The warehouse information of the material class is recorded using the Warehouse Parameters option. The Warehouse Parameters option is located in the right mouse button menu when the Material Class is open. Each good has different locations in different warehouses. In addition to the location, the minimum and maximum material quantities and safety inventory level can be different for each warehouse. The following information is entered in the Warehouse Info window:
Warehouse No. / Warehouse Name: The warehouses defined for the company and divisions are displayed in the window with their numbers and names. This field is not data enterable. The Warehouses are defined using the warehouses option located under the Companies menu of the System Administration module, depending on the company and division definitions. The warehouse specific information of the goods is recorded in the relevant field after the warehouse is selected.
Default Location: The default location of the material in the warehouse. The defined location codes are listed and the location of the material in the warehouse is selected. If "Track by Location" option is applied, the location of the material within the warehouse must also be specified in purchasing transactions of the material class or the material.
ABC Code: The code to be used in the analysis reports of the material class, the related child materials class and the materials is recorded in this field. The ABC Code allows the analysis reports that are important for the sales and costs of the material classes to be generated.
The ABC method is one of the Inventory Revaluation methods. In addition to the Inventory Control, this method is also applied to the Sales, Distribution, Inspection, Finished Good Type, Material Procurement and Production Planning transactions. The usage of the ABC method in Inventory control is limited to the classification of the inventory items according to their cumulative percentages within the whole. This classification typically divides the inventories into three groups:
Group A inventory items account for 15-20% of the total quantity and 75-80% of the total value.
Group B inventory items account for 30-40% of the total quantity and 10-15% of the total value.
Group C inventory items account for 40-50% of the total quantity and 5-10% of the total value.
Some companies may classify their inventories in more than three groups or define sub-groups within the ABC groups. It's natural that each company implements an adequate classification according to the properties of their inventory and defines the quantity and value percentages according to this criterion.
The amount percentages of the defined inventory classes are specified in a manner to facilitate an efficient control.
For example, Inventory Group A is predicted to account for 20%, Group B for 30% and Group C for 50% of the total quantity. There are two rules to be processed when applying the ABC principal: To possess large quantities of low value items and to improve the control mechanism for high value items while decreasing their quantities.
When the inventory control is performed using the ABC method, the following method is used in order to apply a strict control over the Group A items:
- Detailed record systems are arranged.
- The inspection responsibility is assigned to higher-level personnel.
- Reviews periods are more frequent.
- Procurement Time, Order Point, Safety Inventory Level and Order Quantity values are carefully calculated.
- Procurement transactions are closely monitored.
For Group C items, the points specified below are adhered to in the lowest extent possible. The control, order and record transactions are kept simple, and some are cancelled. Since the material quantity is high, frequent review and order transactions are not necessary. Since the transactions are simple, less qualified personnel can handle them. For Group B items, a way in between the groups A and C is followed.
In other words, the ABC Analysis is the qualification of the materials according to certain criteria and by assigning Priority Levels. The analysis provides data to help various management techniques to be implemented, necessary decisions to be made and the methods to be adopted. The letters and respective priority levels:
A: Very important ..............The class with the highest percentage in the general total
B: Medium importance ....The class with the medium percentage in the general total
C: Not very important .........The class with the lowest percentage in the general total.
This classification is based on the percentages of the materials within the general total. The rates defining the Priority Levels are given in the filter.
Input Control / Output Control: It is possible to determine the warehouses in which the materials / materials of a certain class are located and to allow the Input and Output transactions to be performed only from these warehouses. This control and performance method is defined in the Input Control and Output Control fields of the Warehouse Parameters section. The Input Control and Output Control defaults are recorded using the Material Management Parameters. The default values defined there are transferred into the material/material class warehouse parameters page. If different control methods will be used, the methods can be changed on the record.
Input Control and Output Control fields have three options:
- Proceed
- Block
- Warn User
When Proceed is selected, warehouse control is not performed on the slip and invoices for the material / material class.
When Warn User is selected, the user is warned and prompted to confirm the record while the slip containing the material / material class transactions is recorded.
When Block is selected, if the warehouses specified in the slips will not be used in input and output transactions, the slips containing the input and output transactions are not recorded.
Note: Input and Output control also comprises the orders in "Proposal" status and the orders which are not reserved.
Minimum, Maximum and Security Inventory Levels: It is crucial for the material requirement planning to know the minimum, maximum and security inventory levels to be kept. The material levels can be regularly tracked and the materials to be sold or produced can be procured in time using this information. The maximum and minimum options indicate the maximum and minimum amount of material to be kept respectively, and the security inventory level indicates the quantity of material required to be kept at all times.
The slips and invoices are controlled according to the Maximum, Minimum and Security quantities specified in the Warehouse Parameters and the material level is checked with every transaction.
Negative Inventory Level Control: Certain companies may have negative inventories due to operational conditions. This situation must be avoided in terms of cost. If the material inventory is negative, the cost calculations cannot be performed using the Average of On Hand, FIFO and LIFO methods. Only the Average of inputs and Periodic Average costing methods can be used for materials with negative inventory.
If the material level is allowed to be negative, such level must not exceed a certain quantity. In such cases, negative values can be entered in the minimum material field.
It is possible to print "Items with Negative Inventory Level" list which appears while saving slips.
Negative inventory level control can also be performed during "update" and "delete" transactions. When negative inventory level control parameters are selected, the inventory quantity cannot decrease below the negative inventory level.
During transaction entries, material level control is performed in three different ways. The control method is specified in the Material Management Parameters section. If the material level is below or above the Minimum, Maximum or Security levels, the application may proceed with one of the following:
- Records the transaction without any warning,
- Displays a warning message and prompts for confirmation to record the transaction
- Displays a warning message and does not record the transaction.
Note: When materials, of which quantity level is below zero, are selected in slips and invoices, the relevant slip lines are highlighted in green.