Hi all! I need some advices on how to handle this situation in 3.6: 1. Buy an inventory as a Raw material . Ex: AX-705/00 2. A finish Good item is created. Ex; ZAX-705/00 3. A PBOM is created for item ZAX-705/00 containing one item of AX-705/00. This PBOM is free of labour or additionnal items. 4.Production order is made for the item ZAX-705/00. AZ-705/00 must be relieve from inventory and the item ZAX-705/00 by the same amount. 5. When invoicing the FG ( ZAX-705/00) , the inventory must be depleted and the item goes to a “virtual customer owned warehouse” in Navision at zero cost. 6. As the production manager produces a FG item ABC requiring the ZAX-705/00 in its PBOM then this virtual warehouse at 0$ is depleted. Costing for the top-level item is net of the cost of the ZAX-705/00. Thanks!!!
Hi Tatiana I think your processing gets a little confusing, but here is a suggested solution using standard Navision. I am unsure what you mean by the following statement
AZ-705/00 must be relieve from inventory and the item ZAX-705/00 by the same amount.
I believe you BOM is as follows ABC …ZAX-705/000 …AX-705/00 Your production of ZAX-705/000 consumes AX-705/00. If this is set up as backward flushing, AX-705/000 is relieved of inventory when ZAX-705/000 is put into inventory. Whichever way you do step 5 it will not be easy - you could invoice the goods - with associated costs? Then positive adjust the goods back into a virtual warehouse at zero cost. You could create an invoice direct against a GL account for zero and manually transfer the goods - does the end customer require the invoice? Is a sales order loaded as a demand trigger for ZAX-705/00? With step 6 the consumption of the components of ABC can be set against a location on the SKU card which could be the virtual warehouse. Therefore when production is complete of ABC stock of ZAX-705/000 will be relieved in the correct place. I am unsure on the costing at this point without running it through, and it will depend on your costing method (standard?) but if you are taking the constituent parts as the cost then this will be zero as that is the “cost” of ZAX-705/00 on the system (you have booked it in at zero). A couple of other considerations - you are holding the stock [?] for the customer but charging them nothing? and the cost of the item is nothing. This I presume is so the inventory valuation is not overstated, but your sales are understated as you have invoiced zero. Who holds liability if the customer never takes ZAX-705/00? You may have timing issues to contend with here between the COGS of an item and the physical inventory value when in conjuction with teh physical sale. Are you hiding any liability? Insurance is not so bad - as you can insure the goods at a saleable price, which you can get from the virtual location. If you are storing the goods - are you charging for it? Are these fees going into the applicable sales of the “project” to get an accurate costing? if you are storing it and not charging it then your true costs extend to space, stock management, any attributable overheads etc. Its possible in some ways in standard Navision. You may need to be careful with the costing. You could use the reclassification journal - but this reclassifies EVERY setting and has to be used with great care (especially if you are using locations, dimensions or serial/lot numbers)I would not recommend it [;)]. If you need it to be slicker some coding maybe required. Have fun [:D]
Hi Steven, these are some precisions: 1. Costing method is “FIFO” for all items. 3. All items are Lot controlled and Bar code will be used for picking ggods for production. 2. Yes the end customer requires an invoice So, Can I still able to do that scenario in Navision without customization??? If yes, how??? Can I use Non stock item for that??? Thanks
Hi Tatiana Well for the barcode interface you will require customisation. For me to comment on whether the rest would require customisation or not is a little difficult. If the described scenario works 100% for you or is workable, then yes, alternatively different standard workarounds could be used, it would really require a more indepth look at the physical processing, the paperchain and the costing implications. I would never say a simple yes, but it is possible [:D]
Hi Steven, I’m still trying to understand how to handle that situation. I want to be able to sell FG to my customer even if goods are still in our warehouse as RM belogns to the customer who pay for it as soon as we got it. AX-705/00 is RM ZAX-705/00 is FG. Customer get an invoice for FG but itenm is still in a " Customer Virtual Warehouse" at “ZERO COST”. As the production manager produces a FG item requiring ZAX-705/00 in its Bom, then this virtual warehouse at )$ is depleted. So the total cost of the end item is net of the cost of ZAX-705/00. Any other idea??? Thanks
Hi Tatiana You have changed the processing order form last time!! This time you are invoicing the FG before making them - is this the case? So you hold stock of the components (level 1) and relieve these to deplete the virtual warehouse but invoice the FG prior to this. Where were the holes (I think there are loads) from your perspective in the earlier suggestions?
The customer provides you with the raw material, you then process it into a finished product that you sell back to the customer? Is that correct? If so, you don’t own the RM, so you don’t have to account for them financially. Your only responsibility is to make sure that they don’t get stolen. In which case, I think I would be tempted to handle it by simply ignoring them. The customer delivers the RM which you put in a corner and don’t book into Navision. You then have a production order to make the FG but don’t specify any components, so as far as Navision is concerned, you are making it out of thin air. The FG will be received into stock at whatever costs you’ve specified on the FG item record. In the real, physical world, the pile of RM has been reduced but Navision doesn’t need to know that. Assuming that the customer hasn’t supplied the RM for a specific order then periodically, you do a manual check on the raw materials and let them know when they are running low (or the customer can keep tabs on it himself). If the RM have been supplied for a specific order, then they will have disappeared at the end of the production run. Anything left over you can send back with the FG. No need to book out of stock because it was never in stock. Stock control is therefore left as the responisbility of the owner of the RM. If the situation happens on a widescale basis then you might want to be a bit more rigourous about stock control. In which case, how about just receiving the RM into a location at zero cost and then manually issuing them as required? Cheers, John
Hi John Reading the original thread the raw material is purchased, then value added through production and “sold” to the customer. However it never leaves the building. THEN a further item is manufactured containing the already owned produced item. The already sold manufactured items have to be consumed at zero cost (so as you argue you could ignore them) and the costing of the “final” finished goods is everything minus the already sold material. Your final comment:
If the situation happens on a widescale basis then you might want to be a bit more rigourous about stock control. In which case, how about just receiving the RM into a location at zero cost and then manually issuing them as required?
Is a summary of what I said - its just the processing has changed, and I am worried that the detail is not clear enough - not to mention additional processing and costing implications. Still all good fun [:D]
Hi Guys! Thanks for reply. Yes The process has changes as the customer needs invoice as soon as RW have been bought by us. Yes also we have to count in the system those RM ( refers to JohnP comments). That invoice need to be sent and we need to be able to track how much left in our inventory after those RM have been used to produce FG. Stevean has well resumed the situation on his last statement. Hote this larifies Thanks
Hi Tatiana So where do the previous suggestions fail for you and why?
Hi Steven Previous suggestions were not really accurate for what I’m doing. When RM are bought, they need to be invoiced to the customer BEFORE working on them. That means item AX-705/00 must be invoiced. ZAX-705/00 is followed through MRP. If I produce ZAX-705/00 , I need to know after production how much left on hand for item AX-705/00 belonging to the customer. Costs for that item ( AX-705/00) must not be included in the total cost of the item. I hope that these precisions help. Thanks
Hi Tatiana I do not think this really affects anything. 1. BUY AX-705/00 2. Upon receipt of AX-705/00 invoice the end customer for the goods. This will deplete the location of all stock. You will then need to manually receive the goods into a customer owned location at zero cost. 3. When producing ZAX-705/00 ensure the SKU set up for relieves the components at the customer owned location (this may mean you need to transfer other items into this location, I have not reinacted the set-up and process flow, this is just my thoughts - also remember every other rider I have on stated previously regarding processing and costs [:D]). 4. After processing of the production order the consumption will remove the required/used AX-705/00 from stock (arguably you could manually consume this item for further control), leaving what you have left in the customer owned location. 5. As you have consumed a component booked in at zero cost the cost of AX-705/00 will not be included in the total cost of the item. Apologies if I am making any obvious errors - I seem to have got a bit lost and confused on this topic!
Hi Steven, It works well for me now. Thanks you very much