Bin locations, batches, serial numbers and cycle counting support inventory reconciliation. In procurement, three-way matching compares the purchase order, goods receipt and invoice for quantity and cost control.
Item Master Data
Goods Receipt
Stock +Inventory Transfer
Goods Issue
Stock −Inventory Counting
Valuation · Sync to Finance
SAP Business One updates inventory quantity and valuation when goods movements are posted. It supports bin-location, batch and serial-number management. Companies that require advanced warehouse automation should assess EWM or another warehouse-management solution. In procurement, three-way matching compares the purchase order, goods receipt and invoice.
Key control points in inventory managementSystem-to-physical inventory reconciliationSlow-moving / overaged stock monitoringBatch / serial-number managementBin-location managementThree-way matching (PO / receipt / invoice)
Participants: Warehouse / Logistics, Procurement, Finance · Modules used:InventoryBin LocationsProcurement
Project Measures
Inventory-management outcomes and measures
Inventory turnover
COGS ÷ average inventory
↑ Higher is better
Dead stock ratio
Dead / overaged inventory ÷ total inventory × 100%
↓ Lower is better
Inventory accuracy
Matching items at count ÷ total items counted × 100%
↑ Higher is better
Three-way match success rate
Matched invoices ÷ total invoices × 100%
↑ Higher is better
| Core Metric | Formula | Target |
|---|---|---|
| DIO (Days Inventory Outstanding) | (Avg inventory ÷ COGS) × period days | ↓ Lower is better |
| Inventory turnover | COGS ÷ average inventory | ↑ Higher is better |
| Dead stock ratio | Dead / overaged inventory ÷ total inventory × 100% | ↓ Lower is better |
| Inventory accuracy | Matching items at count ÷ total items counted × 100% | ↑ Higher is better |
| Three-way match success rate | Matched invoices ÷ total invoices × 100% | ↑ Higher is better |
Project Outcomes & Acceptance Measures
70% → 95%
Inventory accuracy; real-time accuracy exceeding 99%, daily accuracy reaching 100%.
Sales efficiency ×5
After daily inventory accuracy hit 100%, sales moved to online ordering — accurate inventory directly supports sales.
57% shorter
Slow-moving item storage period — dead stock and overstock reduced in tandem.
98%+
Picking accuracy.
Implementation priorities for inventory and supply chain
Inventory management capabilities
Implementation priorities include inventory accuracy and traceability, slow-moving inventory and turnover management, and working-capital and available-to-promise inventory.
1
Inventory accuracy and traceability
Implementation scope: Use cycle counting, batch, serial-number and bin-location controls to reconcile system quantities with physical stock and process discrepancies promptly.
SAP Business One and extensions:
Batch / Serial NumberBin LocationCycle Counting
Acceptance focus: system and physical quantities agree, with discrepancies identified and processed within the period
2
Slow-moving inventory and turnover management
Implementation scope: Identify slow-moving and overaged stock, analyze inventory holding and turnover, and coordinate disposition plans across purchasing, production and sales.
SAP Business One and extensions:
Slow-moving / overaged stock monitoringInventory turnover
Acceptance focus: inventory turnover and slow-moving stock are measured consistently against the agreed baseline
3
Working capital and available-to-promise inventory
Implementation scope: Reducing dead stock improves working-capital utilization, while accurate available inventory supports sales orders and delivery commitments.
SAP Business One and extensions:
DIO and cash conversion cycleAvailable-to-promise inventory
Further improvement: reduced inventory holding and more reliable available-to-promise quantities
The processes described on this page are supported by standard SAP Business One functions
Days Inventory Outstanding is an important component of the cash conversion cycle.
Related Cases
Inventory and supply-chain implementation outcomes
Agriculture & Food
Inventory accuracy: cycle counting and real-time posting align system quantities with physical stock.
View case
Trade & DistributionOnline ordering: after daily inventory accuracy reached target, sales moved to online ordering for efficiency.
View case
Chemicals & New MaterialsDead-stock reduction: overaged / slow-moving items visible — storage and overstock reduced in tandem.
View case
FAQ
Implementation and system requirements for inventory and supply chain
What’s the difference between Inventory & Supply Chain and S&OP?
Inventory & Supply Chain manages inventory itself — accuracy, dead stock, turnover, batch / serial / bin. S&OP manages the operations chain from order to delivery. Accurate inventory is the prerequisite for S&OP’s “available inventory check” to hold up.
What can SAP Business One’s Bin Location management do?
SAP Business One supports bin locations — items are tracked to specific locations, picking and shipping follow bin assignments. It doesn’t have EWM advanced warehousing, but bin, batch and serial management are fully capable for growing SMBs.
Does SAP Business One support batches and serial numbers?
Yes. Batch, expiry and serial number are traced through every step — when you need to inspect or recall, the records are there.
How does SAP Business One control differences between system and physical inventory?
Goods receipts and issues update inventory and valuation when posted. Cycle counting identifies discrepancies during the period so they can be reviewed and processed under the agreed inventory-control procedure.
How much can inventory accuracy and turnover actually improve?
Depends on business scale and process complexity. Among MTC-delivered clients, accuracy commonly rises from 70% to 95% with daily accuracy hitting 100%, and slow-moving item storage periods are cut by over half.
Inventory structure, turnover and working-capital assessment
An MTC consultant will assess book-to-physical differences, slow-moving and overaged inventory, working-capital use and inventory-turnover requirements.
- ✓Inventory-accuracy assessment by warehouse, item and process
- ✓Slow-moving inventory and working-capital analysis
- ✓Inventory-turnover measures and implementation priorities