In order to properly transfer inventory between facilities, the following issues must be addressed.
1. The paperwork to dispatch the inventory from the shipping facility must be easy to produce on the system and integrate into the normal order processing flow. The system must allow the shipping facility to process the outbound shipment along with normal customer orders and produce the required shipment documentation such as address labels and shipping manifests.
2. The inventory being transferred from the shipping facility must be allocated properly to avoid transferring inventory amounts that have already been allocated to open and backordered customer orders.
3. The goods must be traceable in-transit.
4. The value of the goods must be recognizable by the accounting system during the inventory valuation process such as periodic inventory taking and price protection processing.
5. The receipt of the goods at the receiving facility must be easy, non-disruptive and take place as part of the company's normal receiving process.
6. The receiving facility must be able to track the in-bound inventory in the same manner that it tracks in-bound product from the company's normal vendors.
7. Historical data must be kept to allow the analysis of transfers.
StreamV handles the design issues mentioned in the previous section in the following manner to provide an integrated solution that is transparent to normal operations.
StreamV treats an Inter-Facility transfer as a special type of sales order (a "shipper") from the shipping facilities point of view and as a purchase order from the receiving facilities point of view.
The purchasing department starts the IFT process. A Purchase Order is created for the location that will receive the product, using the P/O Recommendations report and the Purchase Order Entry and/or the Requisition Management programs.
The P/O Recommendations report is used to determine which locations need product and whether or not these needs can be met by inventory surpluses in other locations. The report lists detailed inventory item status (amounts ordered, on hand, in-bound from vendors or transfers), and historical sales information for each of the selected inventory locations. The P/O Recommendations report also allows the operator to optionally create P/O Requisitions for the items that are needed in each location. The requisitions are created using the "recommended quantity" determined by the report based on the current inventory item status and reorder information. The P/O Requisitions created by the report can be edited, assigned to a dedicated “IFT vendor” and used to create IFT purchase order records.
Once the operator has reviewed the P/O Recommendations report and/or requisitions created by the P/O Recommendations report, they can initiate an Inter-Facility Transfer using a single process that creates both an out-bound sales order, which is inserted into the shipping facilities normal order processing operations, and a purchase order to track the in-bound goods at the receiving facility.
The transfer process may be started from the Purchase Order Entry program or from the Requisition Management Screen. This flexibility allows the operator to simply enter a P/O for the items to be transferred, or to take advantage of the more automated purchasing methods that the system provides. In either case the operator creates a purchase order in the destination location for the items to be transferred. The vendor used on the P/O is a special vendor record that is used only for processing "IFT” transactions.
When the IFT vendor is selected in either the Purchase Order Entry or the Requisition Management program, the system recognizes that an IFT transaction is being processed. The system then displays a list of the valid Inter-Facility Transfer destination addresses which have been set up in the system. The operator selects the appropriate destination address for the shipment (the ship to address that the product should be delivered to) from the list. The operator then specifies the location that the product should be shipped from. Once the operator has selected the destination address and the source location for the transfer, the operator enters the quantities and items to be transferred and saves the new P/O. As the purchase order is saved, the system creates a purchase order in the location where the transferred goods will be received and a sales order in the location from which the goods will be shipped out.
The Purchase Order created by the system is used to track the in-bound shipment at the receiving facility. The quantity being transferred is added to the "On Order" quantity in inventory in the destination location to allow sales people in this location to see that product is in-bound. The existence of the in-bound purchase order in the destination location also affects the Purchase Order Recommendations report so that operators can correctly determine inventory requirements in the destination location.
The Sales Order created by the IFT system is identified as a type "L" sales order. This type of sales order is processed through the normal order fulfillment process and shipped out. The shipment of goods against a type "L" sales order produces a special type of invoice record called a “Shipper". A Shipper invoice does not update sales history or get posted to the General Ledger during the Sales Posting process, as the merchandise being shipped out is still the property of your company. When a Shipper invoice is processed the system adds records for each of the items being shipped to the Pending file, and these Pending records are used to track the items while they are in transit to the destination location. The Pending file can be thought of as a temporary inventory location used to track items which belong to your company but which are not physically on hand in any of the warehouse locations maintained on your system (for more information about the Pending file and the types of transactions that are processed using this file please see the Return to Vendor documentation). Each Inter-Facility Pending record is assigned a type of I (inter-facility transfer). This record type is used to identify the transfers that are in process, and it is also used to control how the IFT pending records can be processed.
The sales orders and the purchase orders produced by the IFT system can both be viewed using the standard Lookup and Inquiry programs available on the system. This allows both sales and purchasing personnel to obtain up to date information about all in-bound and out-bound shipments including IFT transfers.
When the goods being transferred arrive at the receiving facility the shipment is received in the same way that normal inventory receipts from the company's vendors are processed. Since the system generated the purchase order and sales order at the same time, the two records have been linked and the system can automatically process the transaction.
When an IFT Purchase order is received in the Purchase Order Receipt program the system automatically:
1. Updates the status and open quantities of the IFT Purchase Order based on the items being received.
2. Increments On-hand inventory for the items received. The transferred items are received at the average cost of the items in the destination warehouse.
3. Writes Inventory transactions to the inventory transaction file (F91) to record the receipt of the merchandise in the destination location. These inventory transaction records have a type of RI (Return to Inventory) and they store the cost of the item in the destination location at the time of the receipt in the previous and new unitcost fields of the record, and the cost of the item in the Pending file in the cost field of the record. If there is a difference between the cost of the item in the destination location, and the cost of the Pending record being received or closed out, a journal entry is made for the extended difference. This journal entry is made to the inventory account for the item and to the Gain or Loss Returns to Inventory Account (Autopost 670). This logic ensures that a transfer of inventory will not adjust the average cost of the item (the average cost is only adjusted when the item is purchased from a third party vendor or when the item is built using the Shop Order System).
4. Updates the Pending records created when the IFT sales order was invoiced based on the items and quantities received. The system updates the cleared quantity in each pending record (closes them), based on the quantity received against each IFT Purchase Order line.
If the system has been set up to automatically post inventory receipts to the G/L Inventory and Inventory Liability accounts, the system skips this posting procedure when an IFT receipt is processed (only the difference in the item cost in Pending and in the destination location is posted during an IFT receipt).