This chapter contains the following topics:
Inventory Management is the foundation upon which other PBS Manufacturing manufacturing and distribution packages are built. If your company is a manufacturer, you will probably also need to install Product Definition & Costing which allows you to define bills of material. This will enable you to use the Shop Order Material Requirements Explosion program in Inventory Management.
If you are a job shop manufacturer that builds all products and buys all purchased materials according to firm customer orders, the PBS Manufacturing Inventory Management, Product Definition & Costing, and Purchase Order Processing packages may provide you with sufficient materials planning capability. If a significant part of your material purchases or your scheduled production depends on a forecast, you may also need additional planning features provided by the Master Scheduling & MRP package.
There are many functions in Inventory Management which may be performed here or in other modules, depending on which modules are installed. Most of these functions may be run from either location while others must be done in the appropriate module. The software will let you know if you're attempting to run a function in the wrong place.
Use the following to learn more about the Inventory Management module:
Physical Inventory
See Traditional Physical Inventory Method and the Freezing Inventory Method.
Entering and Maintaining Item Master Records
Item Masters may be entered and maintained using the I/M Item Masters Enter program. Pay careful attention to the information you enter here as it will be used by all other applications in the system.
For detailed information on how each field is used, see Item Masters.
There is a time saving method that can be used in PBS Manufacturing called the Item Quick Add Method. This is turned on and off in I/M Control information. This method allows you to establish defaults for certain Item Master Fields and skips over less important ones all together during data entry resulting in faster entry of Item Master Records.
Item Masters may also be copied. You may wish to do this when creating a new item that is similar to an existing one. The copy program is also found on the I/M Item Master menu. Once you've copied the old item to the new, you can modify the new record to reflect any product differences.
Master Information
There is master information available in the Inventory Management module. Not all are required to function, but if used properly, they can dramatically increase the flexibility of the system. See the Introduction to Master Information.
Shop Orders
See Entering and Maintaining Shop Orders.
Major functions of PBS Manufacturing Inventory Management include:
| • | Maintenance of item material control, cost, and sales information about your products and about any component parts or subassemblies that you need to make those products. |
| • | Tracking purchase orders and shop orders for the items you buy or make. |
| • | Calculation and allocation of component material requirements for shop orders. |
| • | Processing transactions that immediately update item inventory and order balances for one or more warehouses. |
| • | Optional tracking of inventory by location within warehouse, and/or by Lot or Serial Number. |
| • | Reporting of inventory availability by item or by shop order, required ordering actions, open purchase commitments, open shop orders, and inventory cost valuation. |
| • | Optional conversion of inventory transactions to General Ledger transactions which update inventory and cost account balances. |
The functions in Inventory Management are integrated with one another and with other PBS Manufacturing packages. This is accomplished by using common data files that are accessed by many programs.
Therefore, you will maintain some information in Inventory Management that is used by other PBS applications. For example, the product cost and selling price information maintained in Inventory Management is used by the Customer Order Processing programs. Conversely, other packages update Inventory Management data. For example, invoice transactions in Customer Order Processing can update on hand and allocated quantity balances reported by Inventory Management.
Integration also means that a single transaction can simultaneously update multiple records. An inventory receipt transaction, for example, updates the on hand and on order quantity balances in the item inventory record, and also the received and order balances in an open order record for that item. The transaction itself is stored in a history file, and may subsequently be automatically distributed to general ledger accounts.
In summary, integration provides you with a very efficient method of managing the large amount of data required to properly control inventories and production.
| • | The Inventory Management data may be stored in an SQL database where you may generate reports of your data. |
| • | Has help (highlights of functions) built into the software. |
To understand how to use Inventory Management, you should understand some key concepts and words that are used in this module that relate to Inventory Control.
Inventory consists of goods purchased and held for resale to customers. It can also include items that will be used internally in the business, on jobs, or in the manufacturing process.
Inventory is quite simply the collective total of all merchandise on-hand for sale to customers in the ordinary course of business.
The control of inventory includes being able to regulate or know what goes into inventory and what goes out of inventory. This includes knowing the value of what is in inventory at any time. The inventory management application is often abbreviated as I/M or IM.
An item is a clearly identifiable product, material, or commodity that can be stocked, sold, or used. Inventory Control maintains a file of inventory items. Each item is identified by a unique number and a description. Other information maintained for an item includes cost, price, cost category, quantity on hand, sales data and reorder level.
Perpetual inventory is an inventory system that shows each change in the amount on-hand as it occurs. It is called perpetual because you perpetually (or continually) know the amount of each inventory item on hand.
Accounting is the collection, categorization and presentation of financial records.
General Ledger is the area of accounting where the records from other areas of accounting are brought together for classification and summarization, thereby creating a picture of the overall condition of the company’s finances.
As used here, general means pertaining to many areas. Ledger means a book where accounting records are kept. (This term evolved from pre-computer times when accounting records were kept exclusively by hand in large books called ledgers.) General Ledger is often abbreviated G/L or GL.
A general ledger account is a specific category under which all financial activity of a certain kind is classified. For example, you might have a general ledger account called telephone expenses, under which you categorize your telephone bills.
General ledger account is often abbreviated G/L account. Accountants are experts at defining the various G/L accounts (financial activity categories) needed by a business. Part of this definition process involves assigning an account number to each G/L account.
Independent businesses usually use a 3 or 4 digit account number. For example, you may have a G/L account called 100 Cash in the bank, and one called 200 Sales of Product A, and one called 210 Sales of Product B. Typically, an independent business will have a hundred or more G/L accounts. In accounting modules, each time any financial activity occurs in any area of accounting, the dollar amount of the activity is recorded under the appropriate G/L account numbers.
A cost center is a distinct area within your company for which sales and/or expenses (and sometimes costs) can be calculated separately from the total sales and expenses of the whole company.
In the Passport Business Solutions software, the main G/L account number is from 4 to 8 digits long. If you choose to use cost centers (they are optional in PBS software), you get a sub-account (up to 8 digits) added onto the G/L account number.
For example, your office supplies G/L account is numbered 4200, and you want to track office supply expenses independently for each of your three major departments (Dept. A, Dept. B, and Dept. C). Rather than use a different main account number for each department (such as 4201, 4202 and 4203), you could append -001, -002 and -003 to the 4200 main account number as follows:
4200-001 Office supplies, Dept. A
4200-002 Office supplies, Dept. B
4200-003 Office supplies, Dept. C
Then, whenever you’re allocating office supply expenses to G/L accounts, you would use the above 7-digit numbers.
Cost centers also apply to sales. A typical use for tracking sales by cost center is for a company that has several sales offices. By making each sales office a cost center, you can separately track the sales performance of each office.
The information you enter into your computer is stored on your disk. In order for computer programs to be able to locate specific pieces of data (within large masses of data) and to be able to process it logically, data must be organized in some predictable way.
PBS software organizes your data for you automatically as it stores it on your disk.
There are four terms you should understand about the way the data is organized:
A character is any letter, number, or other symbol you can type on your computer keyboard.
A field (sometimes called a data field) is one or more characters representing a single piece of data. For example, a name, a date, or a dollar amount are all fields.
A record is a group of one or more related fields. For example, the fields representing a customer’s name, address, and account balance might be grouped together into a record called the customer record. A record in a data file is often referred to as an entry.
A data file is a group of one or more related records. A data file is often referred to simply as a file.
The Item file in Inventory Control is an example of a data file. Such a file is made up of many records, each of which contains the description, prices, etc., for one item.
Each file is kept separate from the other files on the disk.
There are other types of files in addition to data files. For example, programs are stored on the disk as program files. However, file in this User documentation means data file, unless specifically stated otherwise.
As used here, purge means to remove unnecessary items.
Any other items’ serial number records, and those that fall outside of the cut-off dates specified for the purge, remain in the Inventory Control Serial file.
As used in accounting, transaction means a business event involving money and/or goods and/or services. For example, a transaction occurs each time you gas up your car -- you are paying money in exchange for gasoline (goods). Or another example: you give a television set (goods) to your neighbor in exchange for the use of his lake cottage (services).
Computer software deals primarily with business events that have already taken place. Therefore, in PBS, software transaction means the record of a completed business event involving money and/or goods and/or services.
The records of sales made and payments received are examples of transactions from the area of accounting called accounts receivable. The records of your purchases and the payments you make for such purchases are transactions from the accounting area called accounts payable.
The records of quantities of goods received and sold are transactions from the accounting area called inventory control.
To post means to take transactions from a temporary file and move them to a permanent file (where other transactions probably already exist). For example, in Accounts Receivable, sales are initially entered into a temporary transaction file. After sales have been entered and edited, they are posted to the more permanent A/R Open Item file.
Often, during transaction posting, information in other data files is also updated. For example, when sales are posted, the account balance and historical sales figures in the Customer file are also updated.
As used here, function means one or more programs that accomplish a specific task. Each selection on a menu for a Passport module is a function. When you select a function from a menu, one or more programs automatically execute, thereby allowing you to accomplish the task you selected.
When a set of accounting modules is integrated, any information generated in one area that is needed in another area is automatically supplied to that other area. You don’t have to enter it twice.
PBS software is fully integrated. When Inventory Control is used with other modules, data recorded in other modules can be transferred automatically to I/C and vice versa.
Inventory Control is integrated with these other modules:
| • | General Ledger distributions are generated as items are put into or taken out of inventory. These can be automatically transferred to G/L if you use General Ledger. |
| • | Customer Orders automatically updates item quantities in I/M for all orders processed. |
| • | Product Purchasing quantity on order will display in I/M. |
When the documentation refers to an alphanumeric entry, this means that the entry can be letters of the alphabet, numerals (numbers), special symbols (*, &, $, etc.) or any combination of all three kinds. In contrast, if an entry is specified as numeric, only numbers can be used.
An item’s price is what a customer would pay to buy that item from you. An item’s cost is how much you spent to acquire that item for your inventory. The difference between the two is the margin, or gross cost, that you make on a sale of that item.
A serialized item is a specific unit of merchandise with a unique serial number. Only one serial number is allowed for each serialized item received. Receivings of serialized items are made as for any item, with the addition of entering serial numbers when appropriate.
Serialized inventory allows you to capture and track detailed information on individual serial numbers
A lot-controlled item is an item whose quantities are tracked within unique lot numbers. Lot numbers are specified during the normal receiving process. On-hand quantities can be viewed by lot, and sales of full or partial lots are recorded and tracked by lot number.
Multi-company refers to the capability to do accounting functions for multiple companies with the same set of software. Accounting functions can be done for more than one company on Passport modules by selecting the Multi-company option.
MRP means Material Requirements Planning and sometimes Manufacturing Resource Planning.
Material Requirements Planning is a type of application software system used to schedule and monitor the use of components and other materials in a manufacturing operation.
Manufacturing Resource Planning, a type of application software system used to schedule and monitor the full range of resources required for a manufacturing operation. (Sometimes called MRP II.)
At any time while running a PBS module, you can press certain keys for Help.
Graphical Mode
Help is accessible from the graphical screens using the <Ctrl>+<F1> keys. The full chapter is available.
Character Mode
You can press the <F8> for Help. A brief explanation of the particular function you are using then appears on your screen.
Look-ups refer to a list of available entries for a particular field. There are two kinds of lookups: Data Lookup and Date Lookup.
Many fields allow you to press a designated key <F8> to show all available data on file. For instance, when entering an invoice you may press this key at the Account number field to bring up a list of all G/L accounts on file. Selecting an entry from this list is often easier and faster than remembering the account number or stepping through all possible entries until the right one is reached.
The date lookup provides a point and click window for finding and entering date fields.
In Graphical mode the date lookup is available via the <F4> key. In Character mode (Windows only) you may access the date lookup via the <F7> key.
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Note |
Depending on where you press <F8>, this function will return a Look-up window or context sensitive Help. If a Look-up window is returned, pressing <F8> a second time will display Help for the field if available. |
A password is a unique code you assign to each individual using your Passport Business Solutions system. Each potential user must enter a valid password prior to being allowed to use a protected function.
This function provides the capacity to recover corrupted data files. You can also use it to convert important data files to a format that can be easily interfaced to common data base and word processing modules.
You can easily configure your PBS software to work with any of the most popular printers. Additionally, instructions are given to allow you to configure the software to use virtually any other printer.
We have included the necessary functions and instructions to allow you to upgrade from earlier Classic versions.
See the PBS Installation and Release notes for more information on upgrading.