DMC Consultants Limited
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DMC Consultants Limited |
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Managing Inventory With Microsoft Dynamics GP
Microsoft Dynamics GP is a good solution for companies that buy inventory for resale as well as those that buy inventory for internal use. There are lots of features that both groups will find useful. Dynamics GP allows you to store the following information for each inventory item:
Item types The two most important item types are sales inventory and service. Sales inventory items are physical inventory items. Service items are non-inventory items and services. Both types of items can be entered on an invoice. For example, an auto parts store can invoice a customer for a battery (inventory item) and for the installation of the battery (service). Sales inventory items maintain stock quantities. Services do not. Item classes and user defined categories Item classes and user defined categories allow you to group items together for reporting purposes. Do you want to analyze your sales or inventory by product line or by vendor? Item classes and user defined categories are good ways to do this. Valuation methods Dynamics GP offers several options re: item valuations. Most of our customers use FIFO. Be careful how you use average costing. With average costing, a new average cost is generated whenever quantities are received or adjusted upwards at a new cost. This makes it difficult to reverse errors caused by incorrect costing. Vendor information Vendor information allows you to store each vendor's item number and description as part of your inventory item information. If you send a vendor a purchase order with your inventory item code and item description, he may not be sure which item you need. He may send you the wrong product. If you send him a purchase order with his inventory item code and description, he will know which item you need. If you have several vendors for a specific item, you can store vendor information for each one. Re-order levels Re-order levels can be maintained for each item. Typically we maintain the order up to level and the order point quantity for each item. The order up to level is the maximum quantity of the stock that should be maintained. It is sometimes referred to as the target inventory level. When a purchase order is done, the quantity purchased should be enough to increase the stock to the order up to level. The order point quantity is the level at which orders should be generated. Once the quantity on hand is at or lower than the order point quantity, a purchase order should be generated. For example, assume that your order up to level is 100 units and your order point quantity is 60. If your quantity on hand falls to 55 units, you should purchase 45 units to increase your stock to the order up to level. The Purchase Advice report shows those items that are at or below the order point quantity. It also shows the quantities that should be purchased to increase the inventory to the order up to level. Store rooms and bin numbers Store rooms and bin numbers allow you to track the location of each item in each warehouse. Dynamics GP allows you to set up a store room (site) for each room in which inventory is kept. You can restrict items to specific sites. You can print stock count sheets by site. You can print item valuation and other reports by site. Each site can be associated with a cost centre in your chart of accounts. Transactions done in a site will therefore be booked to the cost centre associated to that site. This is useful for companies that have more than one location. Sales, purchases and stock adjustments for a specific location can be booked to the general ledger codes for that location. This makes it possible to print sales reports, inventory reports and profitability reports by location. Dynamics GP allows you to track the bins (shelves) in which inventory is stored. This makes it easier to find inventory items in the warehouse. Items can be located if they are stored in a single bin or in multiple bins. Serial numbers, lot numbers and expiry dates Serial numbers, lot numbers and expiry dates are useful ways to track items. Companies that sell electronic equipment often track the serial numbers of their products. If a customer wants to return a product, they can check the sales information to verify that it actually came from their stock. Lot numbers are very important in the pharmaceutical industry. If a product is recalled by the manufacturer, the distributor must be able to trace it by its lot number. This trace must be able to identify the customer to whom it has been sold. Expiry dates are also important. Companies may face significant losses if goods remain in the warehouse until they have expired. Dynamics GP makes it easy to track expiry dates. The SOP (billing) module can automatically assign items to an invoice based on the expiry date. This ensures that items that have earlier expiry dates are sold before those with later expiry dates. Standard pricing and extended pricing Dynamics GP offers two approaches to managing prices for inventory items. Companies can implement one or the other. Standard pricing is based on price levels while extended pricing is based on price sheets. The one you choose will depend on the way in which your company prices it products. Some companies use price levels to set prices. Their customers are placed in groups and a price is set for each group. For example, wholesale customers might pay one price for a product while retail customers might pay a different price. Similarly, customers in Kingston might pay one price while customers in St. Catherine might pay another. This approach works well if a customer belongs to a specific group across all products. If a customer must get wholesale prices for some products and retail prices for others, it can become a bit complex to maintain. Extended pricing uses price sheets. Price sheets are created for each product and customers are assigned to specific price sheets. A company may have a price sheet for wholesale customers and one for retail customers. A customer can easily be assigned to the wholesale price sheet for some products and the retail price sheet for others. Extended pricing allows for promotional prices. A company can set up a price sheet for a sale that it plans to have in the future. It can set the date that the sale should start and the date it should end. Dynamics GP will automatically switch to the sale price once the date arrives and return to the regular prices once the sale ends. Extended pricing supports deals such as:
Both types of pricing support quantity breaks. Quantity breaks allow you to set prices based on the quantity of units purchased on an invoice. For example, a purchase of 1 – 100 units can attract a specific price while a purchase of over 100 units can attract a lower price. |
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