Hi, please excuse this question if it is a little confusing as the manufacturing aspect of Baan is not my specialty.

What I have been asked to do is revalue a range of items to zero.

After some discussion we thought easiest method would be to set simulated purchase prices for all the component items to zero and adjust any operating rates and surcharges which may be applied. Then calculate and update cost prices.

Is there anything else to consider?

I have checked and simulated purchase price is the first priority for the cost price calculation code we will use.

I have also been asked if it would be easier to change the standard cost prices on the item master file to zero, using an external script directly against the table. And what repercussions this might have.

The reason for all this is we going to manufacture items for a parent company, who have their own system. They will be supplying all materials and we don’t want to "pollute" our GL with production values etc.

regards
Jason

Hi Jason,
if I understand you correctly, you work as a subcontractor for your parent company. You want to use production orders where the components are delivered by your parent company free of charge.

In this case you would 'pollute' your general ledger with actual costs + variances no matter what the cost price for your components will be. I don't understand why you don't want to post that to GL since the revenues of that service will appear in the GL, too.

Regarding the method of changing the price please keep in mind that using a script would change the cost price without inventory revaluation (which is done automatically when calculating and updating with the proper Baan sessions).

regards
Frank

Based on your issue, I am assuming that you have currently standard cost for the items.

For Purchase Items you can change the price to 1 cent (note that you can’t update the price as 0 if already a standard cost present)

For Manufactured Items the price will be rolled from BOM. Simulated Purchase price is not applicable for manufactured items.

Changing the standard cost price in the item is not the correct process. It will affect your integration transaction values.

My question is are you planning to change Purchase item or manufactured items. Does those items had any transactions earlier?

Hi thanks for the answers, has cleared up a couple of things.

To expand further, we were thinking that by recalculating the purchased items to zero standard cost this would have a roll on effect to the manufactured items making their material components zero.

If we can not used a simulated purchase price of zero then I guess our only option is to use the script to change the purchased items standard cost to zero, which should then cause the change to the manufactured items when we run the update on them?

If I understand correctly this won't revalue the existing stock on hand of the purchased items to zero, is there a way to force this to be revalued once we have manually set the standard cost prices?


The "long" story is not as simple as I laid out in my original message. The other company have effectivly brought the entire production line for these products, including brands, materials, finished products and production assets. They plan to take over this production themselves within six months. In the meantime we will continue to manufacture product for them.

They are paying all the bills for this production but have no wish to see any cost detail. And our finance team do not want to see any transactions from this production in the GL.

Transaction wise we only want to account for the product we still manufacture for ourselves.


Thanks again for your help
Regards
Jason

To your question of

If I understand correctly this won't revalue the existing stock on hand of the purchased items to zero, is there a way to force this to be revalued once we have manually set the standard cost prices?



It involes updating more tables in ticprxxx, i won't suggest you to do that unless you understand the full standard cost table structure. Even in one of my previous site some analyst given a wrong suggestion like this without informing me and it took me more time to clean up that mess.

My understanding as per your clarification is that for all the production order transaction you don't want to see the finance values? The best thing to do is

Option I
Map the integration transaction in such a way that it doesn't affect your GL. You have to do this carefully in integration settings if you want to activate the GL value after 6 months.

Option II
Do a simulation with purchase price for all the purchase items with value as 0.0001 (if you have 4 decimals in cost price structure). The transaction effect will be nill or minimum in finance since you may have only 2 decimals in finance. Even when it rolls up to manufactured items the standard price will be minimum.

A small remark: zero costprice is read as NO costprice...and no costprice will cause your material issues to fail....(messages like "no costprice structure found..." will occur)

If you don't want to see any bookings in your ledger accounts you'll have to break the integration settings (and you don't want to do that..)
You might consider using a different itemgroups with their own integration rules (to a special account which you could ignore....)

Or simply use PCS to keep the "foreign stock" out of sight (again a different account)

...Even in one of my previous site some analyst given a wrong suggestion like this without informing me and it took me more time to clean up that mess....
How dare he not inform!

...Option II Do a simulation with purchase price for all the purchase items with value as 0.0001 (if you have 4 decimals in cost price structure)...
This seems to be the most straight forward approach that is used by many sites (and not limited to Baan). Depending on the magnitude of prices at a site, the figure often used is one cent (penny etc) and is usually recognised by the users of the system as being a pseudo-zero.

In order to enable zero value purchase items we modified the costing programs to accept zero as a simulated purchase price. This turned out to be a lot more involved than anticipated and not really all that beneficial in the long run.

For Purchase Items you can change the price to 1 cent (note that you can’t update the price as 0 if already a standard cost present)

Please check this again, if I remember right since August 2002 it is possible to have a SCP = 0.

Regards, Juli