1. Inventory Control Small Business Information Systems Professor Barry Floyd

2. Agenda Understand the Inventory Control function Understand the Inventory Control function Understand how MS Dynamics implements/supports managing inventory Understand how MS Dynamics implements/supports managing inventory –Lots of details, including inventory valuation, standard vendors,

3. Questions? What items do I have in stock? How many do I have? What items do I have in stock? How many do I 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 buy? When I buy something, how much of it should I 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 crap? Where’s Professor Grosse when I really need him? How can computer systems help me with all this crap? Where’s Professor Grosse when I really need him? Why aren’t there any donuts here today? Or coffee? I really need coffee today … hmmm, maybe this Floyd guy bring me some coffee? Why aren’t there any donuts here today? Or coffee? I really need coffee today … hmmm, maybe this Floyd guy bring me some coffee?

4. Microsoft Great Plains Integration

5. Inventory Overview Inventory Overview Inventory Overview Inventory Overview Inventory Overview

6. Case … Fabrikam, Inc. has decided to expand their inventory. Due to the demand, they have decided to start selling xxx as an item in Inventory Control. Fabrikam, Inc. has decided to expand their inventory. Due to the demand, they have decided to start selling xxx as an item in Inventory Control. In order to speed up the time it takes to enter a new xxx,you decide to create a new Item Class called XXXX to default some of the setup in advance. In order to speed up the time it takes to enter a new xxx,you decide to create a new Item Class called XXXX to default some of the setup in advance. Finally in order to determine the success of the new product line, you have been asked to create a SmartList query to report the sales of all items in the XXXX class. While you haven’t sold any to date, you decide to be proactive and set a system-wide query for this purpose. Finally in order to determine the success of the new product line, you have been asked to create a SmartList query to report the sales of all items in the XXXX class. While you haven’t sold any to date, you decide to be proactive and set a system-wide query for this purpose.

7. What do we need to know to do this? What does it mean to setup inventory? What does it mean to setup inventory? –What is an Inventory Class? Why does setting one up improve performance? –What does it mean to setup an inventory item? What are the components of an inventory item?

8. First Step … Set up an inventory class … Set up an inventory class …

9. Item Classes

10. 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 Inventory Discontinued Kit Misc Charges Services Flat Fee

11. Valuation Method Determine how the costs of inventory items are calculated: FIFO perpetual LIFO perpetual Moving average perpetual FIFO periodic LIFO periodic

12. Valuation method FIFO Perpetual FIFO Perpetual –Items purchased first are considered sold first. Detailed info is kept on each item. Current cost is cost of first item acquired. FIFO Periodic FIFO Periodic –Items purchased first are considered sold first and are valued at their standard cost. At end of year, standard cost can be adjusted to the current cost. Moving average perpetual Moving average perpetual –The of items with the same item number is totaled an average cost is assigned to the items. Average cost is revalued throughout the period. Note: Perpetual has inventories updates after each transaction, in periodic, inventory counts are updated ‘periodically’

13. First in … First out (perpetual)

14. Last in … First out (perpetual)

15. Weighted moving average (perpetual)

16. Track 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).

17. Lot 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.

18. Sales 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).

19. Allow 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.

20. Revalue inventory for cost 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.

21. Maintain 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.

22. Units 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.

23. Units of Measure

24. Pricing Price groups and Price level ….

25. Pricing

26. Price 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.

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

28. 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.

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

30. 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

31. Price method Currency amount Currency amount –Flat amount % of list price % of list price –List price * price percentage % Markup – current cost % Markup – current cost –Current cost * (100% + price percentage) % Margin – current cost % Margin – current cost –[(current cost * price percentage)/ (100% - price percentage)] Ok, give an example of what this means for your business … Ok, give an example of what this means for your business …

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

33. Purchase Tax Options Identifies your tax options when you buy stuff …

34. 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.

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

36. Accounts

37. 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 10/31/07 Set user date to 10/31/07 Add an item class and accounts Add an item class and accounts Add an item Add an item You can get this info from the class web site: click on Inventory Case You can get this info from the class web site: click on Inventory Case Add item class, then we’ll talk about adding an item… Add item class, then we’ll talk about adding an item…

38. The Item Maintenance Window allows users to control and modify records

39. Item options (also look at categories)

40. Price lists

41. Additional steps are shown in the following slides Add phone to a site Add phone to a site Add stock counts Add stock counts Add purchasing information Add purchasing information Assign a vendor Assign a vendor

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

43. Stock counts

44. Add purchasing information

45. Assign vendor

46. Assign vendor details

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

48. Assign vendor details Manually entered, not updated. Reference only.

49. Assign vendor details Updated automatically from Purchase Order Processing

50. Assign vendor details Min and Max quantities you can order from this vendor.

51. Assign vendor details Amount you’ve determined to be the most economical order quantity.

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

53. Assign vendor details Automatically updated when buying.

54. Assign vendor details 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.

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

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

57. Assign vendor details 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)

58. Assign vendor details 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.

59. Summary The inventory application is a very complicated application, especially when compared to QuickBooks. The inventory application is a very complicated application, especially when compared to QuickBooks. We’ll review queries and reporting, but this exercise gives you an idea of the power that GP Dynamics provides. We’ll review queries and reporting, but this exercise gives you an idea of the power that GP Dynamics provides.

60. Preferences & Default Entries

61. Sites and Beginning Quantities With Inventory Control, you can define sites—such as storage areas or warehouses—and then assign items to sites. With Inventory Control, you can define sites—such as storage areas or warehouses—and then assign items to sites.

62. Using a Site(s) You might need to define only one site and assign all items to it. You might need to define only one site and assign all items to it. You might need to define several sites and assign items to them, along with information about lot numbers, serial numbers, and bins. You might need to define several sites and assign items to them, along with information about lot numbers, serial numbers, and bins.

63. Defining A Site

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

65. Standard Pricing Conditions You’re using Invoicing. You’re using Invoicing. You want price lists to be updated automatically when the current cost or standard cost of an item changes. You want price lists to be updated automatically when the current cost or standard cost of an item changes. You have a fairly simple pricing structure, and don’t need additional tiers. You have a fairly simple pricing structure, and don’t need additional tiers.

66. Standard Pricing Cont’d If you’re using standard pricing, you can define price levels and price groups for use with price lists. If you’re using standard pricing, you can define price levels and price groups for use with price lists. A price level is a pricing tier that can be assigned to items, customers, and prospects. A price level is a pricing tier that can be assigned to items, customers, and prospects. For example, you might create a Wholesale price level and a Retail price level—and then assign the Wholesale price level to certain customers. For example, you might create a Wholesale price level and a Retail price level—and then assign the Wholesale price level to certain customers.

67. Creating a price level Use the Price Level Setup window to create price levels. Use the Price Level Setup window to create price levels. If you’re going to use price lists, you must create at least one price level. If you’re going to use price lists, you must create at least one price level. Each price list must include at least one price level. Each price list must include at least one price level.

68. Creating a price group If you have several items that will have very similar price lists, you can group those items by creating a price group. If you have several items that will have very similar price lists, you can group those items by creating a price group. You can create as many price groups as you like. Price groups are optional. You can create as many price groups as you like. Price groups are optional.

69. Price Group Maintenance Window

70. ABC Analysis With ABC analysis, you can identify which items are most critical, somewhat critical, and least important to your business. With ABC analysis, you can identify which items are most critical, somewhat critical, and least important to your business. Then you can manage those accordingly Then you can manage those accordingly “A” – Most important items “A” – Most important items “B” – Somewhat important “B” – Somewhat important “C” – might have minimal records with periodic review “C” – might have minimal records with periodic review

71. Critique Great program, but need to have an expert to make sure that it runs smoothly. Great program, but need to have an expert to make sure that it runs smoothly. For the average employee, they need both knowledge and experience to fully understand the program. For the average employee, they need both knowledge and experience to fully understand the program.

72. High vs. Low keep inventory high to fulfill orders promptly and keep customers happy keep inventory high to fulfill orders promptly and keep customers happy keep inventory low to reduce investments and make more capital available keep inventory low to reduce investments and make more capital available

73. Purchasing Schedule

74. Ordering Quantity