08 inventory journals.pdf

Chapter 8: Inventory Journals

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CHAPTER 8: INVENTORY JOURNALS Objectives

The objectives are:

Create journal names for inventory journals. Set up dimension groups and inventory dimensions for journals. Set up posting for inventory journals. Create and process inventory adjustment and movement inventory

journals. Create and process a transfer journal. Create and process a bill of material (BOM) journal. Explain counting journals. Set up warehouse items and counting groups. Create and process a counting journal. Create and process a tag counting journal. Block an inventoried item.

Introduction Inventory journals are used for posting physical inventory transactions including posting issues and receipts, inventory movements, creating bills of material, and reconciliation of physical inventory. This chapter explains inventory journals by reviewing the initial setup in addition to each journal.

Supply Chain Foundation in Microsoft Dynamics AX 2012

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Inventory Journals Setup When a new inventory journal is created, the Name field is required. The journal names that are selected in this field are created in the Journal names form.

Procedure: Create a Journal Name

To set up journal names which are then used to create journals, follow these steps:

1. Open Inventory and warehouse management > Setup > Journals > Journal names, Inventory.

FIGURE 8.1 JOURNAL NAMES INVENTORY

2. In the Journal names, inventory form that opens, create a new record and type the journal name and its description.

3. Select the Journal type that determines what the journal is used for. 4. Select a Voucher series from the list.


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5. On the General fast tab, in Selection by, specify whether the line receives a voucher number when the line is entered or when it is posted. For example, the Selection by field helps you assign voucher numbers at posting time when a journal is started at the start of a day; multiple entries can be made by different people and/or at different times during the day. Without the Selection by option, all entry lines have a different voucher number. This makes tracking difficult. With this posting option, voucher numbers are assigned at the time of posting, and are therefore more consistent throughout the journal.

6. In the New voucher by field, specify when a new voucher is allocated, by either of the following: o Change date (enables tracking by date) o Change date or item

This resembles the Selection by option, that enables tracking by one voucher number, in addition to all entries that are registered in the same journal for the same date and the same item. This option helps simplify tracking.

7. Select value in the Detail level field for the journal. The Summary option in the Detail level field is a good choice when you are generating many entries by using journals for the same date, account number, dimensions, and currency code. By doing this, the General ledger is only populated with one summary transaction for each identical value. Therefore, reducing the number of transactions. However, this does not summarize these entries in inventory transactions.

8. Select or clear the Delete lines after posting check box. After posting, the lines typically have only historic value and can therefore be deleted. However, sometimes, a business wants to keep the lines for reference.

9. In Offset account, specify an offset account if the journal name is for the Movement journal type.


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10. Select the method of inventory Reservation for the inventory journal. o Manual Inventory for orders is reserved manually. o Automatic Inventory is reserved when order lines are created,

in the order in which the order lines are created. For bills of materials (BOMs), reservations are made for the BOM item number, not for the individual elements of the BOM.

o Explosion Inventory is reserved when order lines are created, in the order in which the order lines are created. For BOMs, reservations are made for the individual elements of the BOM, not for the BOM item number.

11. Select whether to restrict access to the journal to certain user groups

by using the Private for user group field. For example, you can set up individual journals to enable access to the following: o Only warehouse workers who conduct physical counts o Only users who document movements from the main warehouse

to the vendor warehouse o Users who document movements from the vendor warehouse to

the main warehouse

Procedure: Set Up Journal Name as Default Value

When the journal names are created, they can be set up as default values for the journal type that is selected in the Inventory parameters form in the Journals section. To do this, follow these steps:

1. Open Inventory and warehouse management > Setup > Inventory and warehouse management parameters > Journals.

2. In the appropriate field, select a journal name to be the default value when you create inventory journals of a certain type.

For example, when you create an Inventory adjustment journal type, the journal that is specified as the default journal name is proposed.

NOTE: If it is necessary, override this setting with any other journal name that is set up for the journal type.

After a journal is created and named, a journal line can only be accessed by one user at a time. It is useful to divide journals so that each posting routine is entered


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in its own unique inventory journal.

Example: Setting up Default Journal Names

If posting routines are associated with inventory transactions, a journal can be created for periodic inventory adjustments, and another for inventory counting.

In a situation where multiple departments of a manufacturing plant use the same inventory journal to enter shop supplies use, it helps create multiple journal names, for example, one for each department. In this manner, each department can open its journal for shop supply adjustments at the beginning of the day and leave it open for access throughout the day.

Inventory Dimensions and Inventory Journals

As with other types of receipts and issue transactions, the inventory dimensions must be specified for any transactions that are made in a journal line.

The ability to edit product dimensions for a journal line is determined by the product's dimension group setup.

Setting Up Inventory Dimensions to be Edited in Specific Journal Types

The inventory-related transactions for an item must specify the information that reflects the dimension groups that are assigned to the item, such as the basis for item identification (product dimensions), storage dimensions, and tracking dimensions. Therefore, you must create a dimension group and then add inventory dimensions as needed. The following are inventory dimension types:

Product dimensions Storage dimensions Tracking dimensions

There are no set guidelines for selecting dimensions. However,, we recommend that you use only the number of dimensions that will actually be used for each product. If some products are tracked and other products are not, create several dimension groups. Carefully consider how inventory should function before you set up inventory dimensions and dimension groups.


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To set up inventory dimensions that can be edited in specific journal types, open Product information management > Setup > Dimension groups > Product dimension groups.

FIGURE 8.2 PRODUCT DIMENSION GROUPS FORM

Procedure: Select Dimensions that are Displayed in Inventory Journals

To select dimensions that are displayed in inventory journals, follow these steps:

1. Open Inventory and warehouse management > Setup > Inventory and warehouse parameters.

2. Click Inventory dimensions in the navigation pane, and then click the tracking dimension, for example, Batch number.

3. Select the journals in which Batch number is displayed, for example Movement or Transfer orders.

NOTE: These settings are only valid for the journal if you did not override the setting on the journal by saving selections in the Inventory > Dimensions display dialog box. In this case, if Batch number is cleared, this setting overrides the setting that is specified in Inventory and warehouse management > Setup > Inventory and warehouse parameters.

Posting

When you record inventory transactions. For example, in an inventory adjustment journal, you can generate the transactions for inventory profits and losses.

Use the Posting form to set up ledger account numbers for the automatic ledger transactions that are generated for receipt and for issue transactions in the inventory.


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Set up account numbers as needed on one or more of the following tabs:

Sales order Purchase order Inventory Production Standard cost variance

Each tab contains several account types, and for each account type, you must specify which account in your own chart of accounts that you want to use. If you have created an item group in the Item groups form with corresponding posting, that posting will automatically appear in the form, with the item group as a reference.

You can use either posting profiles or posting definitions to set up the account numbers for offset accounts. Each posting profile is associated with only one offset account. Posting definitions can be associated with multiple offset accounts.

Procedure: Set Up Inventory Posting

To set up inventory posting, follow these steps:

1. Open Inventory and warehouse management> Setup > Posting > Posting > Inventory tab.

2. Select the posting type to be set up for the General ledger posting.

FIGURE 8.3 INVENTORY POSTING FOR INVENTORY JOURNALS


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3. Create an inventory posting record by clicking Add. 4. For each Main account type, specify which main account in the chart

of accounts to use. Use the Item relation and the Item code fields to specify whether the account must be used for one of the following: o A specific item - use to track, for example, the profit and loss,

for a particular item. o An item group - use to track, for example, issue or consumption

for a particular item group. The item groups are set up in Inventory and warehouse management> Setup >Inventory> Item groups.

o All items

Inventory Adjustment and Movement Journals At first glance, the movement and inventory adjustment journals look the same. The primary difference between the two journals is that the offsetting general ledger account can be selected in the movement journal. Because a ledger account cannot be specified in the inventory adjustment journal, all transactions post according to the posting profiles for inventory. This is discussed in the Inventory Journals Setup lesson.

Both the inventory adjustment and movement journals allow for journal lines to be entered where items are issued from inventory or where they are received into inventory. When the journals post, an inventory receipt or issue is posted, the inventory level and value are changed, and ledger transactions are generated. The following must be specified for the journals:

Date of the transaction Item number Quantity Cost price

When a positive quantity is entered in the journals, a receipt and gain is posted. However, when a negative quantity is entered on a journal line, an issue and loss is posted.

Movement Journal

The Movement journal can be used to bring in opening inventory balances during system setup, and offset these adjustments to specific ledger accounts. Other examples of how the movement journal can be used include the following:

To charge an item to a different department, for example, from Prototyping to Engineering.

To remove items from inventory to take to a sales show. The inventory value must be reduced and should be considered as an expense from the Sales Department.


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Demonstration: Using the Movement Journal

This demonstration charges an inventory item to the Sales Department and to the Selling Expenses offset General ledger account, by using a Movement journal.

1. Open Inventory and warehouse management > Journals > Item transactions > Movement.

2. Create a new journal by clicking New and select the IMov for the journal name. Or, click Create new; a journal is created and the Lines form is automatically opened.

3. Open the Lines form by clicking Lines. The journal lines are displayed with today's date in the Date field.

4. Type item "1201" in the Item number field, and in the Configuration field, select 01 (black) and then type the quantity of "-1".

5. Because the quantity is negative, it means that the item is taken out of inventory to be used by the Sales Department. The Cost amount is populated from the item cost table and cannot be changed. Select the Selling expenses offset account in the Offset account field. In this example, it is the 540100 Project COGS - Project hours account.

NOTE: If the quantity is positive, meaning that the item is brought into inventory from an outside source, for example, a salesperson brings samples into inventory, the Cost amount field can be used to enter the value of the item.

6. On the Financial Dimensions tab, select OU_4624, Marketing Campaign (UK) in the CostCenter group.

7. Post the journal by clicking Post and then OK. A message box informs when the Journal is posted.

When the journal is posted, view the transactions that was created from the posting. To do this, follow these steps:

1. From the posted journal line, select Inventory > Transactions. 2. Click Ledger > Financial voucher in the Inventory transactions

form. 3. Click the Overview tab to view the General ledger account posting

activity that credits the 140450 HTS issues account and debits the 540100 Project COGS - Project hours account.

4. Close the Voucher transactions form. 5. On the Financial dimensions - financial tab, view the allocation to

the Marketing Campaign (UK) department in the CostCenter field.


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Inventory Adjustment Journal

Use the Inventory adjustment form to enter where items are picked from inventory (a loss) or where they are received in inventory (a gain). When you post this kind of journal, an inventory receipt or issue is posted, the inventory level and value are changed, and ledger transactions are generated.

Procedure: Create an Inventory Adjustment Journal

To create an inventory adjustment journal, follow these steps:

1. Click Inventory and warehouse management > Journals > Item transactions > Inventory adjustment.

2. Create a new journal by clicking New and then enter a name. 3. Click Create new; a journal is created and the Lines form is

automatically opened. The journal lines are displayed with today's date in the Date field.

4. Enter an Item number and the Quantity of the adjustment. 5. Enter information in the Size, Site and Warehouse fields as

appropriate. 6. To view information about transactions, on-hand inventory,

reservations, registration, and output orders, click the Inventory button.

7. Click Post to post the journal.

Procedure: View a Posted Transaction

To view the posted transaction after the journal is posted, follow these steps:

1. Open Inventory and warehouse management > Journals > Item transactions > Inventory Adjustment.

2. Select Posted in the Show field to view posted transactions. 3. To verify the debit offset account, open the posting profile. This can

be accessed by opening Inventory and warehouse management > Setup > Posting > Posting > Inventory tab. Select Loss on the left side of the form, and verify that Group codes are set up.


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Lab 8.1 - Create a Movement Journal Scenario

The Contoso Company's new salesperson, Kevin, must obtain a sample of DVD Player, 1701 the company sells to be able to show them to prospects.

To maintain inventory accuracy, a movement journal is used to take the DVD Players out of warehouse 21 physical inventory. The journal also commits the value of this transfer to a specific General ledger account that is used for selling expenses (540100). Your task is to create these transactions.

Challenge Yourself!

1. Create a Movement journal. 2. Pick the items. 3. Post from the Journal header form.

Need a Little Help?

Open Inventory and warehouse management > Journals > Item transactions > Movement to create a Movement journal.

Enter the quantities as negative numbers. Click Inventory > Pick to pick the items . Post from the Journal header form.

Step by Step

1. Open Inventory and warehouse management > Journals > Item transactions > Movement.

2. Click New. 3. Select IMov in the Name field and then click Lines. 4. Click the Item number arrow and then select 1701. 5. Confirm that the Warehouse is 21. 6. In the Quantity field, type "-1". 7. In the Offset account field, type "540100". 8. Click Inventory > Pick and then click Add picking list update. 9. Click Register all, and then close the Pick form. 10. Click New in the Journal lines form to enter a new line. 11. Click the Item number arrow and then select 1706. 12. Confirm that the Warehouse is 21. 13. In the Quantity field, type "-1". 14. In the Offset account field, type "540100". 15. Click Inventory > Pick and then click Add picking list update.


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16. Select a Batch number and then click Register all 17. Close the Pick form. 18. Close the Journal lines form. 19. In the Movement journal form, click the created journal, and then

click Post. 20. Click OK. 21. Click Close to close the message box. 22. Close all the forms.


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Lab 8.2 - Create an Inventory Adjustment Journal Scenario

The Warehouse Manager of the Contoso Company reorganized two sections of warehouse 11 so that items were physically moved from one area to another. During the process, a box dropped on the floor that resulted in the breaking of ten Satellite Speakers (item 1163). Your task is to create a Profit and Loss journal to register the inventory adjustment.

Challenge Yourself!

1. Create an Inventory adjustment journal. 2. Post the journal.

Need a Little Help?

Create an inventory adjustment journal by opening Inventory and warehouse management > Journals > Item transactions > Inventory adjustment.

Register the items to be adjusted as a negative number. Post the journal.

Step by Step

1. Click Inventory and warehouse management > Journals > Item transactions > Inventory adjustment.

2. Create a new journal by clicking New and select IPL in the Name field.

3. Click Create new. A journal is created and the Journal lines form is automatically opened.

4. Select Item 1163 in the Item number field. 5. Confirm that the Warehouse is 11. 6. In the Quantity field, type "-10". 7. Click Post to post the journal, and then click OK. 8. Click Close to close the Infolog. 9. Close all the forms.


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Transfer Journals Inventory transfers between stocking locations can be recorded in an inventory transfer journal. Each transfer minimally identifies an item, quantity, and the old and new stocking locations. An inventory transfer journal also supports the transfer of one variant of an item to another, in addition to transferring one batch number to another batch number, much as if you would transfer inventory from one warehouse to another warehouse.

Inventory transfers reflect the immediate movement of material, without a requirement for tracking in transit inventory. For example, a transfer journal can be used to move material between two adjacent warehouses. Transfer orders should be used when in transit inventory must be tracked. In addition, the planned transfers between locations in a company can be modeled with planned transfer orders, whereas a transfer journal typically reflects an unplanned transfer.

Defining Transfer Journals

Use transfer journals to move or transfer an item in an Inventory dimension.

Both automatic and manual transfer orders are created and processed between warehouses in the Transfer form (Inventory and warehouse management > Periodic > Transfer Orders).

Use the Transfer form to move an item in an inventory dimension. For example when you move an item from one warehouse to another, or change the batch number.

When you post a Transfer journal, for one journal line, two inventory transactions are created for one journal line. The two transactions are an inventory receipt and an inventory issue. The on-hand inventories at the two warehouses will be changed.

Postings to general ledger occur in the following cases:

Items are moved to another dimension, for example if items were originally registered by using color=black and are moved to color=red. Postings occur whether this is in the same site or whether the transfer is across sites.

Items are moved to another site, even if the inventory item dimensions are identical. This enables sites to have different costs for the same items.

The issue and receipt transfer journals use different lot IDs.


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Procedure: Create a Transfer Journal

To create a transfer journal, follow these steps.

1. From the Navigation Pane, open Inventory and warehouse management > Journals > Item transactions > Transfer.

2. Click Create new. 3. Select an Item number. 4. Select a From and To Site to transfer the item to. 5. In the From warehouse field, select the location from which the

item should be transferred. 6. In the To warehouse field, select the location where the item is

going. 7. Use the From batch number and To batch number fields to

specify batches. 8. In the Quantity field, type the quantity to transfer. 9. Click Post to post the journal. 10. Click OK to close the Infolog.


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Lab 8.3 - Create a Transfer Journal Scenario

The Contoso Company receives ten units of High-Definition DVD Players from their vendor Litware Electronics. Each of these units has a different batch number. However, after verification, the Contoso Company finds that the last two units should have a different batch number. To make sure that the inventory tracking warehouse dimension batch number is correct, the Contoso Company must correct the situation.

Your task is to rectify these incorrectly numbered units and then view the transactions.

The item number is 1706 and the warehouse that the items were received in is warehouse 21. The transaction that was registered under batch number 00009 is registered under 000008. The transaction that was registered under batch number 000010 is under 000008.

Challenge Yourself!

1. Create a Transfer journal. 2. Transfer the batch number for item 1706.

Need a Little Help?

Open Inventory and warehouse management > Journals > Item transactions > Transfer to create a transfer journal.

Create a Transfer journal. Specify the From warehouse and the To warehouse. Specify the From batch number and the To batch number. Specify the number as a negative number. Review the transactions from the Item form.

Step by Step

1. Open Inventory and warehouse management > Journals > Item transactions > Transfer.

2. Click Create new. 3. Click the Item number arrow and then select 1706. 4. In the From warehouse field, type "21". 5. In the To warehouse field, type "21". 6. Click the From batch number arrow and then select 000009. 7. Click the To batch number arrow and then select 000008. 8. In the Quantity field, type "-1".


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9. Click New to create a new line. 10. Click the Item number arrow and then select 1706. 11. Select 2 in the To site field. 12. Click the From batch number arrow and then select 000010. 13. Click the To batch number arrow and then select 000008. 14. In the Quantity field, type "-1". 15. Click Post and then click OK. 16. Click Close to close the message box. 17. Open Inventory and warehouse management > Common > On-

hand inventory and then select item 1706. Click OK. 18. Click Transactions. Select your transfer line and then click

Inventory > Transactions in physical voucher. 19. Close all the forms.


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Bill of Material Journals Posting a Bill of Material (BOM) journal generates an inventory receipt of the product with an associated BOM and an inventory issue of the products that are included in the BOM.

The BOM journal is used by companies that have a simple high volume production process where production routes are not specified. Also, items that are reported as finished in this manner probably have a high material cost in relation to labor costs.

Procedure: Report a BOM as Finished by Using an Inventory Journal

To report a BOM as finished by using an Inventory journal follow these steps:

1. Open Inventory and warehouse management > Journals > Item transactions > Bills of materials.

2. Create a new journal. 3. In the Lines form, do not create new lines manually, but click

BOM > Report as finished. 4. In the Report as finished form, click Select and select the item of

the type BOM that you want to report as finished. Click OK. 5. Select any dimension for the item that you want to report as finished. 6. Enter the quantity of the BOM you want to report as finished. 7. Select the BOM version. The BOM version defaults to the active

version. However, the user can select a different version that is approved for the item.

8. Select and Explosion policy. The explosion policy determines the basis of components that are used in producing the parent item, as follows: o Never - The underlying BOMs for manufactured components are

never exploded so that the components reflect the single-level BOM. However, the system still explodes requirements through phantom components.

o Always - The underlying BOMs for manufactured components are always exploded regardless of inventory availability so that components only reflect purchased items.

o Shortage - Explode only when shortage exists. The explosion of underlying BOMs for manufactured components reflects available inventory of each component.\

9. Select or clear the Post now check box, depending on whether you

want to post the transaction now or at a later from the Lines form.


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NOTE: To update the item consumption when you report a BOM as finished for example, you might have to specify additional quantities of items because some component items for the BOM were defective it might be a good idea to leave the Post now parameter clear. In this manner, you can verify and update BOM component item quantities before the posting.

10. Click OK and you return to the Lines form where the Bill of Material is exploded into its component items.

11. When the journal is posted, you can view the transactions that were created from your posting. To do this, from the posted journal line click Transactions > Ledger > Physical Voucher from the Inventory transactions form.

Procedure: Generate BOM Journal and Lines from the Released Products Details Form

You can also generate BOM journal and lines if a product that is associated with a BOM is reported as finished directly from the Released Items list page.

1. Open Product information management > Common > Products > Released products.

2. Select a product that is associated with a BOM. 3. Click the Engineer tab > Report as finished 4. Enter any dimensions and the quantity to be reported as finished. 5. Click OK. 6. Open Inventory and warehouse management > Journals > Item

transactions > Bills of materials and you can verify the journal for the BOM.


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Lab 8.4 - Create a Bill of Material Journal Scenario

To satisfy an important customer, the Contoso Company has created four special High End Speakers - ash/14 inches (1102). A customer requested special speakers without grills.

Your task is to register the inventory changes with a BOM Journal.

Challenge Yourself!

1. Report the BOM as finished. 2. Remove the grill.

Need a Little Help?

Use Bill of materials journal > Report as finished. Remove the grill from the BOM before posting the journal.

Step by Step

1. Open Inventory and warehouse management > Journals > Item transactions > Bills of materials.

2. Click Create new. 3. In the Journal lines form click BOM > Report as finished. 4. In the Report as finished form, click Select and then select Item

number 1102. 5. Click OK. 6. In the Site field, type "1", and in the Warehouse field, type "11". 7. In the Quantity field, change the value to "4". 8. Clear the Post now check box. 9. Click OK and then close the Infolog. 10. In the Journal lines form, click the component (5001 Grill), and

then click Delete. 11. Click Yes to confirm deletion. 12. Click Post. 13. Click OK. 14. Click Close to close the Infolog. 15. Close all the forms.


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Counting Journals The Counting journal lets you calculate the current on-hand inventory level that is recorded for a group of items, and then post the actual physical count to make the adjustments necessary to reconcile their differences.

Scenario: Counting Journal Setup

The Contoso Company conducts two types of physical inventory:

Cycle counting that varies in frequency by item. Tag counting that they perform for their year-end inventory.

The Contoso Company's Warehouse Manager has determined which items must be cycle counted, and when.

For example, all items that have a value greater than $1,000 U.S. dollars (USD) are cycle counted monthly; items with a value between 500 and 1000 USD are cycle counted every two months; and items with a value between 250 and 500 USD are cycle counted quarterly. Items with a value lower than 250 USD are not cycle counted, but only inventoried one time per year during year-end inventory. The Contoso Company uses the Cycle Counting journal to support this process.

In comparison, at year-end, the warehouse shuts down for three days for tag counting. During this process, the whole team counts every item in the warehouse by using the Tag counting journal.

Counting Journal Setup Warehouse items let you record multiple product dimension configurations for your items for each warehouse. Warehouse items are a supplement to inventory items and do not replace them, although they are related to them.

When you perform cycle counting in multiple warehouses, a warehouse item must be set up for each item configuration, for each warehouse. By default, when you select Counting group on the General FastTab of the Released Product's form, a warehouse item is created automatically without a specific warehouse. To define cycle count for items where multiple warehouses exist, the Warehouse items form allows for identification of which counting group should be used for each warehouse.

Each warehouse item has its own counting group, warehouse management, and product dimension setup.


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Example 1: Warehouse Items

The warehouse manager purchased an item with two dimension combinations. To make sure that these two combinations of the product dimensions are counted, the warehouse manager sets up the combinations in the Warehouse items form (Product information management > Common > Products > Released products > Manage inventory > Warehouse items), together with counting group, to make sure that they are counted during cycle counting.

Example 2: Warehouse Items

A company has only one warehouse and sells an LCD Television that is available in three sizes and two colors. This company is using the product dimension configuration to minimize product maintenance and the number of inventory items.

For this situation, only one product number is created: LCD Television Model 01.

The following variations to the product master are as follows:

Black - 37 inches Black - 42 inches Black - 50 inches Silver - 37 inches Silver - 42 inches Silver - 50 inches

The warehouse items will be used to assign a specific counting group to each variant. Therefore, the counting journal will provide one request for counting each combination instead of a global request for all sizes and colors together.

Procedure: Create a Warehouse Item

To create a warehouse item, follow these steps:

1. Open Product information management > Common > Products > Released products > Manage inventory.

2. Select the item that you want to configure and then click Warehouse items.

3. Click New to create a new Warehouse item configuration. Create the number of lines that correspond to the warehouses and configurations that are used by the item.


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NOTE: When you open the Warehouse items form, and no warehouse or combination of product dimensions have previously been defined, a default line appears with only the counting group from the inventory item.

To create warehouse and product dimension variants for the item, you must create a new record in the counting journal.

4. Assign a counting group to each line.

Counting Groups

Counting groups lets you create logical groupings of items, depending on how you want to count them. Typically, logical groups are based on item value, warehouse section, ABC code, inventory turnover, and similar factors.

Procedure: Create a Counting Group

To create a counting group, follow these steps:

1. Open Inventory and warehouse management > Setup > Inventory > Counting groups.

2. Click New to create a new counting group. 3. Specify an identification and description for the group. 4. Select a counting code:

o Manual: The item is included every time that the job is run. In other words, you decide the counting interval for the counting group by starting the count job.

o Period: Specify the number of days that make up the period in the Period field.


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Example: Creating a Counting Group

The Wind Televisions Company is buying some products from an overseas vendor where purchasing lead time is lengthy. Keeping a tight control on the on-hand quantity of these products is important to avoid stock shortage. The company creates a counting group that has a period code that comes before the purchasing schedule by a week and assigns this counting group to all items coming from the vendor. Therefore, the Wind Televisions Company can obtain accurate inventory counts immediately before placing the purchase order.

Zero in stock: If on-hand inventory is equal to zero for an item in this counting group, it will be included in the counting batch job. If the on-hand inventory reaches zero after a count, the item will be included the next time that you start the count.

Minimum: The items in this counting group are included in a counting batch job if the item's on-hand quantity is equal to or falls under the quantity that is specified in the Refill limit field of the warehouse item.

Example: Verifying Items are Physically On-Hand

For items that are frequently used in production orders, you must make sure that the item is always physically on-hand for consumption. If these items are used consistently, you can maintain fairly static inventory levels. However, deviations might occur. To accommodate variances in inventory when minimizing counting, these items can be assigned a counting group that has Minimum selected so that they are only added to the counting journal when the quantity falls lower than the specified level.

When you have created the counting group, you must attach it to an item. This value defaults to the warehouse item for the item, although you can overwrite this value in the warehouse item lines.

Procedure: Attach a Counting Group to a Product/Warehouse Item

To attach a counting group to an Product/Warehouse item, follow these steps:

1. Open Product information management > Common > Products > Released products > Manage inventory.

2. Specify the product to which you want to assign the counting group and then click Warehouse items.

3. Click the General tab and select a counting group to attach to the item in the Counting group field.


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Creating and Processing a Counting Journal When a physical inventory is counted, a counting batch is run and lines are generated in the counting journal for the items that are included in the count. The counting journal shows the on-hand quantity that is currently posted in the On-hand field, and provides the Counted field for the user to manually enter the actual physical count for the line items.

When the Counted field is populated by the user, the Quantity field is auto-populated with the appropriate adjustment quantity. Any differences between the posted quantity and the physical count are a profit or loss and will be posted as such.

Each count is given a Journal number and Date. This lets you view and differentiate data from earlier counts, specifically which counting journal and voucher the count was posted to and the date of the count.

Create Journal Lines

The counting journal contains a function that can create journal lines with the individual item numbers and on-hand inventory for each dimension.

By clicking Create in the Counting journal lines form, you can select one of the three methods of creating lines. This is shown in the following table.

Method Description On-hand Selecting this creates a journal listing only for those items

for which on-hand inventory is registeredthat is, on-hand inventory is not equal to zero.

Items Selecting this creates a journal listing for all items, and through the counting process, warehouse staff will identify those that are on-hand (by noting the number counted) or not on-hand (zero).

Expired batches

Selecting this creates a journal listing only for those items with an expired batch date. This enables warehouse staff to count only those items with expired batches so that these items can be removed from inventory or otherwise treated in a special manner.

Inventory and warehouse management > Journals > Item counting > Counting > Create new > Journal lines, Inventory

In the Released Products form, you can determine whether an item is counted by clicking Setup > Warehouse items. When there are transactions for an item number in an Inventory journal, the Counting started field is selected.


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The system creates journal lines for items according to the criteria that is specified in the dialog box for each of these methods. The following criteria are available:

Physical Transactions: Only include items for which there are physical transactions since the last count.

Not counted since: Only include items that are not counted since the specified date.

Counting group: Include only items that belong to the specified counting group.

Activate Counting Code: Create lines only for those items that fulfill the counting criteria that is specified in the item's counting group.

Dimension: When a dimension value is selected in the Counting by section, journal lines are created for each dimension value. For example, lines would be created by warehouse or by batch number for each warehouse or other inventory dimensions.

Include items with nothing on hand: Available only when you create lines with the On-hand method, this criteria includes journal lines for items without stock on hand. For example, for a specific counting group, a separate journal for only items with nothing on hand can be generated for special verification. You do this by creating a journal for the group without selecting this option, and then creating a second journal with all the same options plus this one selected.

Lock Items During Counting

You can lock items that are being counted so that no physical transactions are registered for the item while the item is counted.

Example: Locking an Item During Counting

You create a counting journal line for item 1001 configuration Black in warehouse 21. The Lock items during count parameter is selected. Then, you can create a sales order for this item in its configuration from warehouse 21. You cannot physically update the sales order because the item is locked for this variant. However, you can create and physically update transactions for the item at other warehouses because the item is not being counted at these warehouses.


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Procedure: Lock Items During Counting

To lock items during count, follow these steps:

1. Open Inventory and warehouse management > Inventory and warehouse management parameters > General.

2. Select the Lock items during count parameter.

Now try to sell one unit of an item for the dimension value that is being counted. The message box will inform you that the item is being counted and is locked for updates. The update will be canceled.

BEST PRACTICE: Selecting Lock During count is unsuitable for companies that, for example, run continuous production because it prevents updates to any items that are being counted.

Also, even when companies stop production for the weekend, they might still have to deliver goods and the parameter would stop them from updating orders.

Processing a Counting Journal

After you have selected how you generate the lines of the counting journal, the lines are created. You can then print a counting list from the journal header.

Procedure: Print a Counting List

To print a counting list, follow these steps:

1. Open Inventory and warehouse management > Journals > Item counting > Counting.

2. Select the journal for which you have created lines.


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3. Click Print > Counting List. 4. Select the Print on-hand check box to include on-hand quantities in

the report. You might not want to have on-hand quantities printed in the report if you want to make sure that quantities of the item are counted and not just checked off as being the same quantity in the counting list report.

FIGURE 8.4 COUNTING LIST FORM

When the count is complete, you must enter what was counted into the system.

Procedure: Completing and Posting Journal Lines

To complete and post journal lines, follow these steps:

1. Open Inventory management > Journals > Item Counting > Counting.

2. Select the journal for which you are running the counting. 3. Click Lines. 4. In the Counted field, enter the actual physical quantity of items

counted. The difference between the on-hand inventory and the counted quantity is calculated automatically and appears in the Quantity field. Notice that you must enter a quantity, even if the quantity is zero, for every line that appears in the counting journal.

5. Enter any additional lines for items that were not generated when you created the counting journal lines. This can be, for example, additional items that you have found in the warehouse and want to include in the count.

6. Click Post to post any differences in system counted and physically counted quantity.


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When posted, the system creates transactions, gains or losses, for each item counted. The General ledger entries that are created by the posting of the counting journal are based on the accounts that are selected in Inventory and warehouse management > Setup > Posting > Posting.

Procedure: View Transactions

To view the transactions that are associated with the posting of a counting journal, follow these steps:

1. Open Inventory and warehouse management > Journals > Item counting > Counting.

2. In the Show field, select Posted. 3. Select the journal. 4. Click Lines. 5. To view transaction information that is associated with a line item,

click Inventory > Transactions > Ledger > Financial voucher.

FIGURE 8.5 VOUCHER TRANSACTIONS FORM


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Lab 8.5 - Create a Counting Journal Scenario

The Warehouse Manager at Contoso wants to verify weekly inventory accuracy of the LCD Monitor Model 1 (item 10000) product in warehouse 21, in site 2. She wants to perform a cycle count of this product with or without on-hand inventory at the time of the count. This new counting group will be 40, LCD Monitor1000.

Your task is to create the new counting group, attach it to the LCD monitor, and then enter and post the result of 200 of the cycle count. Make sure that the inventory transaction is visible for the item.

Challenge Yourself!

1. Create a new Counting group. 2. Assign the counting group to Item number 10000. 3. Create a new counting journal with the results.

Need a Little Help?

Open Inventory management > Setup > Inventory > Counting group to create a new Counting group.

Attach the new Counting group to the product. Create a new counting journal and create a record in the new group

in warehouse 21. Type and post the results.

Step by Step

1. Open Inventory management > Setup > Inventory > Counting groups.

2. Click New to create a new group. 3. In the Counting group field, type "40". 4. In the Name field, type "LCD Monitor1000". 5. Click the Counting code arrow and then select Period. 6. In the Counting period field, type "7". 7. Save the record by clicking Close. 8. Open Product information management > Common > Released

products. 9. Select Item number 10000 and then click Edit in the Maintain

group. 10. In the Manage inventory FastTab, select 40 from the Counting

group field.


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11. Close the Released product details form. 12. Open Inventory management > Journals > Item counting >

Counting. 13. Click Create new. 14. Select the Warehouse dimension check box. 15. Click OK. 16. Click Create > Items. 17. Click the Counting group drop-down arrow and select 40. 18. In the Site field, select 2. 19. Click the Warehouse drop-down arrow and then select 21. 20. Click OK. 21. In the Counted field, type "200", for the line with Item number

10000. 22. Click Post and then click OK. 23. Click Close to close the message box. 24. Click Inventory > Transactions to view the generated inventory

transaction. 25. Close all the forms.


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Tag Counting Journals Tag counting is a method that simplifies manual inventory counting. Tag counting can be used in addition to ordinary counting, where automatic counting lines are generated, or it can be used instead of ordinary counting.

Some companies use tags (with pre-assigned numbers) to conduct a physical inventory, typically with hand-written count information about the quantity and location. A separate tag counting journal can be used to record the tag numbers, tag status (used, voided, or missing), and the count information. You can then analyze missing tag numbers. This tag counting journal represents an approach to tag control. Posting it creates a counting journal (with journal lines for used tags). This must be posted to update inventory balances.

The idea of a tag count is to tag count lots with a numbered tag. The following information should be registered on the tag:

Tag number Item number Item quantity

Each item number has its own stack of tags with its own number sequence to make sure that a tag is only used one time and that all tags are used. Therefore, a tag can have one of three status values:

Used: item number counted for this tag Voided: item number voided for this tag Missing: item number missing for this tag

This makes sure that the company is always current with their tags and can account for them. Moreover, because the tag counting process is usually tightly linked to the financial auditor's checks and reviews, each tag must have a status to prove that all generated tags are accounted for, retrieved, and voided if it is necessary. Missing tags are not usually accepted.

When all lots are counted, the used tags should be registered in the Tag counting journal. Select Inventory and warehouse management > Journals > Item counting > Tag counting.

The Tag counting journal posts the entries in a counting journal, from which any differences between expected and physical on-hand inventory are posted.

Processing a Tag Counting Journal

When you post the entered tags, you can run a simulation that shows the effects of the entries. For example, a simulation would show how many items are counted, how many items are on-hand, and the difference between these two values. This enables you to check the counting before final posting occurs in the Counting journal.


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To simulate the posting, click Post in the tag counting journal. Then, select the Simulation check box. Notice that there are options for Zero lines and Transfer errors to a new journal. If Zero lines is selected, the system will zero out all on-hand inventory if these items were not counted in the Tag count. Transfer errors to a new journal lets you post the journal and transfer any error items into another journal for later processing.

You can also use the results of a simulation to enter the counted quantities in the Counting journals if the Tag counting is only meant as an aid to the physical inventory.

In the tag counting journal, you can check which tag numbers are used in the journal to correct any oversights or mistakes. Do this by clicking Functions > Check missing.

Tag counting can be used to count products by dimension. For example, products can be counted by warehouse. If you take a count and therefore create lines for each warehouse, this must be indicated in the tag counting journal on the Setup tab.

If you are counting by serial number, we recommend that you use the Create zero lines option. Lines are then created for the serial numbers that are not counted. When recording such a transaction, select the item numbers for which lines are to be created.

When simulation is complete, you can post the tag journal. Notice that this only posts to the counting journal. A message box appears and shows the journal number for the counting journal. Then, open the counting journal to post the count. It is only at the counting journal that differences between expected and physical on-hand inventory ultimately are posted.

If you decide to lock items during counting, the item will be locked after inventory transactions with the reference of counting. This does not occur until journal lines are created in the counting journal, not in the tag counting journal. This lock is released upon posting of the counting journal..

Procedure: Create and Process a Tag Counting Journal

To create and process a tag counting journal, follow these steps:

1. From the Navigation pane, open Inventory and warehouse management > Journals > Item counting > Tag counting.

2. Click Create new to create a new journal. 3. Click OK to close the Dimension dialog box. 4. Click the Lines button. 5. In the Tag field, type "counting tag identifier". 6. In the Item number field, enter the item number. 7. In the Quantity field, enter the counted quantity to be posted and

transferred to the counting journal.


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When you post the tag-counting journal, a new counting journal is created based on the tag-counting journal lines. When this is accepted, finish the process by posting the counting journal.

You can simulate the posting to check the result in the counting journal before you perform the actual posting of the tag-counting journal. If you are using configurations of the item, you must also specify those.

1. Click Post and select the Simulation check box, if you want to check the result before actual posting.

2. Click Post to post the journal.

Inventory Blocking Inventory blocking is part of the quality inspection process. During the quality inspection, items are automatically blocked from consumption or issue. Also, you can manually block items that you want to prevent from being issued or consumed.

You can block inventory items in three ways:

Manually By creating a quality order By using a process that generates a quality order

Block Items Manually

You can block a quantity of an item by creating a transaction in the Inventory blocking form. Only items that are available as on-hand inventory can be blocked.

For manually blocked quantities, you must consider if expected receipts should be included in planning activities as an expected on-hand quantity. Expected receipts are blocked items that are expected to be available as on-hand inventory after inspection. For items that are blocked through a quality order, the Expected receipts check box is selected by default.

You can cancel blocking of a manually blocked quantity by deleting the transaction in the Inventory blocking form.


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Procedure: Manually Blocking Items

To manually block items, follow these steps:

1. Click Inventory and warehouse management > Periodic > Inventory blocking.

FIGURE 8.6 INVENTORY BLOCKING FORM

2. Click New to create a new blocking transaction. 3. In the Item number field, select the item that you want to block. 4. In the Quantity field, enter the quantity that you want to block. 5. If you want to include the blocked quantity in planning activities as

an expected on-hand quantity, select the Expected receipts check box.

NOTE: If the item that you want to block has a specific serial number as indicated on the Inventory dimensions FastTab, you can only block a quantity of one.

To manually unblock inventory items, follow these steps:


2. Select the blocking transaction for the inventory items that you want to unblock and then click Delete.


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Block Items by Creating a Quality Order

You can specify items for inspection by creating a quality order in the Quality orders form. When you create a quality order, the quantity of an item that you specify is blocked.

NOTE: The sampling plan that is associated with a quality order controls the quantity of an item that should be inspected. The quantity of blocked items, on the other hand, is not controlled by the sampling plan. Regardless of the quantity that is sent for inspection, as specified by the sampling plan, the quantity of the item that is entered on the quality order is the quantity that is blocked.

Block Items by a Process that Generates a Quality Order

A quantity of an item that is specified for inspection through a quality process is automatically blocked. Therefore, when a quality order is generated automatically, the item sampling plan that is associated with the quality order controls the quantity of items that are blocked and not only the quantity of items to be inspected.

NOTE: If the Full blocking check box in the Item sampling form is selected, the full quantity of, for example, a purchase order line is blocked during inspection regardless of the item sampling quantity.

Example: Inventory Blocking

In the following example, a quality order is generated when a purchase order packing slip is posted. In the Quality associations form, posting of a purchase order packing slip is specified as the process that activates the quality order.

Setup User Action Result A quality association specifies that, upon posting of a purchase order packing slip, a quality order must be generated.

The packing slip is posted.

A quality order is generated.

The item sampling setup of the quality order specifies that 10 percent of the purchase order line quantity must be inspected.


10 percent of the purchase order quantity of the item is sent to inspection.

With the Full blocking check box selected, the item sampling setup indicates that the full quantity of the purchase order line must be blocked during inspection regardless of the quantity that is sent for inspection.


The full quantity of the purchase order line is blocked.


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Procedure: Automatic Blocking Setup

When you work with inventory blocking, you must consider the following setup options.

Determine whether you want to block the full quantity of items in transactions that are covered by a sampling plan.

Examine if you want to consider expected receipts for manually blocked items.

To set up a sampling plan, follow these steps:

1. Click Inventory and warehouse management > Setup > Quality control > Item sampling.

2. Click New to create a new sampling plan and fill in information about the sampling plan.

3. Select the Full blocking check box if you want to block the full quantity of items in transactions that are covered by the sampling plan.

Consider expected receipts for manually blocked items


2. Click New to create a new blocking transaction, complete the information about the transaction, and select the Expected receipts check box.

Summary Inventory Journals reviewed how inventory journals are used. This included the following:

Transaction journals that are used to move inventory, record profit and loss, move items between different dimensions, and report as finished BOM transactions.

The use of counting and tag counting journals for the reconciliation of physical inventory.

Using these features help handle and manage inventory. In addition these features help you keep track of and control differences between system-registered inventory and actual inventory that is physically present in the company.


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Test Your Knowledge Test your knowledge with the following questions.

1. What are inventory journals used for?

2. Where are inventory journals set up?

( ) Inventory and warehouse management > Setup > Posting > Posting, Inventory tab

( ) Inventory and warehouse management > Setup > Parameters ( ) Inventory and warehouse management > Setup > Journals > Journal

names, Inventory ( ) Inventory and warehouse management > Setup > Journals > Journal

names, warehouse management

3. What is the main difference between an Inventory adjustment and a Movement journal?


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4. What two inventory transactions are created for each journal line when you post a Transfer journal?

5. Warehouse items let you do which of the following?

( ) Always have the item available on-hand ( ) Make the item default for counting journal ( ) Record multiple item dimension configurations for your items for

each warehouse ( ) Lock the items for any updates


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Quick Interaction: Lessons Learned Take a moment and write down three key points you have learned from this chapter

1.

2.

3.


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Solutions Test Your Knowledge

1. What are inventory journals used for?

MODEL ANSWER:

For posting physical and financial inventory.

2. Where are inventory journals set up?

() Inventory and warehouse management > Setup > Posting > Posting, Inventory tab

( ) Inventory and warehouse management > Setup > Parameters ( ) Inventory and warehouse management > Setup > Journals > Journal

names, Inventory ( ) Inventory and warehouse management > Setup > Journals > Journal

names, warehouse management

3. What is the main difference between an Inventory adjustment and a Movement journal?

MODEL ANSWER:

You can select the offsetting general ledger account in the Movement journal.

4. What two inventory transactions are created for each journal line when you post a Transfer journal?

MODEL ANSWER:

Inventory receipt and issue.

5. Warehouse items let you do which of the following?

( ) Always have the item available on-hand ( ) Make the item default for counting journal () Record multiple item dimension configurations for your items for

each warehouse ( ) Lock the items for any updates


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