rms stock ledger white paper-14.1.x

Oracle Retail Merchandising System

Stock Ledger Whitepaper Release 14.1.x January 2015

Note: The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracles products remains at the sole discretion of Oracle.

Contents Contents ............................................................................................................................. ii

1 Introduction .................................................................................................................. 1

2 RMS Stock Ledger Overview ...................................................................................... 3 Stock Ledger Organization .................................................................................................... 3

Transaction Data .............................................................................................................. 3 Transaction Data API ...................................................................................................... 3 Stock Ledger Roll Ups ..................................................................................................... 4 Stock Ledger and Merchandising Transactions ........................................................... 4

3 RMS Stock Ledger Attributes ..................................................................................... 7 System Options ....................................................................................................................... 7

Budgeted Shrink Indicator ............................................................................................. 7 Calendar ............................................................................................................................ 8 Consolidated Exchange Rate .......................................................................................... 9 Cost Method ..................................................................................................................... 9 Currency .......................................................................................................................... 10 Default Tax Type ............................................................................................................ 10 Estimated Landed Cost ................................................................................................. 10 Financial Integration ...................................................................................................... 11 General Ledger Rollup Level ....................................................................................... 11 Minimum / Maximum Cumulative Mark-on Percent ............................................. 11 Multiple Set of Books..................................................................................................... 11 NWP Processing ............................................................................................................. 12 Receiver Cost Adjustment Type .................................................................................. 13 Retail Markdown for Transfer ..................................................................................... 13 Retain Transaction Data ................................................................................................ 13 Stock Count Processing ................................................................................................. 13 Stock Ledger Retail VAT Inclusive .............................................................................. 14 Stock Ledger Location Level ........................................................................................ 14 Stock Ledger Product Level .......................................................................................... 14 Time Interval .................................................................................................................. 14

Accounting Methods ............................................................................................................ 15 Retail Accounting Method ............................................................................................ 15 Cost Accounting Method .............................................................................................. 17

4 Transaction Data ........................................................................................................ 29 Net Sales (Tran Code 01) ................................................................................................... 29 Net Sales VAT Exclusive (Tran Code 02) ........................................................................ 30 Non-inventory Items Sales/Returns (Tran Code 03) .................................................... 31 Returns (Tran Code 04) ..................................................................................................... 31 Non-inventory VAT Exclusive Sales (Tran Code 05) .................................................... 31

iii

Deals Income (Sales) (Tran Code 06) ............................................................................... 32 Deals Income (Purchases) (Tran Code 07) ...................................................................... 32 Fixed Income Accrual (Tran Code 08) ............................................................................. 33 Weight Variance (Tran Code 10) ...................................................................................... 33 Markup (Tran Code 11) ..................................................................................................... 33

Price Changes ................................................................................................................. 34 Pack Component Sales .................................................................................................. 34 Transfers .......................................................................................................................... 35

Markup Cancel (Tran Code 12) ........................................................................................ 35 Permanent Markdown (Tran Code 13) ........................................................................... 36

Price Change ................................................................................................................... 36 Pack Component Sales .................................................................................................. 37 Transfers .......................................................................................................................... 37

Markdown Cancel (Tran Code 14) .................................................................................. 37 Promotional Markdown (Tran Code 15)......................................................................... 38

Promotional Price Change ............................................................................................ 39 Price Changes at the Time of Sales .............................................................................. 39

Clearance Markdown (Tran Code 16) ............................................................................. 39 Intercompany Markup (Tran Code 17) ........................................................................... 40 Intercompany Markdown (Tran Code 18) ...................................................................... 40 Purchases (Tran Code 20) ................................................................................................. 41 Stock Adjustment (Tran Code 22) .................................................................................... 43 Stock Adjustment COGS (Tran Code 23) ..................................................................... 43 Return to Vendor (Tran Code 24) .................................................................................... 44 Unavailable Inventory Transfer (Tran Code 25) ............................................................ 44 Freight Cost (Tran Code 26) ............................................................................................. 45 Return to Vendor from QC (Tran Code 27) .................................................................... 45 Profit Up Charge (Tran Code 28) ..................................................................................... 45 Expense Up Charge (Tran Code 29) ................................................................................ 46 Transfer In (Tran Code 30) ................................................................................................ 46 Book Transfer In (Tran Code 31) ...................................................................................... 47 Transfer Out (Tran Code 32)............................................................................................. 47 Book Transfer Out (Tran Code 33) ................................................................................... 48 Reclassifications In (Tran Code 34) .................................................................................. 49 Reclassifications Out (Tran Code 36) .............................................................................. 49 Intercompany Transfer In (Tran Code 37) ...................................................................... 50 Intercompany Transfer Out (Tran Code 38) ................................................................... 50 Retail Analytics Stock Ledger Adjustment (Tran Code 41) .......................................... 51 Retail Analytics Inbound Transfer Receipt (Tran Code 44) ......................................... 52 Employee Discount (Tran Code 60) ................................................................................. 52 Freight Claim (Tran Code 62) ........................................................................................... 52 Work Order Activity Cost Update Inventory (Tran Code 63) .................................. 53 Work Order Activity Cost Post to Financials (Tran Code 64) ................................... 53

iv

Restocking Fee (Tran Code 65) ......................................................................................... 54 Cost Variance (Tran Code 70) ........................................................................................... 54 Cost Variance Retail Accounting (Tran Code 71) ....................................................... 55 Cost Variance Cost Accounting (Tran Code 72) ......................................................... 55 Cost Variance Receiver Cost Adjustment FIFO (Tran Code 73) ............................... 56 Workroom / Other Cost of Sales (Tran Code 80) .......................................................... 56 Cash Discount (Tran Code 81) ......................................................................................... 56 Franchise Sales (Tran Code 82) ........................................................................................ 56 Franchise Returns (Tran Code 83) ................................................................................... 57 Franchise Markups (Tran Code 84) ................................................................................. 57 Franchise Markdowns (Tran Code 85) ............................................................................ 58 Franchise Restocking Fee (Tran Code 86) ....................................................................... 58 VAT In Cost (Tran Code 87) ............................................................................................. 58 VAT Out Retail (Tran Code 88) ........................................................................................ 59 General Ledger Mapping Transaction Codes ................................................................... 59 Intercompany Margin (Tran Code 39) ............................................................................ 60 Open Stock (Tran Code 50) ............................................................................................... 60 Budgeted Shrink (Tran Code 51) ..................................................................................... 60 Close Stock (Tran Code 52) ............................................................................................... 60 Gross Margin (Tran Code 53) ........................................................................................... 60 HTD GAFS (Tran Code 54) ............................................................................................... 61 Inter Stocktake Sales Amount (Tran Code 55) ............................................................... 61 Inter Stocktake Shrink Amount (Tran Code 56) ............................................................ 61 Stocktake MTD Sales Amount (Tran Code 57) .............................................................. 61 Stocktake MTD Shrink Amount (Tran Code 58) ............................................................ 61 Stocktake Book Stock Cost (Tran Code 59) ..................................................................... 61 Stocktake Actual Stock Cost/Retail (Tran Code 61)...................................................... 61 Transaction Data Stock Ledger Impact ........................................................................... 62 Transaction Data Data Elements ...................................................................................... 64

5 Stock Ledger Process Consolidation and Batch Processing ............................ 67 Stock Ledger Budgets ........................................................................................................... 67 Stock Ledger Tables .............................................................................................................. 67

TRAN_DATA (A&B) ..................................................................................................... 67 IF_TRAN_DATA ........................................................................................................... 68 TRAN_DATA_HISTORY ............................................................................................. 68 DAILY_DATA ................................................................................................................ 68 WEEK_DATA ................................................................................................................. 68 MONTH_DATA............................................................................................................. 69 HALF_DATA ................................................................................................................. 69 MONTH_DATA_BUDGET .......................................................................................... 69 HALF_DATA_BUDGET ............................................................................................... 70

Stock Ledger Batch Process ................................................................................................. 71

v

Stock Ledger Batch Description ................................................................................... 72 General Ledger Cross Reference .................................................................................. 75 General Ledger Batch Description ............................................................................... 76

7 Stock Ledger Online Forms and Functional Views ................................................ 79 Transaction Data Form ......................................................................................................... 79 Stock Ledger View Form ...................................................................................................... 80

Stock Ledger Cost Summary View ........................................................................... 80 Stock Ledger Cost This Year/Last Year View ........................................................ 81 Stock Ledger Retail Summary View ......................................................................... 81 Stock Ledger Merchandise Handled View .............................................................. 82 Stock Ledger Retail Reductions View ...................................................................... 82 Stock Ledger Retail This Year/Last Year View ...................................................... 83 Stock Ledger Inventory Report View ....................................................................... 83 Stock Ledger Markdown Report View .................................................................... 84 Stock Ledger Franchise View .................................................................................... 84 Stock Ledger Intercompany Transfer View ............................................................ 85

Introduction 1

1 Introduction

This document provides an overview of the primary features of Oracle Retail Stock Ledger functionality. In addition, this document addresses the integration of this module with the two financial packages with which Oracle Retail has standard interfaces: Oracle Financials and People Soft Financials. Use this document to get a detailed overview of the following: Stock ledger attributes Accounting methods Budgeted shrink Transaction data What impacts the stock ledger Stock ledger processes

Note: This document is not intended to give a detailed look at the interfaces that Oracle Retail Merchandising System (RMS) provides or the financial packages themselves.

RMS Stock Ledger Overview 3

2 RMS Stock Ledger Overview

The RMS Stock Ledger records and summarizes the financial results of transactions taking place in the various merchandising processes, which include buying, selling, price changes, stock adjustments, and transfers. Through this recording of transactions, the Stock Ledger keeps track of a retailers inventory volume and value. After recording is complete, these transactions are rolled up or aggregated to the subclass/location level for days, weeks, and months, based on how the calendar is configured in the system. The RMS Stock Ledger uses these aggregated values to measure inventory units and values, and also merchandise profitability. The stock ledger is primarily used for reporting purposes; however, there are online components as well. The RMS Stock Ledger supports multiple currencies. All transaction-level information is stored in the local currency of the store, warehouse, or stockholding franchise store where the transaction occurs. As transaction-level information is rolled up to the aggregated levels in the system, records are kept in the local currency and also converted to the primary currency. This functionality allows corporate reporting to be performed in the primary currency of the company, while at the same time providing visibility by location to the profitability in the local currency. The RMS Stock Ledger can reflect either the Cost or Retail method of accounting, depending on the retailers choice. Additionally, the RMS Stock Ledger is often used as an interface point to the General Ledger in a financial system.

Stock Ledger Organization The Stock Ledger can broadly be divided into two major elements: Transaction Data and Roll Ups.

Transaction Data Transaction data consists of the individual transaction records created when various merchandising processes are completed and recorded in RMS (for example, Sales, Receipts, Inventory Adjustments, Price Changes, Transfers, and so on). This data is recorded in the local currency of the location where the transaction took place and uses the currency precision defined for the local currency.

Transaction Data API The Transaction Data API is a batch process that can be used to load financial transactions into the RMS TRAN_DATA table to adjust the stock ledger value. The upload batch uses a SQL loader to stage data, perform business and technical validations, and upload it to the RMS TRAN_DATA tables. Users have the option to upload transactions at an Item level or Subclass level. When uploading at the item level, and using the WAC method of inventory valuation, you can also indicate whether the transactions should update WAC. Transactions loaded through this API will not impact units in any way, regardless of whether a unit value is included or not. These transactions will only be rolled up into the

Stock Ledger Organization

4 Oracle Retail Merchandising System

Stock Ledger valuation. This tool is meant to provide a mechanism for a retailer to adjust the value of their inventory based on transactions not captured within the standard merchandising system processes, such as adjusting value based on Loyalty programs, or other indirect costs that they retailer wants to allocate to the merchandise value.

Stock Ledger Roll Ups Stock Ledger roll ups are created when the individual transactions from the transaction data are aggregated at the subclass/location level for days, weeks, and months, based on the calendar settings in the system. As mentioned previously, at the time of the roll up of the transaction data to the daily, weekly, and monthly level, records are kept in the local currency and also converted to the primary currency. This processing helps retailers who have locations dealing in different currencies by facilitating corporate reporting in the primary currency, while providing flexibility to give visibility to the local currency at the location level.

Stock Ledger and Merchandising Transactions

Sales/Returns

Stock Count

Inventory Adjustment

Purchase Order

Transfer Order

Return to Vendor

Transfer Order

Receipts

Shipments

Perpetual Inventory

Transaction Data Stock Ledger

Stock Ledger Organization

RMS Stock Ledger Overview 5

The RMS Stock Ledger is used to record the merchandising transactions taking place in the retail business. These transactions can broadly be divided into three categories: Transactions involving receipt of merchandise Transactions involving shipping out the merchandise Transactions only affecting the inventory position. All three types of transactions affect both inventory positions and also form a part of the transactions data set. Purchase Order Receipt and Transfer In transactions cause an increment of stock on hand. These can be recorded as part of transaction data and eventually affect the stock ledger. Return to Vendor and Transfer Out transactions result in the shipping out of merchandise and cause reduction in stock on hand. These transactions can be recorded as part of transaction data and affect the stock ledger. Transactions, such as Stock Count and Inventory Adjustments, do not result in actual movement of inventory, but these nonetheless affect the inventory position. In addition, these form a part of the transaction data set and are written to the stock ledger. Tran_Data and Stock Ledger are supported for both Company (Retailer) locations, and also for Stockholding Franchise Locations. As Stock Ledger and Financial Integration are controlled at a location level, Franchise Location stock ledger information can be excluded from a Retailers financials or managed separately.

RMS Stock Ledger Attributes 7

3 RMS Stock Ledger Attributes

The functioning of RMS Stock Ledger is impacted by the configuration of various system options and department level settings. These settings affect the accounting method, calculation method, integration, set of books, roll up levels, and so on. Because these are very fundamental and one time options, these must be decided at the time of initial system configuration. Changing these during the course of running of the business may lead to severe data loss.

System Options The system-level options described below affect the functioning of stock ledger.

Budgeted Shrink Indicator The Budgeted Shrink Indicator (BUD_SHRINK_IND) designates whether actual shrinkage amounts are calculated based on inventory adjustments and cyclical counts, or based on budgeted shrinkage percent in the period ending inventory calculations in the stock ledger. If this field is set to Y, budgeted shrinkage is used in the calculation of period ending inventory. If this field is set to N, the stock adjustments are used instead of budgeted shrinkage. Budgeted shrinkage is calculated using budgeted shrinkage percent (stored on the HALF_DATA_BUDGET table as the SHRINKAGE_PCT field) at the department/store level for a financial half multiplied by sales at retail or at cost, depending on whether the retail or cost accounting method is used. This number is applicable to all the subclasses within that department. Budgeted shrink percentage can be applied only to stores and not warehouses because stores have sales and warehouses do not. For warehouses, actual shrink is always used. The objective behind calculating an estimated value each month is to spread the effect of shrinkage over the whole year rather than merely the months when the stock count happens or actual shrinkage occurs. The estimated/budgeted shrinkage is adjusted to actual when a unit/value stock count is posted. The different scenarios that can occur for shrinkage calculation are described below.

System Options


Shrinkage Calculation

Budgeted Shrink Indicator = Y

Budgeted Shrink Indicator = N

No Unit & Value stock count has occurred during the period

Net sales * Budgeted shrink rate

- 1 * Stock adjustments

Unit & Value stock count has occurred during the period

Shrinkage amount from the beginning of the period to the date of the count (calculated in the stock count process)

+ Actual shrinkage from the count

+ Net sales from stock take to the end of the month * Budgeted shrink Rate

Actual shrinkage from the stock take

+ (-1 * Stock adjustments)

Note: Refer to the Oracle Retail Merchandising System Stock Counts Overview white paper (1536804.1) for further details on this section.

Calendar The calendar in RMS is very important from the stock ledger point of view. Recording of sales transactions and, thereby sales history, is based on the RMS calendar. A consistent calendar or time intervals facilitates proper analysis and time-based performance comparison. RMS supports a normal or Gregorian calendar, as well as a standard retail or 4-5-4 calendar. The description of both types of calendars is as follows: Normal (Gregorian) calendar: This is a normal monthly calendar that can be used in

the system. However because of its intrinsic nature, it results in uneven yearly, monthly, and weekly comparisons, because calendar dates generally fall on different days from one year to the next. The number of weekdays differs from one year to the next. For example: There may be four Saturdays in a month one year, but five Saturdays the next year. A month may have between 28 and 31 days. Once every four years, an extra day is added to compensate for a leap year. If the normal calendar is used in the system, the weekly stock ledger cannot be maintained.

Retail (4-5-4) calendar: To overcome the unevenness of the normal calendar and better meet the planning and comparisons requirements of retailers, the retail calendar was developed. In this calendar, each quarter contains 13 full weeks divided into a 4-5-4 format. That is, the first month of the quarter has four weeks; the second month has five weeks; and the third month has four weeks. The number of days in the retail year equals only 364 days. To compensate for the missing day in non-leap years and two days in a leap year, an extra week is added to the calendar once every six years. The retail calendar provides consistent inclusion of weekends for yearly comparisons by month and a consistent day for month-end processing. The format of the calendar can also be defined in terms of the distribution of weeks in the months in a quarter. You have the option to choose the 4-5-4, 5-4-4, or 4-4-5 format for the distribution of weeks in a quarter. Each period can have only four or five weeks, but a quarter can have two five week periods in order to support the need to add a week every seven years.

System Options


The indicator for deciding whether normal or retail calendar is going to be used is CALENDAR_454_IND in the system options. In addition to weekly and monthly calendars, RMS also facilitates Half Yearly time periods for which budgeting and reporting can be done in the stock ledger.

Start of Half Month This indicator (START_OF_HALF_MONTH) specifies the month number of the first month of the first half of any year. The month number must be from -12 to 12, excluding 0 and -1. A negative number indicates that the first half of a year starts in the previous calendar year with -2 = February, -3 = March, and so on. A positive number corresponds to the normal calendar month number.

Consolidated Exchange Rate The Consolidation Exchange Rate indicator (CONSOLIDATION_IND) determines whether a consolidation or operational exchange rate is used for currency conversion and thereby whether Oracle Retail supports the addition, maintenance, and viewing for the consolidation exchange rate in the Pending Exchange Rate Maintenance process. If this field contains Y, then the consolidation exchange rate maintenance is supported, and consolidation exchange rate is used as the default for all currency conversion within Oracle Retail. If this field is N, then the operational exchange rate is used as the default for all currency conversion within Oracle Retail. Oracle Retail only uses one set of exchange rates in all currency conversions, either consolidation or operational, depending on how this parameter is defined. In addition to C consolidation and O Operational, RMS also allows P Purchase Order exchange rate types to be set up in the database. If an exchange rate of P Purchase Order type does not exist, the system uses the default of either Operational or Consolidated. As an example, if a P rate type exists in the system, the Purchase Order (PO) process uses this rate, but if one does not exist, the PO process uses the Operational or Consolidated rate type.

Cost Method The STD_AV_IND parameter indicates whether standard cost or average cost is used for inventory and gross profit calculations. This processing is applicable to all the departments, whether configured to use the cost or retail method of accounting. Valid values are S for standard and A for average. Oracle Retail calculates average cost, or weighted average cost (WAC), for each item/location based on inventory transactions. This means that average cost is re-calculated each time an item is received into a location either through a purchase order or a transfer. WAC = (Quantity Received * Purchase or Transfer Cost + Owned Inventory Quantity * Current

Average Cost) / (Quantity Received + Owned Inventory Quantity)

Owned Inventory Quantity includes stock on hand and in-transit inventory. In the case of transfers, WAC is recalculated at the time of shipment of the transfer from the sending location. Standard cost is simply the current primary supplier cost for the item. When an item is sold, the cost of sales is equal to either average cost or standard cost, and gross profit is equal to sales at retail minus either average cost or standard cost, depending on which method is chosen. For more details, see the Accounting Methods section in this document.

System Options


Currency

Base Currency A base currency for the system can be set up through the parameter CURRENCY_CODE. Values for this field are validated from the table CURRENCIES in RMS. All currency conversion rates in RMS are defined in terms of the system's base currency.

Multiple Currency The RMS stock ledger gives you the flexibility to use multiple currencies in a single instance of RMS. There can be different currencies at the location level and corporate level. This is to facilitate recording location level transactions in the local currency, but corporate level reporting in a standard base currency. The indicator MULTI_CURRENCY_IND indicates whether RMS supports multiple currencies. The only supported value is Y. However, this does not require that multiple currencies are used in the system.

Default Tax Type The parameter DEFAULT_TAX_TYPE determines what type of taxation is used in RMS. The possible options are Simple VAT (SVAT), Sales Tax (SALES), and Global Tax (GTAX). In the case of SVAT, RMS uses internal VAT functionality. In the case of SALES, RMS supports US sales taxation through geo-codes. In the case of GTAX, RMS is expected to source the tax information and calculation from an external application. At this point, GTAX is only supported for Brazil.

Estimated Landed Cost The landed costs functions allow you to define expenses, assessments, up charges, and combinations in order to track the costs involved in purchasing and moving goods from the manufacturer to a distribution center or store. Estimated landed cost (ELC) is the bottom-up cost estimate created by the buying organization. ELC is comprised of cost components from the supplier, trading partners, item, origin country, and banks which are brought together during the PO creation in order to develop an estimate of costs associated with purchasing a particular item on the current PO. Within RMS, landed cost is defined using computation value bases (CVB), expenses, and assessments. Expenses and assessments are more generically referred to as cost components. Computation value bases describe how expenses and assessments are combined in order to provide a base for the calculation of other expenses and assessments. Assessments differ from expenses in that they are defined by a government agency. The ELC_IND indicator determines if the ELC is used in the system. ELC is primarily used for estimating the cost of the item as close as possible to the final, actual landed cost by adding cost components to the PO cost. Note that this functionality is not compatible with the use of standard cost. While posting transaction records for purchases (tran code 20), the purchase value net of ELC is also recorded in the TOTAL_COST_EXCL_ELC column. There are two more system options related to ELC in RMS with regard to company stores and wholesale/franchise stores: ELC_INCLUSIVE_IND_COMP_STORE This field allows the system to determine

if pricing cost and acquisition cost should be inclusive of ELC for company stores.

System Options


ELC_INCLUSIVE_IND_WF_STORE This field allows the system to determine if pricing cost and acquisition costs should be inclusive of ELC for wholesale/franchise stores.

Financial Integration The RMS stock ledger may or may not be integrated with an external financial system. The indicator FINANCIAL_IND identifies whether an external financial application is integrated. Valid values are Y and N. The indicator FINANCIAL_AP indicates the external financial system being used by the business. Valid values are O (Oracle EBS Financials), A (PeopleSoft) and NULL (third party). This setting controls supplier entry and general ledger (GL) cross reference maintenance.

General Ledger Rollup Level The system option GL_ROLLUP specifies the roll up level of Oracle Retails general ledger information when bridged to a financial system. Valid values are: D - Department, C - Class, and S - Subclass.

Minimum / Maximum Cumulative Mark-on Percent Cumulative Mark-on Percent is used to estimate the ending inventory at cost when using the retail method of accounting in RMS. RMS also gives the flexibility to set a minimum and maximum cumulative mark-on percentage (MAX_CUM_MARKON_PCT and MIN_CUM_MARKON_PCT). The cumulative mark on % is calculated by the weekly stock ledger program (or monthly if not using weekly accounting). It is calculated using beginning balances and beginning markon % and then adding transactions from the current week to establish the new value. Transactions for the following week then use the cumulative markon % for the transactions (for example, transfers, sales, and so on) that was established at the end of the previous week (or month). If the calculated value lies outside the max and min tolerances, then the system uses the value defined as Budgeted Intake % (BUD_INT). This value is also defined at the department level. If it lies within the tolerances, the calculated percent is used in calculating the ending inventory at cost. The use of the MAX_CUM_MARKON_PCT and the MIN_CUM_MARKON_PCT is optional.

Multiple Set of Books As the scale of operations of retailers grows, they may have a requirement for multiple sets of books in their financial system. This requirement especially applies when the retailer has operations in various countries with different currencies and calendars, or if the retailer has divided its operations into multiple legal entities. Note that RMS supports only one calendar, regardless of the number of sets of books. From version 13.0 onwards, RMS enables multiple set of books in the system. Therefore, a retailer can create multiple financial books in the general ledger, and the RMS stock ledger can integrate to these different sets of books. An inter-company transfer occurs when product is transferred between locations with different transfer entities or locations with different set of books. RMS gives the flexibility to determine whether a transfer is an intercompany transfer based on its being between locations with different set of books or different transfer entities using the INTERCOMPANY_TRANSFER_BASIS system option.

System Options


A transfer entity is a group of locations that share legal requirements around product management and are part of the same legal entity. The indicator INTERCOMPANY_TRANSFER_IND indicates whether or not inter-company transfers are used within RMS. When this indicator is set to Y, each stockholding location (store, warehouse, and external finisher) is associated with a transfer entity. When this indicator is set to N, inter-company transfer functionality is not used.

NWP Processing NWP refers to Niederstwertprinzip and is a legal German accounting financial inventory reporting requirement for calculating year-end inventory position based on the last receipt cost. The NWP Indicator supports this German-specific inventory reporting requirement. For German customers, this setting needs to be 'Y' to allow for the annual NWP calculations and processes. This setting is not relevant for customers outside Germany. NWP calculates the end of year inventory values in each store as of December 31st of the previous year. To determine the correct end of year inventory value for this report, the following process occurs: A stock count is performed for every store in the early part of the year. The variance determined in this count is applied to the book stock as of the end of the

year to determine more accurate end of year inventory values. End of the year stock units are revalued based on the lower of last received cost or

weighted average cost for the items at each location during the previous year. The end of year value of the inventory, after the stock count adjustments and revaluation process based on the lower of weighted average cost or last received cost, is the value that is used to report the end of year inventory for the German NWP report. To accomplish this processing, RMS uses a table, on which it holds a record for every active item/location combination for each year. Items on this table are non-pack items held at the transaction level. New records are added to this table through several processes: Each time a receipt is recorded in RMS, the receipt process determines whether there

is currently a record for the item/location combination for the year of the receipt on the table, and whether there is not, a new record is added to the table.

When the end of year NWP snapshot process runs, the system takes a snapshot of stock and weighted average cost (WAC) for every item/location combination currently holding stock. If there is not a record already on the NWP table for an item/location/year combination in the snapshot, a new record is added for that item/location/year combination.

When an end of year NWP stock count is processed and variances are posted to the NWP table, if there is not an item/location/year record on the NWP table for the variance record, a new record is added to the NWP table for that item/location/year.

The receiver cost adjustment process and receiver unit adjustment process also update records on this table if the item/PO/shipment record exists on this table.

The indicator NWP_RETENTION_PERIOD indicates the number of years the end of year inventory data is retained in the system.

System Options


Receiver Cost Adjustment Type This indicator determines how the receiver cost adjustment is carried out in the system. The valid values of F (FIFO) or S (Standard) are stored in the CODE_DETAIL table with code type of RUCA. The FIFO option looks at the number of units currently on hand, compares to the number of units in the receipt being adjusted, and then determines, based on a First In First Out flow assumption, whether any units from the receipt being adjusted are still on hand at the location and can be adjusted. RMS does not have a FIFO inventory, and this FIFO type calculation is made only for Receiver Cost Adjustments. The Standard Option looks at the number of units currently on hand and compares it to the number of units on the receipt being adjusted, as the only determination of whether there are units on hand that can be adjusted.

Retail Markdown for Transfer This parameter determines which location takes the markdown hit in the case where a transfer between locations have different retails at the sending and receiving locations. There are four indicators for controlling the markdown recording in RMS for different combinations of To Location and From Location. For each of the following system options, the user can specify whether sending location S or receiving location R will get the retail markdown difference: Store to Store Transfer - TSF_MD_STORE_TO_STORE_SND_RCV Store to Warehouse Transfer - TSF_MD_STORE_TO_WH_SND_RCV Warehouse to Store Transfer - TSF_MD_WH_TO_STORE_SND_RCV Warehouse to Warehouse Transfer - TSF_MD_WH_TO_WH_SND_RCV

Retain Transaction Data The parameter TRAN_DATA_RETAINED_DAYS_NO specifies the number of days that transaction-level stock ledger data is kept in the system. Each night the transaction level records, which were created in the system based on various transactions occurring during the day or through the nightly batch process, are moved to a transaction data history table and the original table is purged. The number of days in this parameter corresponds to the number of days that records remain in the transaction data history table. Because the number of records in this table grows quite rapidly each day, it is recommended that the number of days for this parameter be relatively small.

Stock Count Processing The indicator CLOSE_MTH_WITH_OPN_CNT_IND is used to determine whether or not the current fiscal month is allowed to be closed while containing an open Unit and Value stock count. If the indicator is No, the fiscal month will not be closed if open Unit and Value stock counts are found within the current fiscal month. If no open stock counts are found, processing proceeds as normal. For more information, see the Oracle Retail Merchandising System Stock Counts Overview white paper (My Oracle Support Doc ID 1536804.1).

System Options


Stock Ledger Retail VAT Inclusive The indicator STKLDGR_VAT_INCL_RETL_IND specifies whether retail values in stock ledger are VAT inclusive or not. If this field has Y, all retail value in the stock ledger (that is, sales retail, purchase retail, gross margin, and so on) is VAT inclusive. Both Tran code 01 (VAT Inclusive Sales) and 02 (VAT Exclusive Sales) are posted for sales. If the STKLDGR_VAT_INCL_RETL_IND = N, only the transaction code 01(Net Sales) is posted for sales. This field is only applicable when the default tax type is set up as SVAT in the system and applicable for both departments that use retail or cost method of accounting. In the case when default tax type is set up as GTAX, it is assumed that all retail values in the stock ledger will be inclusive of VAT.

Stock Ledger Location Level The system option STOCK_LEDGER_LOC_LEVEL_CODE determines the location level the stock ledger runs at Location or All Locations. The options you can choose are S for each store and T for a total of all stores.

Note: Oracle Retails Stock Ledger runs at the location level. It requires a customization to run the stock ledger at an all locations level. This system option is used in a few programs to make the customization easier, but it does not mean that the stock ledger location level can be changed automatically by switching the value of this option.

Stock Ledger Product Level The system option STOCK_LEDGER_PROD_LEVEL_CODE determines the product level the stock ledger runs at SKU (K), Subclass (S), Class (C), or Department (D).

Note: Oracle Retails stock ledger runs at Subclass level. It requires customization to run stock ledger at any other product level. This system option is used in a few programs to make the customization easier, but it does not mean that the stock ledger product level can be changed automatically by switching the value of this option.

Time Interval The Time Interval indicator STOCK_LEDGER_TIME_LEVEL_CODE determines the time periods that are used to run the RMS stock ledger. The valid values for this parameter are Month (M) and Week (W). This parameter can be set to either value without requiring modifications to the system. If a retailer is running on a 4-5-4 calendar, the stock ledger is available to run for both weekly and monthly levels, which means that inventory and gross margin are available at both weekly and monthly levels. However, it is not required to run the weekly level stock ledger, if it is not needed. If a Gregorian calendar is being used, the only option for this variable is Month.

Accounting Methods


Accounting Methods Various retailers, either because of legal requirements or their own accounting standards, may require using either cost or retail methods of accounting, or both. RMS supports this choice by allowing this to be set at the department level (in the DEPS table). The indicator PROFIT_CALC_TYPE specifies whether all the subclasses in the department will use cost method of accounting or retail method of accounting. The valid values for this field are 1=Cost and 2=Retail. While not commonly done, the system allows a retailer to operate some departments using Cost method and other departments using Retail method. In order to provide a more consistent view and method of determining inventory valuation and profitability, most retailers choose to use either Cost or Retail, but not both. Some retailers with a more diverse assortment may elect to use a mixture of methods. Examples of this approach can include department stores, where fashion departments may use the Retail method, while hard lines or food departments may use the Cost method. Under the Cost method, item level margins can be calculated because costs are determined at the item level. In the Retail method, margins can only be calculated at the level of the stock ledger (that is, the subclass), as that is the level at which cost is estimated. Note that to support visibility to both cost and retail valuation of inventory, regardless of accounting method, RMS captures both cost and retail for most transactions.

Retail Accounting Method The Retail method of accounting is the method by which inventory value is measured using the retail price amount. RMS records sales, purchases, return to vendor (RTV), reclassification and transfers at both cost and retail. Purchases and RTVs are recorded using the actual cost, but the Cost for Transfers, Reclassifications, Sales, and so on is based on the Cumulative Markon %. The ending inventory is calculated based on the retail values of the transactions impacting inventory value. The retail method also takes into account markdowns, markups, markdown cancellations, and markup cancellations in the inventory calculations because these adjustments in the retail price affect the value of the inventory. Under this method, RMS determines ending inventory at cost based on the percentage of the ending inventorys retail value. For this calculation, the historical ratio of available inventory at cost to available inventory at retail to value inventory is used. This is known as the cumulative mark-on percentage (CUM %). RMS computes estimated value for ending inventory cost and cost of sales based on the value of the inventory at the current retail price (non promotional) multiplied by the cost complement (1 - CUM%). It uses the prior weeks Cumulative Mark-on Percentage (or prior months if weekly CUM% is NULL) for each subclass/location to calculate transfers and reclassifications at cost (sending store/source subclass). The estimation of ending inventory at cost is done to provide flexibility in sending ending inventory at both cost and retail to the G/L. Also, ending inventory is used to calculate cost of sales and margin in the stock ledger.

Inventory Calculation Retail Accounting Method

Ending Inventory at Retail = Beginning of Month Inventory at Retail

+ Inventory Addition at Retail - Inventory Reduction at Retail

Accounting Methods


Ending Inventory at Cost = Ending Inventory at Retail* (1- (CUM%)/100)

Inventory Addition at Retail Purchases at Retail (20)

- RTV at Retail (24) + Markup at Retail (11)

+ Intercompany Markup (17) - Markup Cancellation at Retail (12)

+ Transfer in at Retail (30) + Book Transfer in at Retail (31)

+ Intercompany Transfer at Retail (37) - Transfer out at Retail (32)

- Book Transfer out at Retail (33) + Reclassification in at Retail (34) - Reclassification out at Retail (36) + Franchise Returns at Retail (83) + Franchise Markup at Retail (83)

Inventory Reduction at Retail Net Sales at Retail (01)

+ Permanent Markdown at Retail (13) + Promotional Markdown at Retail (15)

+ Clearance Markdown at Retail (16) + Intercompany Markdown (18)

- Markdown Cancellation at Retail (14) + Employee Discount at Retail (60)

+ Shrinkage at Retail (calculated value) + Freight Claims at Retail (62)

- Stock Adjustment at COGS (23) + Transfer Out (Intercompany) at Retail (38)

+ Franchise Sales at Retail (82) + Franchise Markdown at Retail (85)

Cumulative Mark-on Percent ((HTD GAFS Retail - HTD GAFS Cost)/(HTD GAFS Retail))*100

HTD GAFS = Half to Date Goods Available for Sale

HTD GAFS Retail When current period is first month of the Half:

Previous Month Ending Inventory Retail + Inventory Additions Retail

When current period is not first month of the Half: Previous Month HTD GAFS Retail + Inventory Additions Retail

Accounting Methods


HTD GAFS Cost When current period is first month of the Half:

Previous Month Ending Inventory Cost + Inventory Additions Cost

When current period is not first month of the Half: Previous Month HTD GAFS Cost + Inventory Additions Cost

Inventory Additions Cost Purchases Cost (20)

+ Restocking Fee (65) - RTV at Cost (24) + Fright Cost (26)

+Transfer in Cost (30) + Book Transfer in Cost (31)

+ Intercompany Transfer in Cost (37) - Transfer out Cost (32)

- Book Transfer out Cost (33) + Reclassification in Cost (34) - Reclassification out Cost (36)

+ Up Charges (28, 29) + Work order activity Cost (63) + Franchise Return Cost (83)

+ Franchise Restocking Fee (86)

Cost of Sales Beginning of Month Inventory Cost +Inventory additions Cost - Ending Inventory Cost

Gross Margin If STKLDGR_VAT_INCL_IND = 'N', then Net Sales Retail (01) - Cost of Sales - Workroom Expenses (80) + Cash Discount Amount (81) +

Franchise Net Sale

If STKLDGR_VAT_INCL_IND = 'Y', then Net Sales Retail (02) - Cost of Sales - Workroom Expenses (80) + Cash Discount Amount (81) +

Franchise Net Sales

Cost Accounting Method The Cost method of accounting is the method in which inventory is controlled based on the cost of the merchandise. It is reliant on accurate perpetual inventories. Under this method, all purchases, transfers, sales and RTVs are recorded at cost in order to calculate the value of the inventory. While the Retail method is still widely used in certain verticals, across much of the retail industry, the Cost method is generally accepted as a best practice. There are many different ways that the Cost method can be implemented. Oracle Retail supports two methods of Cost accounting: Average Cost and Standard Cost.

Accounting Methods


Average Cost Under the average cost method of cost accounting, the cost of an item at a location is recalculated every time inventory is received based on quantity and cost of the receipt. Because of this calculation method, this method is also referred to as the weighted average cost (WAC) or moving weighted average cost (MWAC).

Note: In the case of transfers, average cost is recalculated for the receiving location when inventory is shipped from the sending location, as in transit inventory is considered owned by the receiving location.

The WAC is the value of owned inventory at a location and is used to determine the cost of sales for an item sold at the location. It is also used as the cost for all transactions that occur for the location that are written to the transaction-level stock ledger. WAC is recalculated in the following cases: Purchase Order is received Transfer is Shipped (for receiving location only) Receiver adjustments occur Transfer Reconciliation (Selected scenarios) Average cost is stored at item/location level in the table ITEM_LOC_SOH.

Weighted Average Cost Calculation*

WAC after PO Receipts If average cost accounting method is selected and a PO is received, the WAC is recalculated for the item for the location where the receipt happens. The WAC is calculated as follows:

(((SOH Quantity + In-transit Quantity) * Old WAC) + (Receipt Quantity * Receipt Cost)) / ((SOH Quantity + In-transit Quantity) + Receipt Quantity)

In the case of pack items, pack component SOH quantity (PACK_COMP_SOH) and pack component in-transit quantity (PACK_COMP_INTRAN) is considered. In the case of simple pack catch weight item, the total cost of the pack is used to derive unit cost instead of receipt cost. The WAC calculation formula and treatment may differ based on the SOH of the item at the location prior to and post receipt of a PO. Different PO receipt scenarios and their impact on WAC are detailed in the following table:

Accounting Methods


No. Transaction Description On Hand Before

On Hand After

Impact on WAC

PO Receipt

1. PO Receipt with negative on hand and on hand becomes positive

- + WAC is set to the unit cost on the PO A cost adjustment (Tran Code 70) is written

based on the WAC adjustment.

The calculation for the WAC adjustment is: (WAC prior to receipt - new PO Cost) * (SOH prior to receipt)

2. PO Receipt with negative on hand and on hand becomes zero

- 0 WAC is set to the unit cost on the PO A cost adjustment (Tran Code 70) is written



3. PO Receipt with negative on hand and on hand remains negative

- - WAC is set to the unit cost on the PO A cost adjustment (Tran Code 70) is written



4. PO Receipt with positive on hand

+ + WAC is recalculated as: ((SOH Quantity * Old WAC) + (Receipt Quantity * Receipt Cost)) / (SOH Quantity + Receipt Quantity)

5. PO Receipt with zero on hand 0 + WAC is set to PO Cost

Note: The SOH is calculated as (Stock on Hand + In-transit) + (Pack component SOH + Pack component In-transit).

WAC after Transfer Shipment (Receiving Location) If the average cost accounting method is selected, in the case of transfers, average cost is recalculated for the receiving location every time inventory is shipped from the sending location, as in transit inventory is considered owned by the receiving location. The WAC is calculated as follows: (((SOH Quantity + In-transit Quantity) * Old WAC) + (Quantity Transferred * Transfer Cost))

/ ((SOH Quantity + In-transit Quantity) + Quantity Transferred)

In the case of pack items, pack component SOH quantity (PACK_COMP_SOH) and pack component in-transit quantity (PACK_COMP_INTRAN) are considered. RMS does not maintain WAC at the pack level for the pack item but only at the component level. The WAC calculation formula and treatment may differ based on the SOH of the item at the location prior to and post shipment of transfer. Different transfer (inter-company/intra-company) scenarios and their impact on WAC are detailed in the following table:

Accounting Methods



On Hand After

Impact on WAC

Intra-company Transfers

1. Transfer In with negative on hand and on hand becomes positive

- + WAC is set to WAC from sending location A cost adjustment (Tran Code 70) is written based

on the WAC adjustment.

The calculation for the WAC adjustment is: ((WAC prior to Transfer In Cost on Transfer) * SOH prior to transfer in)

2. Transfer In with negative on hand and becomes zero

- 0 WAC is set to WAC from sending location A cost adjustment (Tran Code 70) is written based



3. Transfer In with negative on hand and on hand remains negative

- - WAC is set to the WAC from the sending location A cost adjustment (Tran Code 70) is written based



4. Transfer In with positive on hand

+ + The calculation for the WAC adjustment is: ((SOH Quantity * Old WAC) + (Quantity Transferred * Transfer Cost)) / (SOH Quantity + Quantity Transferred)

5. Transfer In with zero on hand

0 + WAC is set to WAC from sending location

Inter-company Transfers

1. Intercompany Transfer In with negative on hand and on hand becomes positive

- + WAC is set to Transfer price. A cost adjustment (Tran Code 70) is written based


The calculation for the WAC adjustment is: ((WAC prior to Transfer In Transfer Price) * SOH prior to transfer in)

2. Intercompany Transfer In with negative on hand and becomes zero

- 0 WAC is set to Transfer price. A cost adjustment (Tran Code 70) is written based



3. Intercompany Transfer In with negative on hand and on hand remains negative

- - WAC is set to Transfer price. A cost adjustment (Tran Code 70) is written based



Accounting Methods



On Hand After

Impact on WAC

4. Intercompany Transfer In with positive on hand

+ + The calculation for the WAC adjustment is: ((SOH Quantity * Old WAC) + (Quantity Transferred * Transfer Cost)) / (SOH Quantity + Quantity Transferred)

5. Intercompany Transfer In with zero on hand

0 + WAC is set to Transfer price.

Note: SOH is calculated as (Stock on Hand + In-transit) + (Pack component SOH + Pack component In-transit).

WAC after Receiver Adjustment If the average cost accounting method is selected, every time a receiver unit or cost adjustment occurs, the average cost is recalculated. Various scenarios for receiver unit adjustment (RUA) and its impact on the WAC calculation are in the following table:


On Hand After

Impact on WAC

Receiver Unit Adjustment

1. Receipt Unit Adjustment with negative on hand and adjustment is positive on hand remains negative.

- - WAC is set to the unit cost on the PO A cost adjustment (Tran Code 70) is written


The calculation for the WAC adjustment is: ((WAC prior to receipt - new PO Cost) * SOH prior to receipt)

2. Receipt Unit Adjustment with negative on hand and adjustment is positive. On hand becomes positive.

- + WAC is set to the unit cost on the PO A cost adjustment (Tran Code 70) is written


The calculation for the WAC adjustment is: ((WAC prior to receipt - new PO Cost) * SOH prior to receipt)

3. Receipt Unit Adjustment with positive on hand and adjustment is positive.

+ + WAC is recalculated as: ((SOH Quantity * Old WAC) + (Adjusted Quantity * PO Cost)) / (SOH Quantity + Adjusted Quantity)

4. Receipt Unit Adjustment with positive on hand and adjustment is negative. On hand becomes negative.

+ - WAC is not recalculated and New WAC = Old WAC.

5. Receipt Unit Adjustment with positive on hand and adjustment is negative. On hand becomes zero.

+ 0 WAC is not recalculated and New WAC = Old WAC.

Accounting Methods



On Hand After

Impact on WAC

6. Receipt Unit Adjustment with positive on hand and adjustment is negative. On hand remains positive.

+ + If WAC_RECALC_ADJ_IND = N, WAC is not recalculated and New WAC = Old WAC

If WAC_RECALC_ADJ_IND = Y then WAC is recalculated as:

((SOH Quantity * Old WAC) + (Adjusted Quantity * PO Cost)) / (SOH Quantity + Adjusted Quantity)

7. Receipt Unit Adjustment with negative on hand and adjustment is negative.

- - WAC is not recalculated and New WAC = Old WAC.

Note: SOH is calculated as (Stock on Hand + In-transit) + (Pack component SOH + Pack component In-transit).

For receiver cost adjustments (RCA), the calculation is more complex. In the case of RCA, there can be two types, selected through system option RCV_COST_ADJ_TYPE. The first type can be Standard and the other FIFO. The standard adjustment recalculates WAC using all units received. The FIFO adjustment calculates layers for the receipts for the PO and creates an adjustment of WAC for only those units in stock whose receivers have not been matched. If the Standard option is selected, since an RCA can occur after the actual receipt, and the number of units on hand and available to absorb the impact of the adjustment may be different than when the actual physical receipt took place, an adjustment based on the full number of units on the receipt that is being adjusted could result in a distorted WAC value. For example, assume the following scenario: Purchase Receipt, Transfer Out, and Receiver Cost Adjustment occurring at a Warehouse: SOH prior to Receipt = 20 Units, WAC of $10.00 and Total Cost of $200.00 PO Receipt occurs for 100 Units, Unit Cost of $15.00 and total cost of $1,500.00.

New WAC = ($200.00 + $1,500.00)/(20 + 100) = $14.17 Transfer out to Store: 100 units at WAC $14.17 = $1,417.00

New SOH = 20 Units, WAC $14.17, total cost = $283.40 Receiver Cost Adjustment for PO Receipt above of -$3.00 Unit for a corrected PO

Cost of $12.00 Unit.:

RCA: 100 units at -$3.00 Unit Cost = -$300.00 New WAC = ($283.40 $300.00)/20 Units = -$0.83/Unit

If the full impact of all Receiver Cost Adjustments is always applied to WAC and inventory value, cases such as above where the resulting WAC could be negative, very low or very high could occur. If the receiver cost adjustment type is set as FIFO, RMS allocates the current on hand quantity to recent PO receipts using a FIFO algorithm. So, for the received quantity, unmatched line items (invc_match_status = 'U') as per the FIFO method are considered.

Accounting Methods


The following is an example: SOH prior to Receipt = 0 Units Receipt# QTY Unit Cost 1 100 $10 2 50 $10 Weighted Average Cost (WAC) = $10 (since there is no change in the unit cost of both the receipts.) Say 80 units are allocated and shipped to stores. So, current stock on hand = 100 + 50 - 80 = 70 Perform RCA for Receipt1 with unit cost adjusted/unit = $1. In this scenario, the system assumes that the quantity (80) shipped to stores are from Receipt1. Hence, only 20 units are used for cost adjustment and the remaining 80 units are posted as tran code 73 (Receiver Cost Adjustment FIFO, see the tran code section for description). Retailers can then use the information in the tran data table for this transaction code to determine how to adjust the WAC manually at location where stock was distributed. Various scenarios for the RCA and its impact on the WAC calculation are shown in the following table:


On Hand After

Impact on WAC

Receiver Cost Adjustment

1. Receiver cost adjustment with negative on hand.

- - WAC is set equal the New PO cost. A cost adjustment (Tran Code 70) is written


The calculation for the WAC adjustment is: ((SOH * New WAC) (SOH * Old WAC)) + (Units Received * (New PO Cost Old PO Cost))

2. Receiver cost adjustment with positive on hand.

+ + WAC is recalculated based on the current on-hands.

((SOH * Old WAC) + (Received Qty * Change in Cost)) / SOH

3. Receiver cost adjustment with zero on hand.

0 0 WAC remains unchanged

Note: SOH is calculated as (Stock on Hand + In-transit) + (Pack component SOH + Pack component In-transit).WAC after Transfer Reconciliation

RMS facilitates reconciling the transfers in case there is an over or short receipt of items. The reconciliation process can attribute the loss/gain to either sending location or receiving location or adjustments are done in such a way that no location incurs a loss. Various methods of adjustment are BL (Bill of Lading adjustment), NL (No Loss Adjustment), RL (Receiving location loss Adjustment), SL (Sending location loss Adjustment). In all these methods, reconciliation is done either through the reversal of the transfer or inventory adjustments or a combination of both at the sending and receiving locations. In a few cases of transfer reconciliation, WAC is also recalculated.

Accounting Methods


Different scenarios for transfer reconciliation and its impact on stock ledger and WAC are described in the following table:

No. Reconciliation Method Impact on WAC

Inter-Company Transfers Under Receipt

1. BL (Bill of Lading adjustment)

In this case, Transfer In (Tran Code 30) and Transfer Out (Tran Code 32) entry will be reversed for the difference between received qty and sent quantity and thereby the SOH for Sending location and In Transit for Receiving Location will be adjusted.

The average cost of sending location and receiving location will be recalculated based on the original shipment cost.

Receiving Location WAC = ((SOH Quantity * Old WAC) - (Short Received Quantity * Original Shipment Cost)) / (SOH Quantity - Short Received Quantity)

Sending Location WAC = ((SOH Quantity * Old WAC) + (Short Received Quantity * Original Shipment Cost)) / (SOH Quantity + Short Received Quantity)

2. NL (No Loss Adjustment) In this case Inventory Adjustment (Tran code 22) will be written for both the locations with the difference between received qty and shipped qty to adjust for the quantity not received. The In Transit qty will be cleared out for receiving location and the sending location inventory will be increased by the same quantity.

No impact on WAC.

3. RL (Receiving location loss Adjustment)

In this case Inventory Adjustment (Tran code 22) will be written for receiving location with the difference between received qty and shipped qty to account for the loss. There will be no impact to sending locations inventory.

No impact on WAC.

4. SL (Sending location loss Adjustment)

In this case, Transfer In (Tran Code 30) and Transfer Out (Tran Code 32) entry will be reversed for the difference between received qty and thereby the SOH for Sending location and In Transit for Receiving Location will be adjusted. Additionally, Inventory adjustment (Tran code 22) will be written for sending location to account for the loss.


Receiving Location WAC = ((SOH Quantity * Old WAC) - (Short Received Quantity * Original Shipment Cost)) / (SOH Quantity - Short Received Quantity)

Sending Location WAC = ((SOH Quantity * Old WAC) + (Short Received Quantity * Original Shipment Cost)) / (SOH Quantity + Short Received Quantity)

Accounting Methods


No. Reconciliation Method Impact on WAC

Inter-Company Transfers Over Receipt

1. BL (Bill of Lading adjustment)

In this case, Transfer In (Tran Code 30) and Transfer Out (Tran Code 32) entry will be written for the additional difference between received qty and sent quantity and thereby the SOH for Sending location will be decreased and Receiving Location will be increased.


Sending Location WAC = ((SOH Quantity * Old WAC) - (Short Received Quantity * Original Shipment Cost)) / (SOH Quantity - Short Received Quantity)

Receiving Location WAC = ((SOH Quantity * Old WAC) + (Short Received Quantity * Original Shipment Cost)) / (SOH Quantity + Short Received Quantity)

2. NL (No Loss Adjustment) In this case Inventory Adjustment (Tran code 22) will be written for both the locations with the difference between received qty and shipped qty to adjust for the additional quantity received.

No impact on WAC.

3. RL (Receiving location loss Adjustment)

In this case Inventory Adjustment (Tran code 22) will be written for receiving location with the difference between received qty and shipped qty to account for the additional units. There will be no impact to sending locations inventory.

No impact on WAC.

4. SL (Sending location loss Adjustment)

In this case, Transfer In (Tran Code 30) and Transfer Out (Tran Code 32) entry will be written for the additional difference between received qty and sent quantity and thereby the SOH for Sending location will be decreased and Receiving Location will be increased. Additionally, Inventory adjustment (Tran code 22) will be written for sending location to account for the additional units.


Sending Location WAC = ((SOH Quantity * Old WAC) - (Short Received Quantity * Original Shipment Cost)) / (SOH Quantity - Short Received Quantity)

Receiving Location WAC = ((SOH Quantity * Old WAC) + (Short Received Quantity * Original Shipment Cost)) / (SOH Quantity + Short Received Quantity)

Accounting Methods


Manual WAC Adjustments In addition, the WAC can also be updated on-line in RMS by creating an average cost adjustment. This updates the WAC at the item/location specified and writes a transaction-level stock ledger record to record the change in inventory value for the stock on hand at that location. The transaction is recorded as Cost Variance.

Standard Cost The second type of Cost accounting that is supported in RMS is the standard cost method. Standard cost is defined as the last or current primary supplier cost. Under this method, the inventory is valued using standard cost, rather than the WAC. This costing method functions in a similar manner as that of WAC, in that the standard cost is the cost used when updating the transaction-level stock ledger and is also used as the cost of sales. The biggest difference between the two methods is the way that cost is updated in the system. The standard cost can only be updated by doing a supplier cost change within RMS. Changing the primary suppliers cost for an item results in a change in the value of the inventory for that item at all locations, meaning that a cost variance record is written to the stock ledger for the difference between the old cost and the new cost multiplied by the total available stock (On Hand plus In-Transit). In the standard cost method, if a transaction occurs with a cost different from the standard cost, a transaction needs to be written to account for the difference. This difference in cost is recorded as cost variance in the stock ledger. For example, if the standard cost for an item is $10 and a purchase order for the item is received at $12, then the purchase will be recorded at $12 with a $2 cost variance. This difference in the cost can be because of an off-invoice deal with the supplier or any other reason, the treatment would be similar. The net effect of this transaction will be an increase in the overall inventory of $10 or the standard cost of the item.

Note: Standard cost is not compatible with the estimated landed cost functionality in RMS because the assumption is that cost is the same for all locations within RMS. If retailers are using the estimated landed cost functionality, then the retailer will need to use the WAC method or make a customization to the system.

Accounting Methods


Inventory Calculation Cost Accounting Method

Ending Inventory at Cost Beginning of Month Inventory

+ Purchases (20) - Return to Vendor at Cost (24)

- Net Sales at Cost (01 or 02) +Transfer in at Cost (30,31,37)

- Transfer out (32,33,38) + Up Charges (28,29)

- Shrinkage at Cost (calculated value) + Reclassification in at Cost (34) - Reclassification out at Cost (36)

- Cost Variance (70) - Freight Claims (62)

+ Inventory Adjustment at Cost (23) + Work Order Activity Updates (63)

- Cost Variance (Cost Accounting) (72) - Franchise Net Sales (82)

Ending Inventory at Retail Beginning of Month Inventory

+Purchases at Retail (20) - Return to Vendor at Retail (24)

+ Markups at Retail (11) - Markup Cancels (12)

+ Transfer In at Retail (30,31,37) - Transfer Out at Retail (32,33,38)

- Freight Claims at Retail (62) + Inventory Adjustment at Retail (23]=)

+ Inventory Adjustment (if not using budgeted shrink) (22) - Stocktake Adjustment at Retail ( ) + Reclassification In at Retail (34)

- Reclassification Out at Retail (36) - Net Sales at Retail (01)

- Markdowns at Retail (13) - Promotional Markdowns at Retail(15)

- Clearance Markdowns at Retail (16) +Markdown Cancels at Retail (14) - Employee Discounts at Retail (60)

+ Intercompany Markup (17) - Intercompany Markdown (18)

- Franchise Net Sales at Retail (82)

Accounting Methods


+ Franchise Markup at Retail (84) - Franchise Markdown at Retail (85)

Gross Margin Net Sales Retail - Net Sales Cost

Transaction Data 29

4 Transaction Data

To facilitate the calculation of inventory by the stock ledger, RMS records every transaction involving movement of merchandise with a TRAN_DATA record. For every transaction, RMS captures its Department, Class, Subclass, Transaction Date, Units, Cost and Retail. Additionally, RMS also provides two optional reference fields, which can be used for recording a reason code or event number. The Tran Data Code is a numeric field with a length of 4 digits. RMS uses specific Tran Data number codes for specific types of transactions, and the RMS Stock Ledger programs expect these specific codes. Retailers have the ability to customize and use codes that are not used by the base product if needed. However, as RMS expands, it will continue to add new Codes that are used by the system for specific purposes. The codes currently used by the system are detailed later in this document. If VAT is being used in the system, the retail value captured in these transactions is VAT inclusive (with the exception of transaction codes where it is specifically mentioned that it records VAT exclusive values, based on the system level parameters). A system level parameter indicates whether or not the VAT amount should be included in the stock ledger. Each transaction is assigned a transaction code, based on predefined type of transaction. In case of transactions involving packs, transaction data is recorded for the component items and not packs. Transaction codes are defined in greater detail in the subsequent sections. These transactions are recorded in multiple tables in the system in various stages of processing. The three tables that are used in combination for the processing of transaction data are TRAN_DATA, IF_TRAN_DATA, and TRAN_DATA_HISTORY. Initially, for each type of transaction that occurs in the system involving the movement of merchandise, a record is written to the transaction data table at the item/location/transaction level. (Note that there are a set of tables called TRAN_DATA_A and TRAN_DATA_B that allow for continuous processing of transactions and recording of TRAN_DATA records in RMS during the batch cycle. TRAN_DATA is a database view.) After that processing, but before the end of day processing is run, the records on TRAN_DATA are removed from the table and are moved to a staging table called IF_TRAN_DATA. This table is used as an interface point to the G/L and is also used as the driving table for the end of day processing. Keeping only one day worth of data on both TRAN_DATA and IF_TRAN_DATA improves the performance of the interface run and end-of-day processing, as well as the performance of transactions writing to TRAN_DATA throughout the batch cycle. After end of day processing, transaction level records are kept historically in the TRAN_DATA_HISTORY table. Records are written to this table based on the data in the IF_TRAN_DATA table. This is the table that is used to view transaction-level data on-line in RMS.

Net Sales (Tran Code 01) Net sales transactions are written in RMS by the sales upload process through the POSU file. These transactions include both customer sales and returns. This record captures the units sold (or returned), the retail value of the units, and the cost of the units (average or standard cost based on system option setting). The retail value is

Net Sales VAT Exclusive (Tran Code 02)


the equivalent of the sale price captured at the POS and not the value in RMS. For example, it includes any promotional discounts applied to the sale, which may not be reflected in RMS retail price. Any difference in the unit retail in RMS and actual sales retail is accounted through specific tran codes for markup/markdown. The quantity, retail, and cost amounts are positive numbers for sales and negative numbers for returns. The cost and retail values captured in these records are rolled up to the subclass/day, subclass/week, and subclass/month levels and are used in the ending inventory calculations for those periods. This tran code includes VAT in the value posted in the following scenario: The default tax type is either SVAT or GTAX (DEFAULT_TAX_TYPE = SVAT or GTAX) The Stock Ledger Retail VAT Inclusive is Yes (STKLDGR_VAT_INCL_IND = 'Y'). The VAT rate for an item for a VAT region is stored in the VAT_ITEM table. The sales upload batch program does not post individual transactions, but transactions are grouped by certain transaction attributes. The sales upload process posts sale in RMS by grouping transactions at item/price point/sale type/store/day level. Sale Type differentiates Regular Store Sales, In Store Customer Order Sales and External Customer Orders. The following is an example of how a TRAN_DATA record would look like for this transaction code:

For more information on the definition of all the column headers in TRAN_DATA table, see the section Transaction Data Data Elements in this document.

Net Sales VAT Exclusive (Tran Code 02) This transaction type is similar to Net Sales (Tran Code 01) and written along with tran code 01 in the cases when tax type selected at the system level is SVAT or GTAX and Stock Ledger Retail VAT Inclusive = Yes (STKLDGR_VAT_INCL_IND = 'Y'). This record gives visibility to sales without the VAT value. If VAT is not included in the stock ledger, records are not written with this transaction code. These transactions are rolled up to the subclass/day, subclass/week, and subclass/month levels; however, it is not used in the ending inventory calculations. The summarization of sales and return transactions is similar as Net Sales (Tran Code 01). The following is an example of what a TRAN_DATA record would look like for this transaction code:

Non-inventory Items Sales/Returns (Tran Code 03)

Transaction Data 31

Non-inventory Items Sales/Returns (Tran Code 03) This type of transaction is also recorded in RMS by the sales upload process, and it includes all the sales/ return transactions at POS for non-inventory items. These records are the items for which items inventory indicator (INVENTORY_IND) is N. For these transactions too, sales are positive records and returns are negative. Retail is the items sales price, and cost is WAC or standard cost, depending on system option. The summarization of sales and return transactions is similar as Net Sales (Tran Code 1). Sales recorded under this tran code is not part of the Net Sales (Tran Code 1). These records are not used for the ending inventory calculations but rolled up to subclass/location level for day, week, and month in the stock ledger to interface it to the general ledger. The following is an example of what a TRAN_DATA record would look like for this transaction code:

Returns (Tran Code 04) This transaction type is recorded for all customer returns processed through the sales upload process in RMS. This is the only place in the system in which there is visibility to customer returns, because customer returns are not written to the sales history tables in the system. Units returned, total retail, and total cost are captured for each return transaction. Return transactions are rolled up to the subclass/day, subclass/week and subclass/month level. However, because customer returns are part of the Net Sales transaction, Returns are not used in the ending inventory calculations. Summarization of sales and return transactions is similar as Net Sales (Tran Code 01). The following is an example of what a TRAN_DATA record would look like for this transaction code:

Non-inventory VAT Exclusive Sales (Tran Code 05) This transaction type is written for the same criteria as the 'Non-inventory Items Sales/Returns (Tran Code - 03)' transaction described above, if the system parameter is set that indicates VAT should be included in records written to the stock ledger. When it is written, it is in conjunction with the Non-inventory Items Sales/Returns record in order to give visibility to sales without VAT. If VAT is not included in the stock ledger, then records are not written with this transaction code. This transaction code is similar to Tran Code 02.

Deals Income (Sales) (Tran Code 06)


These records are not used for the ending inventory calculations but are rolled up to subclass/location level for day, week and month in the stock ledger to interface it to the general ledger. The following is an example of what a TRAN_DATA record would look like for this transaction code:

Deals Income (Sales) (Tran Code 06) This transaction code is recorded to post income generated from bill back rebate or vendor funded promotion types of deals that are calculated based on sales. These are the deals from which the retailer gets income as certain part of sales. The amount of income may differ based on predefined threshold sales levels and percentage thereof. For example, a supplier may give 10% discount on every $10,000 worth of sales and 15% discount if the sales reaches $20,000. This transaction is based on sales; thus, the posting is at retail only. This transaction is created by the daily deal income and sales upload batch programs. The latter posts deal income transactions only in case of Vendor Funded Promotions. For these transactions the daily data roll up table is updated by the daily deal income batch rather than sales daily batch. Additionally, deal ID is also recorded in the reference number column. These transactions are rolled up to the subclass/day, subclass/week, and subclass/month levels; however, it is not used in the ending inventory calculations. The following is an example of what a TRAN_DATA record would look like for this transaction code:

Deals Income (Purchases) (Tran Code 07) This transaction is recorded to post income generated from bill back or bill back rebate deals that are calculated based on purchases. The income from these deals is dependent upon the quantity of purchases made by the retailer from the vendor, and deal income may differ based on predefined threshold levels of purchases. For example, a supplier may give 10% discount if the purchase of a particular item is more than $10,000, and if the total purchase in a year reaches $200,000 then extra 2% is given to the retailer. These transactions are posted at cost based on the purchase cost. This transaction is created by the daily deal income batch program. For these transactions, the daily data roll up table is updated by the d

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Documents

stock ledger organization

rms stock ledger overview

rms stock ledger attributes

stock ledger roll ups

general ledger rollup

contents contents

transaction data api

merchandising transactions