The Problem
The client had not run inventory recalculation in over four years. As a result, FIFO-based inventory valuation no longer reflected reality — on-hand quantities were showing negative in the warehouse, and month-end close required 24–32 hours of manual effort just to arrive at a usable inventory value. Finance and warehouse teams were working around a broken system rather than trusting it.
Root Cause
Investigation traced the issue to a process conflict: the business was manually creating item requirements while a system parameter was simultaneously enabled to auto-generate item requirements on product receipt. The two processes collided — system-generated requirements updated automatically upon receipt, but the manually created ones remained in the system, creating phantom “on order” quantities and pushing on-hand inventory into negative territory.
The Solution
Magnifia examined the system end-to-end to identify why on-hand inventory was showing negative and why large adjustment amounts kept appearing at month-end. Once the root cause was isolated, the fix involved:
- Eliminating the redundant manual item-requirement creation process
- Running a full, correct inventory recalculation to reset FIFO valuation to true values
- Clearing four years of accumulated valuation drift
- Providing process recommendations to prevent recurrence
Timeline: approximately 2 weeks, covering system analysis, root-cause diagnosis, the fix itself, and preventive guidance.
The Outcome
- Month-end inventory valuation is now fully system-generated — the 24–32 hours of manual effort per month is eliminated
- Inventory data is clean and trustworthy for the first time in years
- Fully deployed and closed out — no longer a POC or pilot
Delivery
Engagement led end-to-end by Magnifia IT Solutions Pvt. Ltd.
