Professional Documents
Culture Documents
Abbreviations PDF
Abbreviations PDF
ASN: Advanced shipment notifications areused to notify a customer of a shipment. Often including
purchase order numbers, SKU numbers, lot numbers, quantity, pallet or container number, carton
number
CCD: Charged coupled device is a barcode scanner that takes digital image of the barcode instead
of laser scanning, can only scan at short distance of a couple of inches
EPC: Electronic product codeis the RFID version of the UPC barcode. EPC is intended to be used
for specific product identification
LIFO: Last-in-first-out
WHM/WHS/WHSE: Warehouse
At each stage there should be documents or other procedures that allow control to be
exercised.
The purchase requisition notes are passed to the purchasing department where they
will be examined and approved or queried. Sometimes, despite the supplier being
entered on the purchase requisition, the purchasing department might ask several
suppliers for quotations.
A purchase order is then raised (created). This will typically show:
The order will have at least two copies: one for the supplier one for the stores to
inform them that a delivery is expected.
When goods are received, they will usually be accompanied by a delivery note. This
will show the information that is on the purchase order, except for the value of the
goods. Goods should not be accepted before checking to a copy of the order that they
have, in fact, been ordered. One copy of the delivery note is signed and kept by the
supplier. Usually the receiving company will create a standard goods received
note from the delivery note. The goods will be stored in the warehouse and stock
records on bin cards (see below) will be updated from the goods received note.
A purchase invoice showing the payment due will be received from the supplier, and
before this is approved for crediting to the suppliers account and subsequent payment,
it should be matched to the order and goods received note to ensure that the correct
goods have been received.
There might be production order setting out goods and labour needed for the
production of the goods ordered by customers.
As goods are produced they will be transferred from the production line to the
finished goods store. Stock records there should be updated with goods description,
quantities and costs.
Customer orders will initiate sales. From those, despatch (or delivery notes) will be
produced. These can be used as the basis for taking goods from stores, updating the
bin card (see below) packing the goods and despatching them. There will usually be
three copies of the delivery note: two go with the goods and of those one stays with
the customer and one is signed by the customer and returned as proof of delivery
receipt. One copy will stay in the despatch department in case of later queries.
Central to the material control cycle is the recording of the amount of inventory as this
will determine when goods need to be ordered and will also record the receipt and
issue of goods.
In manual accounting systems bin cards are used (a bin is where a specific item of
inventory is stored). The equivalent records are now usually held in computer
systems. A typical bin card would look as follows:
Free inventory = Quantity on hand plus units ordered less units allocated for use
The calculation of free inventory has the advantage of anticipating stock movements
so that receipts and issues that are known about are taken into account when assessing
the need to order.
To ensure that the inventory as recorded on the bin cards is accurate, companies
should carry out periodic stock counts(sometimes called cycle counts) and correct the
amounts on the bin cards. Some companies carry out one only stock count per year
Stores - Material Request
1. When should you use the Electronic Material Request ?
If you wish to order material from the CERN Stores, then you should use the Electronic
Material Request. If you wish to take material from the Urgency Window, then you should
use the Paper Material Request.
Inventory control
Overview
Inventory Control is designed to support the requisition processing, inventory management, purchasing, and
physical inventory reconciliation functions of inventory management through a set of highly interactive capabilities.
The design of Inventory Control is based on the following key objectives:
• To provide information on the availability of stocked items and the status of stocked requisitions
• To facilitate timely requisition processing
• To automatically record and service backorders
• To help minimize inventory investments consistent with service objectives by basing purchasing
decisions on usage history
• To provide automated tools to assist servicing, purchasing, and management of the inventory
• To improve financial control of the inventory by chargebacks to the user organizations
• To improve financial control of the inventory by periodic reconciliation of the inventory balances with
the physical counts
Inventory Control utilizes a set of user-maintained master tables, a set of system-maintained master tables,
transaction document types, and offline programs to meet these objectives. It also creates inventory control
management reports. These reports, batch programs, and transaction document types are explained in subsequent
sections of this chapter. For a brief description and sample copy of these management reports, see the User's
Reference.
Event Description
A request for inventory stock represents the intent to incur an obligation. Requests for
inventory stock can provide useful accounting information for internal management
Stock Requisition (SR)
purposes and are recorded in the accounting system as pre-encumbrances. Though they do
(Pre-Encumbrance)
not represent legal obligations, they are reductions to the available budget balance when
budgetary controls are being used.
Once requested stock items are released and issued by the seller, the net accounting effect
Stock Issue
recognizes revenue for the seller (if the warehouse is able to recognize revenue) at the unit
Confirmation (CI)
price multiplied by the quantity of the stock items, and the expense of inventory at cost. In
(Buyer Expenditure,
terms of the buyer, an expenditure/expense is recognized for the same amount, and the
Seller Revenue)
pre-encumbrance created by the Stock Requisition (SR) document is reversed.
A direct issue of requested stock items from inventory recognizes the same net accounting
Over the Counter (OC)
events involved with an Issue Confirmation (CI): expenditure/expense to the buyer,
(Buyer Expenditure,
revenue to the seller (if the warehouse is able to recognize revenue), and expense of
Seller Revenue)
inventory at cost.
The return of stock items to inventory by the buyer results in reversing the accounting
Stock Return (SN)
events that took place at the issuance of these items. A decrease in revenue for the seller
(Revised Accounting at
(if the warehouse is able to recognize revenue) and a decrease in expenditure/expense for
Issue)
the buyer are the net accounting effects.
The managing warehouse may need to adjust the on-hand quantities or the unit costs of
stock items in inventory. If quantity and/or unit cost are increased, the net accounting
Inventory Adjustment
effect of this event is an increase in inventory balances with a decrease in expense to the
(IA) (Seller Expense)
seller. If there is a decrease in quantity and/or unit cost, the net accounting effect is a
decrease in inventory balances and an increase in expense to the seller.
The managing warehouse may need to adjust the on-hand quantities of stock items in
Physical Inventory inventory at a specified unit price. If quantity is increased, the net accounting effect of this
Purchase Input (IP) event is an increase in inventory balances with a decrease in expense to the seller. If there
(Seller Expense) is a decrease in quantity, the net accounting effect is a decrease in inventory balances and
an increase in expense to the seller.
As the transfer of stock items is recognized and received by the receiving warehouse, the
expenditure previously incurred by the issuing warehouse is transferred to the receiving
Stock Transfer Receipt
warehouse. The net accounting effect results in an increase in the available budget
(TR) (Transfer of
balances for the issuing warehouse and reduction in the available budget balance of the
Expenditure)
receiving warehouse. This transaction recognizes inventory and expenditure balances at
cost.
In addition, the following non-accounting or item-tracking events occur during the inventory control process:
Event Description
Pick and Issue This process prints a pick ticket and generates an associated Issue Confirmation (CI) document
(PI) for each Stock Requisition (SR) that has a reserved stock item.
Stock Transfer This tracking process initiates the transfer of items from one warehouse to another and places
Issue (TI) items from an on-hand status to an in-transfer status.
Documents
Inventory Control includes the following documents:
Document Description
Reserves quantities of stock items from an on-hand supply for later delivery. This reduces the
Stock Requisition
available quantity. If items are not immediately available, they may be backordered and later
(SR)
filled by having the Backorder Servicing program run.
Schedules previously reserved items to be picked up for delivery and releases them from a
reserved status. This function is performed by creating a Pick Ticket Report (IN80). From this
Pick and Issue
report, the warehouse can determine the stock item, the quantity, and the bin number of the
(PI)
items that are to be picked up. It also creates the corresponding Issue Confirmation (CI)
document.
Confirms to the system that previously reserved and released items have been issued from the
Stock Issue
warehouse to the buyer. The on-hand quantity of the warehouse for this item is reduced by the
Confirmation (CI)
amount issued.
Issues requested items directly from the on-hand quantity. As the items are issued immediately
upon request, in effect, "over-the-counter," backordering is not allowed. Once an "Over the
Over the Counter Counter" transaction is successfully completed, an Over the Counter Issued Report will be
(OC) produced, identifying the requestor and the stock items issued. Any request for items
unavailable for immediate issuance must be reserved through a Stock Requisition (SR). On-
hand quantity is reduced by the amount issued.
Allows the original buyer to return previously issued items. At the option of the issuing
Stock Return (SN)
warehouse, a return charge may be imposed.
Allows warehouse management to adjust quantities or unit values of on-hand items due to a
Inventory
change in on-hand quantities or unit costs. These adjustments alter inventory and cost of goods
Adjustment (IA)
expense balances.
Physical
Allows warehouse management to adjust quantities of on-hand items due to a change in on-
Inventory
hand quantities at a specified unit costs. These adjustments alter inventory and cost of goods
Purchase Input
expense balances.
(IP)
Stock Transfer
Initiates the transfer of items from one warehouse to another.
Issue (TI)
Stock Transfer Recognizes the receipt of transfer items by the receiving warehouse. On-hand quantities of
Receipt (TR) receiving/issuing warehouses are adjusted.
Offline Programs
Inventory Control is supported by several offline programs that perform the following functions:
Program Function
Attempts to fill backordered quantities of open stock requisitions. If stock replenishment has
Back Order
occurred since the stock requisition was originally processed, the on-hand quantities may
Servicing
now be sufficient to allow reservation of the backordered quantities.
Calculates the safety stock and reorder level for each item in inventory. Reorder quantity is
Reorder Point
either the order-up-to quantity minus the on-hand quantity, or is calculated by the Economic
Calculation
Order Quantity (EOQ) model.
Forecast Demand Is based on historical issues and forecasted demand. This routine reads Inventory (2 of 3)
Calculation (INV2) and calculates and updates the forecasted demand for each stock item.
Is based on selection criteria. Stock items are flagged and frozen for the physical inventory
Physical Inventory
count. While frozen, these items cannot be issued from the warehouse. A list of frozen items
Freeze
is produced to use during the count.
Physical Inventory Updates the on-hand quantity in Inventory Inquiry (1 of 3) (INVN) to reflect the actual
Reconciliation inventory counts and posts entries to the General Ledger to adjust for stock overages and/or
Posting shortages.
Rolls back the historical information stored on Inventory Inquiry (INVN) for each item.
Annual Closing Actual quantities and forecasted quantities are both moved back one year, leaving an empty
array of 12 months for the forthcoming year of actual and forecasted quantities.
Purges closed Stock Requisition (SR) and Over the Counter (OC) documents from the open
stock requisition tables. Also, closed stock transfer receipts are purged from the open stock
Closed Transactions
transfer tables. If the Mark for Future Deletion indicator is selected on Inventory (3 of 3)
Table Purge
(INV3), and no open items exist (PCs, SRs, etc.) for an Inventory Inquiry (1 of 3) (INVN)
record, these items are purged from Inventory Inquiry (1 of 3) (INVN).
Aids in the automatic replenishment of warehouse stock. This program uses information
Autogeneration of
already in the system to automatically generate orders such Purchase Requisitions (RX). The
Purchase Requisition
program uses Inventory Replenishment (IREP) and the existing Replenishment Review
(RX)
Report to obtain this information.
Inventory Ledger
Inventory Control maintains the Inventory Ledger. This ledger provides a detailed audit trail of all inventory
transactions. It stores information regarding stock items and associated quantities, but includes the buyers'
accounting distribution for report writing purposes. All accounting transactions produced by inventory transactions
are recorded and posted to the General Ledger.
Inventory Reports
Inventory Control includes various management and planning reports. These reports are identified by a report ID
consisting of the letters IN followed by a two-digit number.
Inventory Control reports are normally run monthly or semi-monthly, although they may also be run on request. You
can obtain any of these reports by providing two items to your system administrator:
1. Report ID
2. Report dates card information