Purpose: Wholesale distributor - keep track of inventory balances so customer orders can be filled/refilled on a timely basis and so you donít have large excess inventory
- commit inventory
- when confirmed that order shipped, you release committment and deduct from on hand
- what you order goes in on order field
- when you receive, out of on order and into on hand
- return from customers, add to on hand if resellable
- return to vendors, deduct from on hand
- need to make plus and minus inventory adjustments for shrinkage, mistakes, damage, adjust to count etc.
- Ordering - can use formulas - some very sophistocated
- can establish order points - min/max etc. (example: on hand - committed <= min stocking level then order enough to make on hand - committed + on order = max stocking level)
- can consider sales for lastd 13 periods and project forward in anticipation of demand
- need ability to have management review to override for specials etc.
- need ability for buyer to place special orders
- physical count
- count slips entered and inventory adjustments and account adjustments made for General Ledger, reports etc.
Issues to consider
- frequently different buyers for different products - need to be able to print reports by these groupings/departments etc.
- vendor choice option - file organized by item #/vendor # with information to help make choice
- may have prime vendor
- may always choose cheapest
- may rotate
- accounting method to calculate value of inventory
- FIFO (must keep track of every shipment and prices since charging based on what was paid)
- LIFO (charging based on latest price -nd most widely used)
- average cost (formula to calculate average price - most widely used)
- Government requires you file change of system - canít change for a set time period (I think it is 5 years?)
FILES: just a rough possibility
Inventory (item#, description/name, cost, *price, unit of measure, on hand, on order, committed, min stocking level, max stocking lefel, weight, **vendor, vendor price, vendor id, vendor description, tax code info, shipping info etc, history (here or on separate file))
*price - can be per volumn or based on class of customer or zone prices
** vendor information - if multiple vendors or some or all products will have separate file ordered by your item # and vendor # which contains vendor information
Vendor (vendor #, name, address (for remittance and orders), phone, contact, purchases (MTD,QTD,YTD), return (MTD,QTD.YTD), payments (MTD,QTD,YTD), terms, average delivery time etc.
Things to watch for in designing or evaluating inventory system:
- item number and description adequate to needs
- check all basic field sizes (problems: small parts that you have many of and high prices)
- if buying and selling what to tie item to vendors - allow multiple vendors
does system allow you to cost as you want to (LIFO, FIFO, Average etc) - what accounting procedures do you use and how does it handle them
- pricing - are fields adequate - retail, wholesale, negotiated with specific costs, volumn discounts - take a close look at how your company sells things when designing or reviewing a system
- may price be so many per thousand etc. - can you handle everything you need to
- how do you sell and how do you buy - each, carton, case etc. - can it handle - is maintenance accurate
- does it accomodate grouping items together
- does it handle buying and reselling
- if price increases from vendor can you handle it - for example, all of vendor X up 5% or certain categories up 4%
- do you want automatic replentishments, what about automatic with human intervention/change ability
- can system handle your method or formulas for restocking, automatic replentishments etc.
- small manufacturer buying parts handles stocking differently than large - does it handle grouping parts needed to make product and number needed etc.
- does it handle breakdowns by dept or group to accomodate buyers
- does it handle needs of retail and other businesses for stocking levels at different times and stocking up for specials etc.
- is it important to know physical location where product stored - if so does it handle it and does it generate information for picking slip
- does it handle cash register as you need it
- does it handle UPC and bar codes
- does it handle things like color and size differences if needed
- does it keep trakc of sales on class/catagory basis