Acumatica Distribution: Inventory Management Module/Workspace

When to use the Inventory Management Module/Workspace

The Inventory Management Module/Workspace is used in the following business scenarios:

  • Receipts of goods from suppliers, or return of goods from customers where you want to keep track of them in inventory at a warehouse.

  • Issuing or shipping goods to customers, and returns of goods to suppliers where you want to keep track of them in inventory at a warehouse.

  • Transfer of goods between warehouses

Relationship between this Inventory Management Module and other Suites and Modules of Acumatica ERP Foundation

Purchasing goods (stock items) leads to storing the received goods in the inventory. Selling goods (stock items) leads to issuing or shipping goods from the inventory to the customer. Both processes will be described next to better understand the interface of the inventory module with the PO module and the SO module.

 

  • Purchasing goods from suppliers goes normally through the following steps:

    1. Purchase Requisition

    2. Requesting a bid or sales quote from suppliers

    3. Receiving bids (sales quotes) from suppliers, and evaluating those bids

    4. Placing a Purchase Order (PO) with the vendor or supplier

    5. Receipt of goods from the supplier

    6. Receiving an invoice from the supplier, for which you will create a vendor bill in accounts payable

    7. Paying the vendor bill

When you purchase from a B2C or B2B E-Commerce store of your supplier, this sequence of steps will be different. This business scenario is discussed and illustrated in the webpage titled "Purchasing from a  E-Commerce store or Customer Portal".

In simple words the first four steps (purchase requisition, requesting, receiving and evaluating bids, placing a PO) are enabled in the PO module of the Distribution Suite. The fifth step (receipt of goods from the supplier) is enabled in the Inventory Management module of the distribution suite. The last two steps ( creating a vendor bill, and paying this bill) are enabled in the Accounts Payable module of the Finance suite. Don't worry, you will not have to jump from one module to another. All these steps are linked in logical order so that you go through those steps very easily.

  • Selling goods (stock items) to your customer goes normally through the following steps:

    1. The customer may send you a Request for Bid/Quote

    2. You respond to the customer with a Sales Quote

    3. The customer approves the Sales Quote, and places a Purchase Order, which becomes a Sales Order (SO) for you

    4. You ship the goods, and create a shipment (inventory issue) record in your system

    5. You create an invoice in your system, and send the invoice to the customer

    6. The customer pays, and you create a payment record in your system

When you sell through a B2C or B2B E-Commerce store or a customer portal, this sequence of steps will be different. This business scenario is discussed and illustrated in the webpage titled "Acumatica Commerce Edition".

In simple words the first three steps (receiving a Request, creating a Sales Quote, and later a Sales Order) are enabled in the SO module of the Distribution Suite. The fourth step (shipment of goods to the customer) is enabled in the Inventory Management module of the distribution suite. The last two steps ( creating a customer invoice, and receiving payment from the customer) are enabled in the Accounts Receivable module of the Finance suite. Don't worry, you will not have to jump from one module to another. All these steps are linked in logical order so that you go through those steps very easily.

The following diagram illustrates this relationship. This is actually an Acumatica dashboard for distribution. If you click on eg. phone order for warehouse 2 in an Acumatica live dashboard (not on the one below), it will take you to the Sales Order form/screen in Acumatica ERP. You or our company can customize these dashboards for your company so that your employees can just click on the right picture to do their work.  You can create a dashboard for user roles or for a specific employee. If the employee signs in, he/she will see first their dashboard. Such a dashboard can list all due tasks/activities the employee should do first. More on dashboards.

Overview

Acumatica Distribution Suite, Inventory Management module workspace has the following main features:

  • Creating item classes

  • Creating stock items, sub items, assembly kits. lot and serial numbers

  • Creating warehouses

  • Creating vendor price sheets

  • Specifying a cost method for a stock item (standard, average, FIFO, LIFO, specific,..)

  • Keeping track of the inventory of stock items

    • Receipts of goods from a supplier​

    • Return of finished goods from customers

    • Issuing/shipping goods to customers

    • Returning items to suppliers

  • Inventory replenishment

  • Warehouse management

  • Physical count

 

An overview video illustrating briefly all the above features can be seen here.

A video discussing how the Acumatica Distribution Inventory Management module/workspace addresses inventory issues can be seen below. The main business issue is creating a balance between excess inventory and inventory shortage. In other words, trying to have for a specific product just the right quantity at the right time to satisfy customer orders on time  while avoiding excess inventory.  Acumatica enables you to do this as seen in the video below. The video below refers also to an advanced inventory management application of NetStock. The advanced NetStock application will be discussed under Acumatica Independent Software Vendor (ISV) applications. 

  • Creating stock items and item classes 

    • ​You create stock items when you purchase items from suppliers, or when you manufacture items yourself, and you want to keep track of those items in your stock/inventory.

      • Importing hundreds or thousands of stock items with all the detail information can be a nightmare. However Acumatica ERP provides a tool called Import Scenario that enables you to import an Excel file with all the item data from your old system into Acumatica.  This tool is smart in the sense that you can select which data fields you want to import, and that you can specify conditions and formulas to affect the imported values. Click here for information about  using Import Scenarios.  

    • Item classes enable you to group items into groups eg. pants, shirts, dresses, etc. and assign attributes to each item class/group. Such attributes can be max. order quantity, safety stock, reorder point, etc. ​

      • Video ( 2 mins, 2017)

Important features of the Inventory Management Module/Workspace

  • Serial and Lot Numbers

    • ​Serial and lot numbers enables you to take the following steps:​

      • Track a specific stock item from the supplier to inventory to the customer so when this item has a defect, or is recalled, your company will know which supplier supplied it, which lot is was part of, and to which customers or distributors or retail outlets it was shipped. This tracking is mandatory for food products and drugs. Other industries (manufacturing, distributors and chain stores) use it also. 

      • ..

Video (  10 mins, June 2020) below illustrates this feature in more detail.

Video (  39 mins, 2018) below illustrates this feature in more detail. To see a full screen, click here.

Identifying a lot number with a date is common practice especially in the food industry. Click here to learn more.

  • Inventory subitems

    • ​Subitems enables you to do the following:​

      • Specify characteristics of an item

        • For instance the item soccer ball can have as subitems: color and size. 

        • For instance a shirt will have subitems: collar size and length

        • For instance pants will have subitems: waist size and length 

      • When an item has the same price for the different characteristics, than those characteristics can become subitems. 

      • Of course once an item has subitems, values for those subitems will have to be selected in any transaction such as purchase order, sales order, etc. 

      • Video (  39 mins, 2018) below illustrates this feature. To see a full screen, click here.

The features of sub items have been enhanced with Item Matrix in the Acumatica ERP version 2020R1. For details, click here.

  • Inventory replenishment

    • Inventory replenishment in Acumatica ERP enables you to replenish your inventory with the right items with the right quantities at the right time so that you can fulfill your customer orders fully on time without carrying too much inventory. 

      • In general the following formula is used to determine the replenishment quantity (order quantity)

        • When the inventory level for an item drops to the reorder point eg. 200, then purchase or manufacture new stock.

        • The purchase/manufacture order quantity = 

          • Max Order quantity (eg 300) - (Quantity on Supply (POs) eg. 0 + Quantity on Hand eg. 530) + Quantity on Demand (SOs) eg 510 

          • = 280 = Purchase Order to replenish. 

        • The above formula assumes that your demand rate is about the same over time because the formula is driven by the Max. Order quantity that was calculated on a past average monthly demand. If you have a seasonal demand, you will have to adjust the max order quantity on time. 

      • You can refine the formula with some more detailed deductions and additions. 

      • However in general, demand planning is a very important function in a company to avoid over or under stocking.  

      • More advanced inventory management systems are available among our Independent Software Vendor (ISV) applications such as NetStock, EasyStock, GoodsForecast, etc

      • Video (  39 mins, 2018) below illustrates this feature. To see a full screen, click here.

From the Acumatica ERP Version 2019R2 on, the inventory management module/workspace can be enabled to automatically create Purchase Orders when the stock level hits a Reorder Point or a minimum stock level . Determining the Order Quantity is another level of complexity that can be handled by Acumatica. For details here.

  • Advanced Fulfillment

    • Advanced fulfillment is mainly a pack and ship application. This feature enables you to make sure that your shippers in the warehouse put the right items with the right quantity in the right packaging box to be shipped to the right customer to fulfill a sales/customer order. 

      • The shipper in the warehouse has printed a paper pick list from a sales order on his/her handheld scanner. The pick list has  a barcode besides each item of that sales order. That barcode identifies the storage location (row, bin, ..) for that item. 

        • Advanced Fulfillment stops here. It doesn't interact with a scanner. The interaction with a scanner requires the 2019R1 version and the new Warehouse Management feature that needs to be paid separately.  He/she tries to find the right storage location of each items listed in that sales order by scanning that barcode on the pick list.  Once found he/she scans the bar code of each picked item against the list of items in the sales order. This is quite a manual procedure but is used when the warehouse is simple, and doesn't use sophisticated put to light or voice directed picking methods. However scanning the items against the sales order is still done in sophisticated warehouses but by overhead scanners.  These overhead scanners can be connected to Acumatica to transfer the scanned barcode to the Acumatica Sales Order. 

      • Video (  39 mins, 2018) below illustrates this feature. To see a full screen, click here.

  • Shipping rates of main carriers (USPS, FEDEX, UPS. .)

    • Shipping rates can be very high especially for international shipments. Therefore Acumatica enables you to get the shipping rates from the main carriers while you create your shipment in Acumatica. You can then choose the best shipping rate. 

      • Video ( 9 mins, 2018) below illustrates this feature.

  • Kit Assemblies

    • When your company assembles stock items into a finished good/item, and ships this assembly to the customer, the kit assembly feature of Acumatica should be used. For instance if you assemble a fuse box from the components/stock items such as interior panel, circuit breakers, surface cover and power wire, you will create a kit assembly called fuse box which will become a new stock item in your inventory, and will be tracked in your inventory.

    • If you don't assemble the kit in the warehouse but do it at the customer site, then you can create a non-stock assembly. That assembly will not be tracked in your inventory. 

    • Video ( 9 mins, 2018) below illustrates this feature. Click here to see a full screen.

  • Vendor Price Sheets

    • When you purchase items from your supplier, the supplier will offer its products at a certain price, and may give you discounts based on quantity, promo period, location, or for a certain item being cleared. You want to track those prices and discounts so that your supplier bills use the right prices and discounts. Acumatica enables you to do all this. 

    • Video ( 9 mins, 2018) below illustrates this feature. Click here to see a full screen.

  • Inventory cost (valuation) methods

    • When you purchase items from your supplier, you buy them at a certain price and maybe with a certain discount. However when buy more of those same items in the next month, the price and discount may change. When you sell those items to your customer, the question is : " which items (of which purchase date) shall I pick to sell to my customer". I can do Last In First Out (LIFO), or First In First Out (FIFO), or use other methods of picking. Then the next question is "If I pick items of several months, these items may have different vendor prices, which cost value will I use for all these items?". Acumatica lets you set the cost valuation method. 

    • Videos ( 9 mins, 2018) below illustrate this feature.

  • Inventory Physical Count

    • Although Acumatica ERP tracks the inventory very well, it still relies on people entering correctly and timely the receipts and issues of stock items. If people make mistakes, the inventory in Acumatica will be wrong. Also some stock items may have perished, may have been damaged, may have been misplaced, may have become totally outdated, etc. To count for all this, an annual or quarterly  or monthly physical count is needed, which can be tracked in Acumatica ERP. When the physical count starts, all inventoy transactions (receipts, issues, transfers) are put on hold. The physical count for each item is entered into Acumatica and compared with the book count.

    •  Video ( 9 mins, 2018) below illustrates this feature. Click here to see a full screen.

  • Drop Shipments

    • Your company may ask the supplier to ship or drop the purchased items at the customer site. These are called drop shipments, and very often occur with construction contractors. Acumatica handles these drop shipments accurately:

      • Create a sales order where method of shipment is drop ship​

      • Create Purchase Order (PO)

      • When items are dropped at customer site, create a PO receipt

      • Invoice customer

    •  Video ( 9 mins, 2018) below illustrates this feature. Click here to see a full screen.

Benefits of the Inventory Management Module/Workspace

The benefits of the Inventory Management Module/Workspace to you are as follows:

  • The many rich features will address most of your inventory needs so that not so much customization will be needed. 

  • Your inventory data will be in sync with POs and SOs, and manufacturing, and transfers between warehouses. This will avoid over stocking and under stocking.  This can save you a lot of money, and make a lot of customers very happy.

The Inventory Management Module/Workspace Datasheet

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