Odoo Inventory Management: Complete Setup Guide

Inventory management is where many Odoo implementations either shine or stumble. Get it right, and you have real-time stock visibility, automatic replenishment, and efficient warehouse operations. Get it wrong, and you spend your days chasing phantom stock and fixing incorrect deliveries.

This guide walks through the key elements of setting up Odoo Inventory, from basic warehouse structure to advanced features like multi-step routes and barcode scanning.

Understanding the Warehouse Structure

Before configuring anything, you need to understand how Odoo organizes physical space. The hierarchy works like this: a warehouse is your top-level location (your building or facility). Inside each warehouse, you have locations — these can represent zones, aisles, shelves, or any subdivision that makes sense for your operation.

Odoo comes with default locations for each warehouse: input (where goods arrive), stock (where goods are stored), output (where goods wait for shipping), and a packing zone. You can customize this structure to match your actual layout.

• Warehouse — your physical facility (e.g., Brussels Warehouse, Antwerp Distribution Center)
• Location — subdivisions within a warehouse (e.g., Zone A, Shelf 1-A-01, Cold Storage)
• Virtual locations — non-physical locations for accounting purposes (e.g., Inventory Loss, Scrap)

Tip: do not over-engineer your location structure at the start. Begin with the main zones you actually need to track, and add detail later. A company that creates 500 bin locations on day one but does not have the discipline to use them properly is worse off than one with 10 well-managed zones.

Configuring Routes and Operations

Routes define how products move through your warehouse. Odoo supports one-step, two-step, and three-step routes for both incoming and outgoing goods.

Incoming Routes

One-step (Receive directly into stock): goods arrive and are immediately registered in the stock location. Simple and fast, good for businesses without quality inspection or put-away requirements.

Two-step (Receive then put into stock): goods arrive at an input location, then are moved to their storage location in a separate step. Useful when you need to inspect goods before storing them or when you have a put-away process.

Three-step (Receive, inspect, then store): adds an explicit quality inspection step between receiving and storage. Best for businesses with strict quality requirements.

Outgoing Routes

One-step (Ship directly from stock): orders are picked and shipped in one operation. Works for small operations or when orders are simple.

Two-step (Pick then ship): orders are picked from stock and moved to an output area, then shipped. This creates a natural staging point and is common in medium-sized operations.

Three-step (Pick, pack, then ship): adds a packing step between picking and shipping. Essential for businesses that need to consolidate picks into packages, add packing materials, or generate packing slips before shipping.

Choose the simplest route that meets your needs. Each additional step adds operational overhead. If you do not actually inspect incoming goods, do not configure a three-step receiving route just because it seems more professional.

Replenishment Rules

Automatic replenishment is one of Odoo Inventory's most valuable features. Instead of manually checking stock levels and creating purchase orders, you define rules and let the system handle it.

• Minimum stock rules (reorder points) — set a minimum and maximum quantity for each product at each location. When stock drops below the minimum, Odoo automatically generates a procurement (purchase order, manufacturing order, or inter-warehouse transfer) to bring it up to the maximum
• Make-to-order — procurement is triggered by demand (sales orders) rather than stock levels. Each sales order directly creates the necessary purchase or manufacturing order
• Make-to-stock — products are procured and manufactured to maintain stock levels, independent of specific customer orders

For each product, you can define different replenishment strategies. Fast-moving products might use reorder points with safety stock. Expensive or custom items might be make-to-order. The choice depends on your lead times, demand variability, and the cost of holding inventory.

When setting up reorder points, consider your supplier lead times, demand during lead time, and desired service level. Setting the minimum too low means frequent stockouts. Setting the maximum too high ties up capital in excess inventory. Finding the right balance requires understanding your actual demand patterns.

Barcode Scanning

Manual data entry in a warehouse is slow and error-prone. Odoo's Barcode module provides scanning capabilities for all inventory operations — receiving, picking, packing, shipping, internal transfers, and stock counts.

The barcode interface runs in a web browser, so it works on tablets, smartphones, and dedicated barcode scanning devices. The interface is designed for speed: scan a product, confirm the quantity, move to the next item.

• Receiving — scan incoming products to validate against purchase orders
• Picking — scan products as you pick them to confirm the correct item and quantity
• Internal transfers — scan source and destination locations to track movements
• Inventory counts — scan products during stock counts for faster and more accurate results
• Lot and serial tracking — scan lot or serial numbers to maintain traceability

Implementation tip: start with barcode scanning for your highest-value or most error-prone operations first. If picking errors are your biggest problem, start there. If receiving accuracy is the issue, implement scanning at the dock door first. You do not need to barcode everything at once.

Multi-Warehouse Management

Businesses operating multiple warehouses need coordinated inventory management. Odoo supports multi-warehouse setups with inter-warehouse transfer rules.

You can configure one warehouse as the central distribution hub and others as regional locations. Replenishment rules can trigger automatic transfers between warehouses when stock at a regional location drops below the minimum. This creates a hub-and-spoke model where the central warehouse serves as the primary stocking point.

Stock visibility across all warehouses is available in real time. Sales teams can check availability across locations and choose the closest warehouse for fulfillment. Reporting aggregates data across all locations or breaks it down per warehouse.

Product Tracking: Lots and Serial Numbers

Depending on your industry and products, you may need lot tracking (groups of products produced or received together) or serial number tracking (unique identification per unit).

Lot tracking is common for food, chemicals, and pharmaceuticals where you need to trace a batch through the supply chain. Serial number tracking is used for high-value items like electronics or machinery where each unit needs individual tracking.

Configure tracking requirements at the product level. Once enabled, Odoo enforces lot or serial number entry at every inventory operation, creating a complete chain of custody from receipt to delivery.

Inventory Valuation

Odoo supports several inventory valuation methods: standard price (fixed cost), average cost (weighted average updated on each receipt), and FIFO (first in, first out). The choice depends on your industry, product types, and accounting requirements.

For Belgian companies, inventory valuation directly affects your financial statements and tax obligations. Make sure you choose the correct method and configure it before processing any transactions. Changing valuation methods after the fact is complex and may require manual accounting corrections.

Getting Your Setup Right

Inventory configuration affects every part of your supply chain — purchasing, sales, manufacturing, and accounting. Mistakes in warehouse setup, route configuration, or replenishment rules create problems that cascade through your entire operation.

If inventory management is core to your business, working with an experienced consultant during setup is strongly recommended. Through odoone, you can connect with senior Odoo consultants who have configured warehouse operations for businesses like yours. Starting at €80/hour with a free approval cycle and money-back guarantee, it is a practical way to get your inventory management right from the start.