Stock - Configuration and Stock Types
The Stock module provides a fully featured and integrated stock management and sales order processing facility. The key features are:
- Stock Item Maintenance
- Stock Valuation methods - Standard, FIFO or Average
- Bills of Material and Works (Production) Orders
- Purchase Orders and Receipts
- Sales Order Processing
- Stock Management including stock count and other adjustments
The module is designed to support several business models, manufacturing, assembly and stocking for resale, including business branches. Transactions, both quantity and value, are posted automatically providing very efficient stock management, business control and ease of use.
If there are any aspects of Stock management and valuation that you are unsure of a discussion with your advisor is strongly advised.
This guide addresses the following topics.
- Activating Stock
- Stock Valuation Methods
- Units of Measure
- Stock Types
- Setting up Stock Items
- Bills of Material and Works Orders
- Purchase Orders and Receipts
- Sales Order Processing and Despatches
- Stock Management
Before any facilities are available the Stock feature needs to be activated and certain decisions made. This is done via the Optional Features tab in Organisation Profile.
Control - Organisation Profile - Optional Features
Tick the box adjacent to Stock Management and SUBMIT to activate the module. NOTE: Messages and warnings may appear requesting the user to complete the configuration.
A Stock menu is now visible in the top-level menu items. The next stage is to configure stock to operate as required by the business. This is done in the Stock Module Configuration screen.
Stock - Configure Stock - Stock Settings
The Stock Module Configuration screen is presented.
Clicking Use BOMS allows Bills of Material to be built. See further comments below in the Bills of Material section. A Stock Valuation method must be selected. If using boms has been selected the stock valuation method must be Standard Cost otherwise select the appropriate one. Also see more details below.
Selecting Allow Negative Stock from Works Order will complete Works Order stock movements even though the system available quantities may be a negative as a result. If this box is not ticked the system will issue a warning and not process the transaction. This feature will be helpful where multiple users are responsible for different aspects of stock management.
Selecting Allow Negative Stock from Sales Order will allow the reservation of a sales order even though the system available quantities may be a negative as a result. If this box is not ticked the system will issue a warning and not process the transaction. In effect any negative reserve balance represents quantities to be made or purchased. Whilst reserved stock may be negative it is not possible to despatch a negative stock. This feature will be helpful where multiple users are responsible for different aspects of stock management, and entering information may not necessarily be sequential and at a particular moment system data may not be consistent with the physical reality.
The next PO (purchase order) and SO (sales order) number to commence an automatic sequence may be set in the Next PO Number or Next SO Number fields. If a prefix (such as a year number or some other) is desired then enter it in the PO Number Prefix or SO Number Prefix fields. This prefix will appear on all future PO's and/or SO's until changed.
Tick the Customer PO Required on Orders box to force the entry of a Customer Purchase Order Number when a sales order is entered. A sales order cannot be stored unless there is information in the Customer PO Number box of the sales order screen.
If Quote Policy Text is to appear on quote documents then enter the text in this box.
Click the Button button to store the information.Return to the list of topics in this user guide
Stock Valuation Methods
Stocks can include raw materials, sub-assemblies (Work in Progress) and consumables used to manufacture products as well as products purchased for resale.
For most taxation and compliance purposes the value at which stocks should be shown in financial statements is defined as the sum of the lower of cost or estimated selling price less costs to complete and sell of the separate items of stock or of groups of similar items. For this purpose cost is defined as being that expenditure that has been incurred in the normal course of business in bringing the stock to its present location and condition.
Commonly accepted and employed valuation methods in the UK include FIFO (First In First Out) and Weighted Average, both of which are supported. Additionally the system provides a standard costing methodology to allow a user to determine the costs for a manufactured product via a Bill of Material as well as valuing stock at standard cost.
It is the responsibility of the business owners or Directors to select the most appropriate methods for the business circumstances, and in the case of using standard cost that this provides adequate approximation for compliance. If you are at all unsure it is strongly recommended that you discuss with an advisor.
- Standard Cost
- A valuation method based upon using a pre-determined cost for each element of cost. When a stock transaction takes place the associated value is based upon the standard cost set for that component. Even when say the purchase of a component is at a different unit price to the current standard cost, the stock value is still based upon the standard cost and any difference is posted as either an income or expense to profit and loss.
- FIFO (First In or First Out)
- A valuation method that is based upon the In Stock quantity valued at the latest purchase or manufacture costs counting backwards from today.
- Average Cost
- A valuation method that is based upon the average purchase or manufacturing cost over the accounting period.
See an example of Stock Valuation MethodsReturn to the list of topics in this user guide
Units of Measure
For stock items to be set up, appropriate units of measure need to be previously defined. This is done via the Define Stock UoM menu.
Stock - Configure Stock - Define Stock UoM
It is only necessary to add those Units of Measure you are likely to use.
Click ADD ITEM and enter a Unit of Measure. Tick the Whole Units Only Box and the system will then round to a whole unit when a stock movement has been completed. If relevant, intermediate computations will be at full accuracy of 5 decimal places with rounding taking place at the final one. Click SAVE ITEM to confirm.
Repeat the process for all the UoM's you require and finally click SUBMIT to record the definitions for use in the Stock module.Return to the list of topics in this user guide
For the purposes of efficient stock management and accounting as well as compliance an item of stock in the system must be categorised as one of six types, and before setting up a stock item the type must be decided.
- Finished Goods Bought-In (FGB)
- Goods purchased for resale.
- Finished Goods Manufactured (FGM)
- Manufactured Goods for sale
- Raw Materials (RMT)
- Raw materials before processing
- Work in Progress (WIP)
- Non Stocked (NST)
- Items not stocked but valued into a BOM
- Labour (LAB)
- Labour costs valued into a BOM
The latter two, Non Stocked and Labour, are not physical stock items but their value may appear in a Bill of Material and therefore be reflected into a Finished Goods Manufactured stock Item value. (See the Bills of Material section below).
Work in progress items are sub-components of Finished Goods Manufactured items, held as stock until utilised in a final manufacturing process.Return to the list of topics in this user guide