inventory functional flow doc

INVENTORY MANAGEMENT

Inventory has got 4 Major topics:

1. Transactions2. Control3. Planning4. Accuracy

1. Transactions: 3 Types

a. Receiving b. Issuingc. Transfers

a. Receiving:

1. Miscellaneous Receipt: Receipt without Document

Nav: Inventory – Transactions – Miscellaneous receipt

2. PO Receipt: Receiving against Purchase order Number

Nav: Inventory – Transactions – Receipt

3 Inter-Org Receipt: Receiving stocks from the other Inventory-Org (Here M2 is receiving Org)

Req: Define Shipping Network Nav: Inventory – Setup – Organization – Shipping Network

3. RMA (Return Material Authorization) Receipt: Sales Return

Nav: Inventory – Transactions – Receipt – Customer Tab – RMA Number (Return SO Number)

b. Issuing:

1. Miscellaneous Issue: Issuing stocks without any document

Nav: Inventory – Transactions – Miscellaneous Issue

2. Inter-Org Issue : Issuing stocks to other Inventory Org (Here issuing Org is M1)

Nav: Inventory – Transactions – Inter-Org Issue

3. Sales Order: Sales Order is an issue

Nav: Order Management – Order, Returns – Sales Orders

4. RTV (Return To Vendor): Purchase Return: Will discuss in PO Module

C. Transfers: 3 Types

1. Sub-Inventory Transfer: Transfer of goods within Org, between Sub-inventories – No documentation and No Approver is required.

Nav: Inventory – Transactions – Sub-inventory Transfer

2. Move Order: Transfer of goods within Org, between Sub-inventories – Documentation Number available and Approver is Required.

Nav: Inventory – Transactions – Move Order

Perform transact Move Order to Move the Item from Sub-inventory

3. Inter-Org Transfer: Transfer of goods between Inventory Org’s.

A. Direct Org Transfer – On hand will be updated immediatelyB. In-transit – Stock receiving has to be performed manually

Req: Shipping Network has to be defined

4. Control: 6 Types

A. Lot Control: Stocks Control Over Batches

B. Serial Control: Stocks Control over individual units

C. Revision Control: Version of Item

D. Locator Control: Control over Exact location of the item in the sub-inventory

E. Restrict to Sub Inventory / Locator: Restrict Items to specific sub-inventory and locator while receiving the goods.

F. Dual Unit of Measure: Item can be transacted with 2 UOM’s

5. Planning: 4 Types

a. Min-Max Planning

a) It is a method of inventory planning that determines how much to order based on b) It is a method of inventory planning that determines how much to order based on the minimum

and maximum inventory levels.c) It is done at Organization & Sub inventory level for a specific item.d) To perform Min-max at SI, then Item/SI details have be to set. e) It is used for non-critical items which has independent demandf) Can't perform Min-max if you are running MRP for the same itemg) It does not consider the lead-time and forecasted demandh) When -to- order : [(on_hand_qty – demand) + planned receipt ] < minimum qtyi) How much -to- order : Maximum_Qty - [(on_hand_qty – demand) + planned receipt ]j) The output of Min-max will be influenced by fixed lot multipliers, min order qty and max order

qty. k) It is done at Organization & Sub inventory level for a specific item.l) To perform Min-max at SI, then Item/SI details have be to set. m) It is used for non-critical items which has independent demandn) Can't perform Min-max if you are running MRP for the same item

o) It does not consider the lead-time and forecasted demandp) When -to- order : [(on_hand_qty – demand) + planned receipt ] < minimum qtyq) How much -to- order : Maximum_Qty - [(on_hand_qty – demand) + planned

receipt ]r) The output of Min-max will be influenced by fixed lot multipliers, min order qty

and max order qty.

b. Re-Order Point Planning

Is a type of planning which replenishes stock before the stock goes below safety stock. Used for Items under independent demand, item which needs high control and critical It uses demand forecasts to decide when to order. It is done are Org level but org should be MRP planned.

Max qty (ROQ

ROPSafety stock

Time

Lead-time: The interval between re-order points to safety stock.Re-order qty: The difference between the maximum qty and the safety stock.Required information:

1. Safety stock (to protect the fluctuations in the supply and demand)2. Replenishment lead-time (the consumption time between the re-order point -to-

safety stock)3. Item demand4. Order cost5. Carrying cost

When to order: (on hand qty – expected supply) < Re-order pointRe-order point = (Safety stock) + [(Lead-time) * (average demand during lead-time)]Re-order Quantity= EOQ= SQRT {[2* annual demand*ordering cost] / [inv carrying cost* unit price]} Re-order qty can be constrained by fixed lot multiplier, Minimum order qty and Maximum order qty

c. Replenishment Planning: Tracking the untracked sub-inventory

D Kanban:

1 Kan-ban itself is a self regulating pull leads to shorter lead time and reduced inventory.

2 Multi-stage replenishment process3 It is applied to items which has relatively constant demand and medium & high

production volume.4 Kanban can be replenished from the supplier, sub inventory or an internal

organization, production, flow schedules, user defined5 Locator control can be used even it locator is turned off at the organization and item

levels.6 Cards can be created for Item, Sub inventory, locator7 Supply status – New, Full, Wait, In-transit, Empty, In-process

4. Accuracy: 3 Types

a. ABC Analysis: Classification of Items as A,B and C.An analysis used to categories items in the inventory into High, medium, low based on On-hand qty/ Value/ Consumption/ historical transaction etc. Similar to pareto analysis ( i.e., 80% of the inventory values are held by 20% of the items and vice-versa )

4. Cycle Counting: Periodic counting of inventory items for accuracy purpose. Inventory records are kept accurate by correcting errors between the system on-hand and actual quantities. It is performed without affecting the production / Sales and mostly performed for the high value items.

Physical Inventory: Reconciliation of system on-hand balances with physical counts in inventory. It can be done for the entire organization or a Inventory. It is performed once every six months or a year depending upon the orgs requirements. Accurate on-hand quantities are required for Tax and audit purposes

Difference between Cycle count and Physical Inventory: