Inventory Adjustments

An inventory adjustment corrects a discrepancy between what your system says you have and what is physically in your warehouse. Adjustments are a normal part of warehouse operations — they account for damage, shrinkage, counting errors, expiry, and other real-world events.

Adjustment Types

Each adjustment is categorized by the reason for the correction:

Type	When to use it
Cycle Count	Discrepancies found during a scheduled cycle count.
Physical Inventory	Corrections from a full warehouse-wide physical count.
Damage	Items damaged in storage, during handling, or in transit.
Shrinkage	Unexplained inventory loss (packaging errors, unrecorded breakage, minor discrepancies).
Obsolete	Items that are no longer sellable or usable and should be written off.
Correction	A manual fix for a data entry error or system issue.
Found	Items discovered that were not previously recorded (e.g., found during reorganization).
Expired	Items that have passed their expiry date and must be removed from available stock.
Theft	Confirmed inventory theft.
Return to Vendor	Items being sent back to the supplier (e.g., defective goods).

Adjustment Lifecycle

Adjustments follow an approval workflow to ensure accountability:

DRAFT --> PENDING APPROVAL --> APPROVED --> POSTED
                           \-> CANCELLED

Status	What it means
Draft	The adjustment is being prepared. Line items and quantities can still be edited.
Pending Approval	The adjustment has been submitted and is waiting for a manager or supervisor to review it.
Approved	A manager has reviewed and approved the adjustment.
Posted	The adjustment has been applied to stock levels. This is final — stock quantities are updated and a journal entry is created.
Cancelled	The adjustment was cancelled. No changes to stock.

Creating an Adjustment

Go to Adjustments in the sidebar under Inventory and click Add Adjustment.
Fill in:
- Adjustment Number — a unique reference (e.g., ADJ-2026-001).
- Warehouse — the warehouse where the adjustment applies.
- Adjustment Type — the reason for the correction (damage, shrinkage, cycle count, etc.).
- Adjustment Date — the date of the correction.
- Reference Number — an optional external reference.
- Reason — a description of why the adjustment is needed.
Save the adjustment in Draft status.
Submit it for approval when ready.

Adjustment Lines

Each adjustment contains one or more lines, each representing a specific item being adjusted:

Expected Quantity — what the system says you should have.
Actual Quantity — what was physically counted or observed.
Adjustment Quantity — the difference (calculated automatically).
Variance Percentage — how far off the count was from expectations.
Reason Code — a specific reason for this particular line’s discrepancy.
Cost Impact — the financial impact of the adjustment.

Approval Workflow

Adjustments require approval before they affect stock levels. This prevents unauthorized changes and creates an accountability chain:

The warehouse worker creates the adjustment and clicks Submit for Approval. The configured workflow picks the right approvers — there is no need to choose them by hand.
The decision is routed to the assigned approver’s Approvals inbox, where they review the adjustment, its line items, and the stated reason.
The approver can approve, reject (with a required reason), or delegate the decision to another user.
Once all required approvers sign off, the adjustment is posted — stock levels are updated and a permanent journal entry is created.

The full chain of decisions, including any rejections and the reasons given, is kept permanently on the adjustment for audit purposes.

Tip: For high-value adjustments (e.g., above 50,000 DA), set up a workflow with a second level of approval. Approval workflows route differently based on threshold amounts so high-impact corrections automatically get extra scrutiny.