inventory control small business information systems professor barry floyd

Inventory ControlInventory Control

Small Business Information Small Business Information SystemsSystemsProfessor Barry FloydProfessor Barry Floyd

AgendaAgenda

Understand the Inventory Control Understand the Inventory Control functionfunction

Understand how MS Dynamics Understand how MS Dynamics implements/supports managing implements/supports managing inventoryinventory– Lots of details, including inventory Lots of details, including inventory

valuation, standard vendors, valuation, standard vendors,

Questions?Questions?

What items do I have in stock? How many do I What items do I have in stock? How many do I have?have?

How often should I buy an item?How often should I buy an item? When should I buy an item?When should I buy an item? When I buy something, how much of it should I When I buy something, how much of it should I

buy?buy? What is the current value of my inventory?What is the current value of my inventory? Have I lost anything? Why? Theft? Breakage?Have I lost anything? Why? Theft? Breakage? How can computer systems help me with all this How can computer systems help me with all this

crap? Where’s Professor Grosse when I really need crap? Where’s Professor Grosse when I really need him? him?

Why aren’t there any donuts here today? Or Why aren’t there any donuts here today? Or coffee? I really need coffee today … hmmm, coffee? I really need coffee today … hmmm, maybe this Floyd guy bring me some coffee?maybe this Floyd guy bring me some coffee?

Microsoft Microsoft Great Great Plains Plains IntegrationIntegration

Inventory OverviewInventory Overview

Inventory OverviewInventory Overview

Case …Case …

Fabrikam, Inc. has decided to expand their Fabrikam, Inc. has decided to expand their inventory. Due to the demand, they have inventory. Due to the demand, they have decided to start selling xxx as an item in decided to start selling xxx as an item in Inventory Control.Inventory Control.

In order to speed up the time it takes to enter a In order to speed up the time it takes to enter a new xxx,you decide to create a new Item Class new xxx,you decide to create a new Item Class called XXXX to default some of the setup in called XXXX to default some of the setup in advance.advance.

Finally in order to determine the success of the Finally in order to determine the success of the new product line, you have been asked to new product line, you have been asked to create a SmartList query to report the sales of create a SmartList query to report the sales of all items in the XXXX class. While you haven’t all items in the XXXX class. While you haven’t sold any to date, you decide to be proactive and sold any to date, you decide to be proactive and set a system-wide query for this purpose.set a system-wide query for this purpose.

What do we need to What do we need to know to do this?know to do this? What does it mean to setup What does it mean to setup

inventory?inventory?– What is an Inventory Class? Why What is an Inventory Class? Why

does setting one up improve does setting one up improve performance?performance?

– What does it mean to setup an What does it mean to setup an inventory item? What are the inventory item? What are the components of an inventory item?components of an inventory item?

First Step …First Step …

Set up an inventory class … Set up an inventory class …

Item ClassesItem Classes

Item ClassesItem Classes

Item types describe the type of item or the status of the item. They determine which accounts are posted to when included on a transaction:

Sales InventoryDiscontinuedKitMisc ChargesServicesFlat Fee

Valuation MethodValuation Method

Determine how the costs of inventory items are calculated:

FIFO perpetualLIFO perpetualMoving average perpetualFIFO periodicLIFO periodic

Valuation methodValuation method

FIFO PerpetualFIFO Perpetual– Items purchased first are considered sold first. Detailed Items purchased first are considered sold first. Detailed

info is kept on each item. Current cost is cost of first item info is kept on each item. Current cost is cost of first item acquired.acquired.

FIFO PeriodicFIFO Periodic– Items purchased first are considered sold first and are Items purchased first are considered sold first and are

valued at their standard cost. At end of year, standard valued at their standard cost. At end of year, standard cost can be adjusted to the current cost.cost can be adjusted to the current cost.

Moving average perpetualMoving average perpetual– The of items with the same item number is totaled an The of items with the same item number is totaled an

average cost is assigned to the items. Average cost is average cost is assigned to the items. Average cost is revalued throughout the period.revalued throughout the period.

Note: Perpetual has inventories updates after each Note: Perpetual has inventories updates after each transaction, in periodic, inventory counts are updated transaction, in periodic, inventory counts are updated ‘periodically’‘periodically’

First in … First out First in … First out (perpetual)(perpetual)

Last in … First out Last in … First out (perpetual)(perpetual)

Weighted moving average Weighted moving average (perpetual)(perpetual)

TrackTrack

Determines how (and if) you wish to track inventory items:

Serial Number (each item has a serial number)

Lots (good for things like fabric, paint, etc that were created at the same time using same dye or ink).

Lot CategoriesLot Categories

When you create a lot category, you can define up to three attributes associated with the lot and two dates. Here the user defined ‘distributor’ as an attribute. When you add an item, you can say that item was distributed by Company xxx.

Sales Tax OptionSales Tax Option

Indicates if you want to charge tax on this class of items when you sell them.

You can charge taxes in a number of different ways: based on where they are when they get it (shipped address or if they pick it up, your warehouse).

Allow back orderAllow back order

When you sell an item and run out of them, this allows you to issue an immediate backorder and associate it with that order.

Revalue inventory for Revalue inventory for cost variancecost variance

If the item class will be for sales inventory or discontinued items, and if the Valuation Method is LIFO Perpetual, FIFO Perpetual, or Average Perpetual, you can specify whether purchase receipts for the item should be revalued when cost variances (actual invoiced cost) exceed certain levels.

Maintain HistoryMaintain History

Indicates how much history information that you wish to keep around.

Calendar and Fiscal year is a summary of posted information. Calendar keeps summaries by month, fiscal keeps it by the fiscal periods you set up for your business.

Transaction and distribution history includes detailed information about each transaction and the distributions entered.

Units of MeasureUnits of Measure

Indicates the various units you use to buy and sell your products.

So if you buy by the case and have a value associated with the case, if you sell by, say a can, then it calculates the cost of that individual can when it updates cost of goods sold.

Units of Units of MeasurMeasuree

Pricing Pricing

Price groups and

Price level ….

Pric

ing

Pric

ing

Price GroupPrice Group

Price groups are identifiers that you can assign to items that have similar pricing structures. You can use price groups to specify the items to be included when you update price lists.

Pric

ing

Pric

ing

A price group would identify all the items that have this pricing structure.

Price Level Price Level

Price levels is a way of creating different pricing structures for items. You can create different pricing levels for different customers. For example, you could create ‘wholesale’ and ‘retail’ pricing levels.

Pric

ing

Pric

ing

Here is an example of the price levels ‘Wholesale’ and ‘retail’..

Price Method Price Method

Price methods are ways of determining how you set your prices. Methods include:

Currency amount % of list price% markup – Current cost% margin – Current cost% markup- Standard cost% margin – Standard cost

Price methodPrice method

Currency amountCurrency amount– Flat amountFlat amount

% of list price% of list price– List price * price percentageList price * price percentage

% Markup – current cost% Markup – current cost– Current cost * (100% + price percentage)Current cost * (100% + price percentage)

% Margin – current cost% Margin – current cost– [(current cost * price percentage)/ (100% - price [(current cost * price percentage)/ (100% - price

percentage)]percentage)]

Ok, give an example of what this means for Ok, give an example of what this means for your business …your business …

Pric

ing

Pric

ing

This pricing method is ‘currency’, where the price is simply specified.

Purchase Tax Options Purchase Tax Options

Identifies your tax options when you buy stuff …

User categories User categories

Great Plains way of allowing the user to create their own categories for classifying items. This is similar in nature to the notion of ‘class’ in QuickBooks.

Accounts Accounts

When transactions are created, these are the accounts that get updated …. heavy duty accounting work here.

AccountsAccounts

Ok, where were we?Ok, where were we?

Oh yeah, we want to create a new class. Oh yeah, we want to create a new class. Do the following ….Do the following …. Set user date to 10/31/07Set user date to 10/31/07 Add an item class and accountsAdd an item class and accounts Add an itemAdd an item You can get this info from the class web You can get this info from the class web

site: click on Inventory Casesite: click on Inventory Case Add item class, then we’ll talk about Add item class, then we’ll talk about

adding an item…adding an item…

The Item Maintenance Window The Item Maintenance Window allows users to control and modify allows users to control and modify

recordsrecords

Item optionsItem options(also look at categories)(also look at categories)

Price listsPrice lists

Additional steps are Additional steps are shown in the following shown in the following slidesslides Add phone to a siteAdd phone to a site Add stock countsAdd stock counts Add purchasing informationAdd purchasing information Assign a vendorAssign a vendor

Add Phone to a site: Click Add Phone to a site: Click on GO TO then vendorson GO TO then vendors

Stock countsStock counts

Add purchasing Add purchasing informationinformation

Assign vendorAssign vendor

Assign vendor detailsAssign vendor details


Restricts you to see only those vendors assigned to this item.


Manually entered, not updated. Reference only.


Updated automatically from Purchase Order Processing


Min and Max quantities you can order from this vendor.


Amount you’ve determined to be the most economical order quantity.


If you are manufacturing, this is used to adjust suggested order quantities when using Period Order Quantity or Lot for Lot order policy.


Automatically updated when buying.


You get to choose the purchasing UofM that will default into the Purchase Order for this item. You can choose the one from the Item Card or from the Item Vendor. If you choose Item Vendor, you choose the UofM right here.


FOB means Free On Board and that designates the point where at which the buyer takes ownership of an item shipment from a vendor.


Receipts will automatically get updated with each receipt of goods from this vendor. You can put in the default value here.


You can put this in if you’ve calculated it. If you use the Purchase Order Processing module this gets updated.

[(number of receipts) * (average lead time) + (received date – ordered date)]/(number of receipts + 1)


Planning lead time reflects the TOTAL time to get an item available. You add additional “internal days” to reflect the average lead time and the number of days to actually create the order.

SummarySummary

The inventory application is a The inventory application is a very complicated application, very complicated application, especially when compared to especially when compared to QuickBooks.QuickBooks.

We’ll review queries and We’ll review queries and reporting, but this exercise gives reporting, but this exercise gives you an idea of the power that GP you an idea of the power that GP Dynamics provides.Dynamics provides.

Preferences & Default Preferences & Default EntriesEntries

Sites and Beginning Sites and Beginning QuantitiesQuantities With Inventory Control, you can With Inventory Control, you can

define sites—such as storage define sites—such as storage areas or warehouses—and then areas or warehouses—and then assign items to sites.assign items to sites.

Using a Site(s)Using a Site(s)

You might need to define only You might need to define only one site and assign all items to it.one site and assign all items to it.

You might need to define several You might need to define several sites and assign items to them, sites and assign items to them, along with information about lot along with information about lot numbers, serial numbers, and numbers, serial numbers, and bins.bins.

Defining A SiteDefining A Site

Standard PricingStandard Pricing

Currencies, price levels, units of Currencies, price levels, units of measure, and quantity ranges measure, and quantity ranges combine in price lists to give you combine in price lists to give you different options for pricing your different options for pricing your inventory for customers.inventory for customers.

Standard Pricing Standard Pricing ConditionsConditions You’re using Invoicing. You’re using Invoicing. You want price lists to be updated You want price lists to be updated

automatically when the current automatically when the current cost or standard cost of an item cost or standard cost of an item changes. changes.

You have a fairly simple pricing You have a fairly simple pricing structure, and don’t need structure, and don’t need additional tiers. additional tiers.

Standard Pricing Standard Pricing Cont’dCont’d If you’re using standard pricing, you If you’re using standard pricing, you

can define price levels and price can define price levels and price groups for use with price lists. groups for use with price lists.

A price level is a pricing tier that can A price level is a pricing tier that can be assigned to items, customers, and be assigned to items, customers, and prospects. prospects.

For example, you might create a For example, you might create a Wholesale price level and a Retail Wholesale price level and a Retail price level—and then assign the price level—and then assign the Wholesale price level to certain Wholesale price level to certain customers.customers.

Creating a price levelCreating a price level

Use the Price Level Setup window Use the Price Level Setup window to create price levels. to create price levels.

If you’re going to use price lists, If you’re going to use price lists, you must create at least one price you must create at least one price level. level.

Each price list must include at Each price list must include at least one price level.least one price level.

Creating a price groupCreating a price group

If you have several items that will If you have several items that will have very similar price lists, you have very similar price lists, you can group those items by creating can group those items by creating a price group.a price group.

You can create as many price You can create as many price groups as you like. Price groups groups as you like. Price groups are optional.are optional.

Price Group Price Group Maintenance WindowMaintenance Window

ABC AnalysisABC Analysis

With ABC analysis, you can identify which With ABC analysis, you can identify which items are most critical, somewhat critical, items are most critical, somewhat critical, and least important to your business.and least important to your business.

Then you can manage those accordinglyThen you can manage those accordingly ““A” – Most important itemsA” – Most important items ““B” – Somewhat importantB” – Somewhat important ““C” – might have minimal records with C” – might have minimal records with

periodic reviewperiodic review

CritiqueCritique

Great program, but need to have Great program, but need to have an expert to make sure that it an expert to make sure that it runs smoothly.runs smoothly.

For the average employee, they For the average employee, they need both knowledge and need both knowledge and experience to fully understand experience to fully understand the program.the program.

High vs. LowHigh vs. Low

keep inventory high to fulfill keep inventory high to fulfill orders promptly and keep orders promptly and keep customers happycustomers happy

keep inventory low to reduce keep inventory low to reduce investments and make more investments and make more capital availablecapital available

Purchasing SchedulePurchasing Schedulest

ock

time

Reorder Point

Minimum Quantity

Ordering QuantityOrdering QuantityD

olla

rs

Quantity

inventory control small business information systems professor barry floyd

Documents

sales inventory

setup inventory

item number

inventory valuation

inventory counts

type of item

costs of inventory items

new item class