In the Importance of a Good Unit of Measure Schedule blog, we walked through the importance of unit of measure schedules and how to design a unit of measure schedule. Using a well-designed unit of measure schedule and proper configuration of inventoried items in Dynamics GP, enables your system to accurately track inventory balances.
An item card in Dynamics GP maintains a multitude of information about an item such as default accounts, tracking options, valuation methods, engineering data, and much more. In this blog we will focus on the setup of a item card with relation to default purchasing and selling units of measure.
To configure these default units of measure, there are four windows that you need to access – yes, you heard right, four windows! But…you want accurate inventory balances, correct? Let’s take a look at the four windows we will review:
- Item Maintenance Window: Defines the Unit of Measure Schedule ID for an item. As a reminder, each item can only have one unit of measure schedule ID.
- Price List: Defines the default selling unit of measure, and defines multiple selling units of measure
- Purchasing: Defines the overall default purchasing unit of measure.
- Vendors: Defines default purchasing units of measure per assigned vendor.
Below is an image of the item card and how you can easily access the other three windows from the “Go To” button from the item maintenance window.
Alright, now the nerd in me is about to shine through – configuration is where us consultants have our fun because we know how much easier this is going to make your life!!
We will start with the Item Card (Inventory >> Cards >> Item). Here you will select your Unit of Measure Schedule ID to assign to an item. In the example below, the Unit of Measure Schedule ID for item RED INK is EACH. In this unit of measure schedule ID, the base unit of measure is Each. Then there are additional units of measure defined such as case of 25 eaches (Case25) or pack of 10 eaches (Pack10). Therefore, as you purchase, sell, and/or consume in cases or packs, your system will calculate down to eaches to allow for accurate inventory balances.
Next, navigate to the Price List (Inventory >> Cards >> Price List). The price list will define the default selling unit of measure for an item. On a side note, in order to create price lists you must have at least one price level. Additionally, you could have multiple price levels if you would like to setup different selling units of measures for different customers. Whew…I feel like that is a lot to to take in! Let me explain with an example.
Assume for one class of customers you sell packs of 10, but for another class of customers you sell in packs of 50. Create two price levels and name them after the customer class ID (for this example we will say RETAIL and SERVICE). Next, add a price level line for RETAIL and select PACK10 as the unit of measure. Add another price level line for SERVICE and select PACK50 as the unit of measure. Before this works on a sales transaction, you must assign the REGIONAL and NATIONAL price levels to the customers from the customer card window (Sales >> Cards >> Customers). After the price levels are created and assigned to customers, when you enter a sales transaction entry using the item/customer combinination, the default selling unit of measure will populate.
Perfect, we have our default selling unit of measure. Now it is time to set the default purchasing unit of measure. The first window we need to update is the Item Purchasing Options Maintenance window (navigate to Inventory >> Cards >> Purchasing). In this window, you select one default purchasing unit of measure. Determine which unit of measure you purchase that item in most, and assign that unit of measure in this window. In the example below I have selected Case 25.
Once you have setup the default purchasing unit of measure, you will navigate to the Item Vendors Maintenance window (Inventory >> Cards >> Vendors) to assign default purchasing units of measure based on vendors. Look at the default U of M section. Notice you have the option to use the unit of measure entered in the Purchasing window, or you have the option to select a different default unit of measure based on the vendor.
To set a default unit of measure different than the default purchasing unit of measure, select the vendor ID. Next, you will mark the From Item Vendor button and click the lookup icon. Then select the default purchasing unit of measure you wish to assign to this item/vendor combination. Don’t forget to his save to save your changes.
That is it – congratulations! You have configured the default purchasing and selling units of measure for your item. Okay, so that wasn’t bad, right? But you may be thinking, what is the point of populating all this detail? Answer: Accurate inventory counts and efficient data entry. Because examples are so proficient, let’s take a look at one.
The below chart is an example of just 7 transactions for a sellable item (which is I’m sure way less than you have in a period). The second column shows the transaction type, the third column reflects the unit of measure being used on the transaction, the fourth column reflects the quantity ordered or sold in column three’s unit of measure, and the fifth column reflects the quantity in the base unit of measure. Notice that the inventory count could be challenging without the base unit of measure (Each) calculation. You can also see, with the proper configuration of the item and units of measure, Microsoft Dynamics GP accurately tracks the on-hand inventory balance (which is the last column).
Not only does proper configuration assist with accurate inventory tracking, but users entering sales and purchasing transactions will have default units of measure based on the item setup. This means less key strokes and increased efficiency.
When configuring and designing inventory within your ERP system there are many things to consider. Yet the time dedicated to proper configuration can benefit your company in the long run.
If you have questions or would like assistance with your inventory design within the GP application, please contact FMT Consultants by filling out the form below.