13 Work with Transfer Orders
This chapter contains these topics:
You enter a transfer order to relocate inventory between branch/plants within your company The transfer order program does the following:
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Creates a purchase order for the shipping location that represents the supplier
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Creates a sales order for the receiving location that represents the customer
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Processes the inventory amounts on the transfer order as a formal purchase and sale of goods
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Creates documents, such as pick slips or invoices, that are necessary to complete the transfer
The default document types assigned in the processing options of the Transfer Orders program (P4242) are ST for the sales order and OT for the Purchase order. Because of this a transfer order is often referred to as an ST/OT.
By processing the sales order through Shipment Confirmation and Sales Update, the on-hand quantity for the shipping location is decremented and journal entries are written to reflect this reduced inventory and the increased amount in the Inventory Intransit account. Entries may also be written to the Interbranch Revenue and the Cost of Goods Sold accounts.
By processing the purchase order through Receipts and Voucher Match, the on-hand quantity for the receiving location is incremental and journal entries are written to reflect this increased inventory and the reduced amount in the Inventory Intransit account. The Inventory Intransit account will then net to zero.
When transferring inventory from one branch to another, each item is usually transferred at its cost. Since the cost of an item may be different within each branch, the cost used for the transfer order is taken from the shipping branch. There may be a markup on the transfer that is defined by the shipping branch in the branch sales markup table. See Section 13.1, "Set Up for Transfer Orders" in this chapter.
13.1 Set Up for Transfer Orders
Verify that the following set up is in place before calling the transfer orders program:
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Branch/Plant Constants. Each Branch/Plant must have a valid address book number defined in the Branch/Plant Constants file.
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Customer Billing Instructions. The Sold-to Address on the sales order comes from Customer Billing Instructions of the receiving branch.
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Order Line Types. The Line Type used for an order transfer must be set up as follows:
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GL Interface set to Y
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Inventory Interface set to Y
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A/R Interface set to Y. This must not be set to N since it will cause an out of balance batch to be created. To bypass A/R, use the processing option on Sales Update to turn off the A/R interface.
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The A/P Interface flag can be set to either Y or N since it does not influence whether an Accounts Payable Ledger record is written or not.
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Order Activity Rules. These must be set up for both combinations of order type/line type for Sales Order and Purchase Order Entry. Invoices are not normally printed for transfer orders, so this step may be eliminated for Sales Order Processing for an ST order type.
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Transfer Orders Processing Options (P4242). Ensure that the appropriate line type and order types are defaulted into the program. If a markup is to be applied ensure that processing option 34 is set:
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Enter 1 to use the cost plus any transfer cost markups for the sales order price.
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Enter 2 to use the Base Price file (F4106).
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If left blank, the cost alone will be used to price sales order lines.
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Sales Update Processing Options (P42800). It is recommended that a special version of Sales Update be created for transfer orders. If you are not printing invoices then this should be copied from the Assign Invoice No. Final version. Do not change the data sequencing and ensure that the processing options for A/R Invoice date (2) and General Ledger date (4) are not set to 1. If Shipment Confirmation has been run, then the Actual Shipment date can be used for these options. To bypass updating Accounts Receivable set processing option 14 to 1. See Section A.4, "Bypassing Updating A/R."
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Branch Sales Markup Table. To apply a cost markup to an item when creating a transfer order, the Branch Sales Markup table must be set up on menu G4241 and processing option 34 set appropriately for the Transfer Orders program.
13.1.1 AAI Setup For Transfer Orders
Special setup must be done with AAIs to get the correct account distribution when processing a transfer order. First as a reference we will look at the standard AAI setup and accounting entries for sales and purchase orders, then we will look at the setup required when using transfer orders.
13.1.1.1 Standard AAI setup for Sales and Purchasing
Sales:
| AAI | Account | Debit | Credit |
|---|---|---|---|
| 4230 | Revenue | $XXX | |
| RC | Accounts Receivable | $XXX | |
| 4240 | Inventory | $XXX | |
| 4220 | Cost Of Goods Sold | $XXX |
Purchasing Receipts:
| AAI | Account | Debit | Credit |
|---|---|---|---|
| 4310 | Inventory | $XXX | |
| 4320 | Received Not Vouchered | $XXX |
Voucher Match:
| AAI | Account | Debit | Credit |
|---|---|---|---|
| 4320 | Received Not Vouchered | $XXX | |
| PC | Trade Payable | $XXX |
Now we will look at the AAI setup and accounting entries for a transfer order. These can differ depending on whether the item is transferred at cost or is transferred at cost plus a markup. For this example, we will be bypassing A/R by setting processing option 14 of Update Customer Sales (P42800).
13.1.1.2 AAI setup for Transferring Inventory At Cost
If the item is transferred at cost, then Revenue, Accounts Receivable, and Cost of Goods Sold may not apply. AAIs for Revenue (4230) and Accounts Receivable Trade (4245) can be netted against each other as shown below. Inventory is credited (reduced) and Inventory Intransit is debited (increased) using the Inventory (4240) and Cost of Goods Sold (4220) AAIs. With A/R bypassed the system uses AAI 4245 (AR Trade) instead of the RC AAI, and creates a batch type of G. No Account Receivable Ledger record (F0311) is created.
Sales - Shipping branch:
| AAI | Account | Debit | Credit |
|---|---|---|---|
| 4230 | Direct this revenue AAI and the A/R Trade AAI (4245) ti the same Suspense account | $100 | |
| 4245 | Direct this AR Trade AAI to the same Suspense account as 4230 above | $100 | |
| 4240 | Inventory | $100 | |
| 4220 | Direct this Cost Of Goods Sold AAI to the Inventory Intransit account | $100 |
Depending on whether a voucher match will be performed with the receipt or not, the Purchasing AAIs will need to be set up differently:
Purchasing - Receiving branch when voucher match will be performed
For the receiving branch, a receipt is processed at the time the goods are physically received. Inventory is debited (increased) and Received Not Vouchered (temporary liability) is credited (increased).
Purchasing Receipts:
| AAI | Account | Debit | Credit |
|---|---|---|---|
| 4310 | Inventory | $100 | |
| 4320 | Received Not Vouchered | $100 |
Assuming that this transfer does not have to be paid for, the Received Not Vouchered entry must be offset. This can be done by adding a line to the Purchase Order in the Voucher Match program (P4314). The new line should reverse the original line with the Item/Account entry being changed from the item number to the account number of the Inventory Intransit account.
After both lines are voucher matched, there will be zero dollar Accounts Payable Ledger record (F0411) created. The Trade Payable account nets to zero, whilst the credit to the Inventory Intransit account from the added expense line offsets the debit created to this account by Sales Update.
Voucher Match:
| AAI | Account | Debit | Credit |
|---|---|---|---|
| 4230 | Received Not Vouchered | $100 | |
| PC | Trade Payable | $100 | |
| Added Negative Line | |||
| (none) | Inventory Intransit | $100 | |
| PC | Trade Payable | $100 |
Purchasing - Receiving branch when voucher match will not be performed
If a voucher match will not be performed after receipt, the Received Not Vouchered AAI can be directed to the Inventory Intransit account at the time of receipt, offsetting the debit entry to the Inventory Intransit account created at Sales Update by AAI 4220.
Purchasing Receipts:
| AAI | Account | Debit | Credit |
|---|---|---|---|
| 4310 | Inventory | $100 | |
| 4320 | Inventory Intransit | $100 |
With this setup, the accounting resolves satisfactorily, however the receipt creates a match type 1 record on the Purchase Order Receiver file (F43121) which shows up in open receipts. To exclude this record from further processing, set its Match Type to 5 using either World Writer or some other data file utility.
13.1.1.3 AAI setup for Transferring Inventory At Cost Plus
The shipping branch may want to charge the receiving branch a fee for transferring the inventory, in this example 10% of $100. This can be done by updating the branch sales markup table and setting the appropriate processing option on Transfer Orders (P4242). Since the shipping branch may want to hit the Interbranch Revenue and Cost of Goods Sold accounts, the AAIs in Sales Order must be setup accordingly.
Sales - Shipping branch:
| AAI | Account | Debit | Credit |
|---|---|---|---|
| 4230 | Interbranch Revenue | $110 | |
| 4220 | Cost of Goods Sold | $100 | |
| 4240 | Inventory | $100 | |
| 4245 | Direct this A/R Trade AAI to the Inventory Intransit account | $110 |
Purchasing Receipts:
| AAI | Account | Debit | Credit |
|---|---|---|---|
| 4310 | Inventory | $110 | |
| 4320 | Received Not Vouchered | $110 |
Voucher Match:
| AAI | Account | Debit | Credit |
|---|---|---|---|
| 4320 | Received Not Vouchered | $110 | |
| PC | Trade Payable | $110 | |
| Added Negative Line | |||
| (none) | Inventory Intransit | $110 | |
| PC | Trade Payable | $110 |
If the voucher match process is not being performed, use the same process as described above in the 'at cost' section.
13.1.2 What You Should Know About
| Topic | Description |
|---|---|
| Kit items | Kit items are not supported in the transfer order process. To enter an order for kits, use the regular sales or purchase order entry programs. |
| Work Orders | Use the Transfer Order Entry program (P4242) to create work orders in the Shop Floor Control system for a specific line type. Items with this line type can be manufactured in one branch before being transferred to another branch. The Sales Detail File (F4211) stores the work order number and type. |
13.2 Entering Transfer Orders
From Sales Order Management (G42), choose Sales Order Processing
From Sales Order Processing (G4211), choose Transfer Orders
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Complete the following fields:
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Ship From Branch
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Ship To Branch
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Item Number
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Quantity
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Complete the following optional field:
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Landed Cost
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Display the default values for the remaining fields by pressing Enter.
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Do one of the following:
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Accept the default values for all remaining fields
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Complete the default values in any remaining fields
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| Field | Explanation |
|---|---|
| Landed Cost | A user defined code (41/P5) that indicates the landed cost rule for an item. The landed cost rule determines purchasing costs that exceed the actual price of an item, such as broker fees, commissions, and so forth. You set up landed cost rules on Landed Cost Revisions. |
13.2.1 What You Should Know About
| Topic | Description |
|---|---|
| Import/Export | This program supports Import/Export Functionality. See the JD Edwards World Technical Tools Guide for more information. |
13.2.2 Changes to a Transfer Sales Order or Purchase Order
The sales order and purchase order created from a transfer order, are connected by the Related Order Number, Related Order Type, and Related Line Number fields in both the Sales Order and Purchase Order files. This is a "one-way" connection in that changes to the sales order are reflected on the purchase order whereas changes to the purchase order are not reflected on the sales order.
More specifically:
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Changes made to existing lines on the sales order with Transfer Orders (P4242) or Enter Orders (P4211) are reflected on the purchase order.
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Changes made to existing lines on the purchase order with Transfer Orders (P4242) or Change Orders (P43111) are not reflected on the sales order.
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Lines added to the sales order with Transfer Orders (P4242) are added to the purchase order.
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Lines added to the sales order with Enter Orders (P4211) are not added to the purchase order.
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Lines on the sales order that are split at Shipment Confirmation are also split on the purchase order.
13.2.3 Receipt Routing
Receipt routing can be used to track inventory that is in transit from one branch to another. After the branch processing the sales order has shipped the goods, they will be ready for receipt at the receiving branch where they can be processed with Enter Receipts by PO or Item (P4312). The goods can be tracked in a receipt routing operation (TRAN) before they are physically entered into stock (STK). When the receipt batch is posted, the appropriate journal entries are written.
Receipt routing can be initiated through processing options in the Shipment Confirmation program.
13.2.4 What You Should Know About
| Topic | Description |
|---|---|
| Entering an agreement number | To automatically find an agreement number, you can access the Agreement Search program from the agreement number field in the detail area. You must be in the ECS format to access this additional field.
If an agreement is assigned to a detail line, the system performs agreement processing. See About Agreement Management in the JD Edwards World Agreement Management Guide. |
| Entering configured items | The Sales Order Management system does not support transfer order processing for configured items. |
| Creating sales and purchase order records | The program creates records in the following tables:
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| Generating Automatic work orders | Consistent with standard sales order functionality, when you enter a transfer order with a detail line that has a line type set to generate a work order, typically W, a work order associated with the sales order generates automatically. Type 6 in the Option field to Exit to Work Order Header. |
| Transferring inventory | The Inventory Transfers program (P4113) is an alternative method that allows you to move inventory from one branch to another within the system immediately, lacking the tracking and accounting benefits provided by sales and purchase order processing. |
| Cost differences | If an item is stored within a branch in multiple locations with different costs and the item is soft committed at the time of transfer order entry, the system stores the cost at the primary location. When the item is hard committed, either at pick slip or ship confirm, and the cost is different within the location it is allocated to, the system updates the sales order to reflect the different cost but the system does not update the purchase order.
If the costing method is average cost and at the time of ship confirm the average cost changes, the sales order reflects the new average cost but the purchase order retains the original cost. You can use the Update Sales Order Cost/Price program (P42950) to update and sync costs between a sales transfer order and the associated purchase order. You can also set a processing option for the Shipment Confirmation program (P4205) to update the sales order price and purchase order cost when it updates the cost on a transfer order. |
13.3 Creating Transfer Orders in Batch Mode
You can create transfer orders in batch mode using the Batch Order Create program (P40211Z). On the processing option (40211Z), add appropriate data to the EDI or Z files. New purchase order fields in the F47011 or F47012, and F4001Z or F4011Z apply to transfer orders. The Purchase Order Business Unit (SYPOBU) is required for the creation of purchase orders for transfers. You must specify the receiving branch in this field in the inbound EDI Order Header file (F47011) or Batch Order Header file (F4001Z).