Inventory Costs Are Causing ERP Seismic Reactions

Posted by Gerry Poe


inventory costs Is your inventory costing cause seismic reactions in your company?
Maintaining accurate inventory costs, booking measurable variances and cost-of-goods-sold are necessary materials and accounting control process. Taking care to do this properly means reliability for reporting those costs of goods, cash flow forecasting, purchasing and financial planning.

SYSPRO has several methods to help. If you have materials showing incorrect costs, your financial picture is at risk. Inventory represents somewhere between 30% and 50% of a business operating assets. Correcting costs assures proper planning, reporting and forecasting.  We will touch on a few of those available standards within SYSPRO.

Inventory Price/Cost Percentage Change, this method is a line by line process to update stock code, warehouse, lot, and bin costs; enabling an operator to adjust costs by either a dollar or percentage method. This system lets you update across the entire inventory, range, warehouse, product-class or just one stock-code those associated costs by a price code, cost, inventory, or another price code. It is good global price and cost change system with many selectable options.

Inventory Movements, Cost Changes allows Cost Changes per stock code. This system works for a one-off of few at a time cost update. It is slower and allows the operator to select various elements of a stock-code’s detail data, such as warehouse, and unit or total on-hand changed to the new cost. You can also post those cost variances to a specific GL expense code for a selected transaction group.

Inventory Movements, Cost Modifications allows Cost Changes per stock code. You use the Cost Modifications option to adjust the inventory cost of a specific quantity of items (e.g. to change the cost of a batch of items received into stock where the cost was incorrectly entered). The system applies the total change of the entered items to the quantity on hand. You would normally use this option when you wanted to adjust the cost of a specific number of items received into stock.

Bill of Materials (BOM), Cost Implosion enables re-costing stock items from raw materials levels through to the finished product. The program also checks for more than 15 levels in a product's structure. This identifies inadmissible parent/component/parent loops.

Bill Of Materials (BOM), Transfer BOM Costs to Warehouse Costs transfers the bill of material costs (calculated by the Cost Implosion program) to the unit cost field of a stock item. You can use the BOM & Inventory Cost Comparison program to view the differences between the BOM and inventory costs before using the Transfer BOM Costs to Warehouse Costs program to transfer the costs. Any change made to the inventory unit cost is recorded in the inventory journal and stock movement files (the latter only if stock movements are being retained for the relevant stock code).

Summary
Inventory costing is one of the most prevalent problems in enterprise today. Systems seem to be out of sync and reeling them in can be tedious, time consuming and costly. With so many systems built into SYSPRO, we have the opportunity to balance from general ledger (GL) to all sub-ledgers utilizing standards-based, audit methodologies.

The three main factors in inventory control decision making process are:

  • Inventory holding costs (e.g., based on the interest rate).
  • Cost of placing an order (e.g., for raw material).
  • Cost of shortages, i.e., what is lost if the inventory is insufficient to meet all demand, on time.

SYSPRO offers organizations the tools necessary for smooth running, financially sound, best business practices operation.

When your ERP software gets the best of you, it is time to call us. We have a special SYSPRO USER SUPPORT PROGRAM that can pay itself off with just one call.

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Tags: Best ERP Software, SYSPRO, SYSPRO Support

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