Hi,
We have a scenario where we are receiving same items from multiple vendor. We would like to reflect that in our cost. What are the possible solution.

The one I know of is using
1. Lot costing. But implementing this requires changes in various business areas and reporting.
2. Average costing- Avergae costing will though not give us the correct valuation and then one still has to handle the variances that it will generate. Though the variances will loose their meaning.

3. We also thought of creating different part numbers for each vendor and then when doing sales order use a phantom part number and change sales order BOM. This is technically challenging.

Any input will be appreciated.

Thanks

Arvind Patil

This is a tricky requirement.
One of Baan's fundemental rules is that an item can have one cost. There are ways of managing this, such as using PCS, where each project can have different costs, or using multiple companies, and different costs per item within each company or just setting up multiple items, one per each vendor.

I would not try to capture the various costs within your inventory, but instead to capture the various costs within the purchase orders. You could either use the standard baan purchasing \ PPV reports, or write custom reports that would show the various costs by supplier, by time period.

Your finance team could then use the output of these purchasing reports to book the financial entries they need to make.

I don't know a clean answer to this problem in Baan.

Hi Robert,
Thanks for the input. Actually managing by rpeort would be quite tedious. We also need to have correct COGS. I have tested the lot costing and I think this is the closest we can get. In order to implement the lot costing we are trying best way to capture the lot information, without much overloading the warehouse process
Arvind

Hi Arvind,
Just so that i understand your situation, you get the same items from different vendors at different prices, am i right? If not then kindly ignore my suggestion..

Although not elegant but still a viable option is to create another item code for this item (so that the cost is recorded correctly) and then have it defined as an alternative item to one another. This way when you run out of stock on one item (Supplier:A Cost:Y) it would get replaced with your alternative item (Supplier:B Cost:X) when it comes to being consumed in an order.

sk

Hi Sukesh,
Thanks for your suggestion. Use of different item number has lot of ramifications

1. If a sales order comes for item A, how are we going to substitute for item B automatically? Remember we will have partial quantity.
2. For our customer we want this to be transparrent, so what happens if they send us the credit, how do we know what item etc?
3. From planning perspective we will have to consolidate the demad as they are one product.
4.How will customer service will check the stock- They would have to check the stock for both the items. We have a online inventory check, so that means we need to do something to address that.

I think in practially this won't work. I did test the lot costing and it work nicely, but the issue is how efficiently can we capture the lot.

Thanks for your suggestion.

Arvind

Hi,
Lots might be the elegant way to go about your requirement and if you have made up your mind i wish you all the best.

For arguement sake there are some not so good workarounds for the pointers you raised.
Point 1 & 2 could be solved in a crude way by creating a manufactured item code to host the item A (preferred one lets say) in its BOM. Whenever there is an order, you just raise a production order and issue items based on their stock availability (Item A or Item B). The customer only sees one item however internally your process gets a bit lengthier than usual (i know its not pleasing).

For Customer Service you can create some sort of a report which clubs the items based on their coding to give a collective stock report.

Coming to the Planning, how do you procure these items? Do you have a fixed quantity that you get from both the vendors or you just order from the second vendor when the first one doesnt have stock? If its the first then by fixing maximum quantity on the items MRP section could take care of the planning..If on the other hand its the second reason then i guess your planning becomes a bit manual...

All in all, these are not options that stands out or fits your bill perfectly but then workarounds are not known for their appeal... Just something to put off what you have to accept eventually(Lots in your case)...

sk

Hi,
First of all we are in distribution environment - webuy from overseas and sell it directly form warehouse.
Actually lot is the last option. We also debated of creating a Phantom item and then have the product below it as part of it and dynamically change the sales BOM based on the inventory availability. However, it becomes more tricker if there exists a partial inventory to handle the satisfy the order.

Production order is also quite cumbersome as one has to factor in again the partial inventory and also it has to be tied to sales picking as the picker needs to pick up the correct item or needs to tell the system what he has picked up. And then one has to complete production order etc, again checking of inventory by customer service and online would be a separate issue.
We not only do current stock, but also give expected date and I guess it could only go complicate if we have two items.
In planning we would distribute the MPS order in pre-determined percentage, so that is not an issue.
I think 2 item concept has lotof ramification.What happens if we have a third supplier, and that would only complicate the issue. I was wondering, if Baan has try to resolve this issue at all. The most common answer I get is use the variance to handle in standard costing.But then I will be refelcting my gross margings and inventory valuation in correctly.
Thanks for your input
Arvind Patil

Hi Arvind
As I understand with all of your conversation that you want landed cost of each purchased item and for that you have only one method in BaaN IVc4 that is set your all items Inventory valuation as Lot Price. for that you can use session tdltc0130m000 - Convert No-Lot Item to Lot Item. By using Lot Price Inventory valuation you can get cost of each item as per your purchase order for each and every item. If you load any other charges in Purchase order that will updated automatically in respective lots. No doubt you have to work a lot for this but this is the only right way for geting the landed cost.

Regards,
J K Sharma

Hello,

I know it's a late respons, but you can calculate the average purchase price for the current stock, based on the historic purchase receipts. This purchase price can be updated in itm001 and a new costprice can be calculated which would give reasonably good cost of goods sold...

hope this helps...

we don't want to do the average costing as then we would get variances and then variances would loose its meaning. Financially, we have mapped the accounts correctly now. We are capturing the serial number as we ship the product and then we would know accurate COGS. Currently, we would manual entries in COGS at the end of the month to refelct the cost correctly.
Thanks

Arvind Patil

Use the Lot costing is the closely solution in your situation.
and the lot costing functionality iteself, is to meet this requirement as you raised.