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Inventory Management module
optimizes all purchasing processes with the workflow driven
processing functions, enables automated procurement and
storing with accurate inventory management, and integrates
purchase accounting as well as quality check of material at
the time of receiving the same in the stores. ERP gives
real-time inventory report quickly for JIT (Just-In-Time)
inventory management.
In a manufacturing company that is in the early stages of
their ERP project, obtaining a 95% or higher IRA (Inventory
Record Accuracy) number is a tedious, but absolutely
necessary task.
1.1. Inventory Master
1.1.1. Item
Master
Audit Trail: The name of the person who created the item in
item master is captured along with date of creation. The
same can be seen in the item list.
Master database-containing information about all kinds of
material.
Enter items in the item master.
1. Bought out items, raw material, consumables, spares,
etc. Items which are supplied by vendors
2. Sub-assemblies, semi-finished goods, factory made item,
etc. This includes items that are received from third party.
3. Finished Goods, (product which usually appears in the
sales invoice).
Everyone in the organization must call any material (item)
by the same name (nomenclature). Proper classification or
categorization of material is very important in the ERP.
This discipline helps in getting useful MIS (Management
Information System) reports. Access / secret password to
prepare the item master should be restricted to two people
only, to ensure correct grouping of items.
In ERP it is not necessary to give numerical item code per
se. However, if user wishes to give item code there is no
restriction. Item code once given cannot be changed. Item
code is nothing but a short name of the item. Item
description is long name of an item. Item description can be
edited later – but NOT the item code. Select the main
category of the item carefully. It is advisable to restrict
number of category of items. This is a one time setting and
should be restricted to experience person only.
1.1.2. Main Location
Master
1.1.3. Location concept
Any material movement is always with respect to an
inventory location that is defined in the location and
sub-location master database.
1.1.4. Sub Location
Master
Example:
Sub-contractor is also an inventory location.
1.1.5. Item Category
Master
User can create a new product category by clicking the New
button and typing the New category in the Product category
description text box. This is linked to GL account.
1.1.6. Add Item Sub Category
User can create a new product sub category "sub category"
by clicking the new button, selecting the Product category
under which the user wants to create a sub category, and
typing the new sub category in the Sub category description
text box.
1.1.7. Item Sub
Group
User can further add a sub-group for a given sub-category.
1.1.8. Just in Time Inventory control settings
There are important flags [tick mark] provided on the Item
sub-category master.
1.1.8.1. Excess received %
(percentage)
"When material is received, the PO quantity is defaulted
automatically. The stores person cannot receive quantity
exceeding PO quantity. However, for some item it may not be
practically possible for vendor to supply the exact
quantity. When ticked, ERP will allow excess by percentage
that is defined for a given sub-category.
1.1.8.2. QC Required
flag
If tick (true) then item will be first received in Hold
then will be transferred to stores after QC is done; else
(if not tick) item can be directly received in stores.
1.1.8.3. Depreciation
applicable
Tick for capital goods to avail depreciation.
1.1.8.4. Activate serial
number
When ticked, ERP will keep track of Serial number of the
item. (Not applicable).
1.1.9. U.O.M. (Unit of Measurement)
Master
It displays various units of measurement, which are
regularly used. E.g. Kg, Each, Pair, Set, etc. This is
‘accounting unit’ required while creating item master.
1.2. Inventory Transactions
1.2.1. Goods Receipt Note (GRN)
Purpose: Goods Receipt Note "Purchase Voucher" is used when
material is received in the stores. PO is a parent document
to make a GRN. User will select vendor name. All pending PO
will default automatically. User will enter Quantity
information and save the GRN. This document is active
document. In ERP, user does not have to enter documents
twice. Excisable purchase transaction will also record
excise related information.
In legacy parlance, this transaction is sometime called
goods inward.
In ERP the GIN is prepared for material received from the
sub-contractor "Third Party" . ERP distinguishes the
material received from Vendor "Vendor" and sub-contractor,
because sub-contractor material is actually our own item
received in a new shape and / or size, after processing (or
assembly).
Goods Receipt Note "Purchase Voucher" cum Goods Inward
transactions does the following:
1. GRN will add material into stock (Hold location or
material under inspection location).
2. Credit the vendor .
3. QC inspector / Quality Assurance can reopen GRN and enter
accepted quantity – this will automatically add item into
main stores and if item is rejected, add into Rejection
Location.
4. Prepares short quantity debit note based on Challan
quantity and received quantity.
5. Excise update button is given, here the excise person
opens the document and enters the CenVAT amount, Cess amount
and S. H. Cess amount and clicks the Excise update button.
This will automatically update the CenVAT Credit Input
register.
6. In Item level GRN there is facility to add Agents Name
when user chooses the agent
7. In item level GRN facility to add Agent Bill No in GRN
8. Account passed procedure is for accountant control.
9. Short quantity debit note "Short quantity debit note" :
ERP will raise a debit note (automatically generated), in
case received quantity "received quantity" is less than
challan quantity "challan quantity" . Debit supplier and
credit the purchase account.
10. When QC person opens the GRN (or GIN) and enters the
accepted quantity:
ERP will change and print remark below QC Done "QC Done"
(changed from QC pending "QC pending" ).
When the material is rejected, the credit posting in the
creditor ledger "creditor ledger" (vendor ledger) shows
full credit as per the total bill amount. Therefore, an
additional Account remark should be printed:
‘Raise debit for Rs. nnnnn, against rejection’.
This remark also will be printed in creditor ledger –
particular column.
11. Account person will open this GRN again and approve the
same by clicking ‘Account approved’ button. Until then, the
GRN will be with remark ‘Account Pending’.
Once the accountant saves the GRN, the remark will change to
‘account approved "account approved" ’.
See a column in Creditor Ledger ‘ACCOUNTANT’ -
ERP will pint ‘OK’ if GRN (or GIN) is approved else by
default ‘PENDING’ under this column.
1.2.2. Stock Transfer Challan (STC)
STC is used to transfer material from one location to
another. This does not consume material. User will select
from location and to location.
Material is transferred using the stock transfer challan (STC),
from stores to shop floor as per the Bill of Materials. STC
is linked to the work order.
1.3. Stock Transfer Challan with W/O (STC):
If user is issuing more material than the required material
then it displays a passive message for the same.
1.4.7. Item Master List
There are three kinds of items:
i. Raw Material / bought out items, consumables, spares.
ii. Semi-Finished Goods (SFG), sub assemblies, WIP.
iii. Finished Goods (Final product).
List of all inventory items. User can prepare this category
wise or sub-category wise. User can select required field
(data) by ticking tick box. The report can be automatically
saved, instantly, as an MS Excel Sheet.
From legacy data, prepare three item lists, print and
endorse in the beginning. Thereafter, new item can be added
by only authorized person (only two or three people is given
the
password).
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