Getting Started with JD Edwards EnterpriseOne Inventory Management

This chapter provides an overview of JD Edwards EnterpriseOne Inventory Management and discusses:

• JD Edwards EnterpriseOne Inventory Management business processes.

• JD Edwards EnterpriseOne Inventory Management integrations.

• JD Edwards EnterpriseOne Inventory Management implementation.

JD Edwards EnterpriseOne Inventory Management Overview

JD Edwards EnterpriseOne Inventory Management is the basis of the supply chain. You must understand how to set up and manage inventory to effectively work with all the other programs in the JD Edwards EnterpriseOne systems. The JD Edwards EnterpriseOne Inventory Management system defines discrete inventory items, which enables you to manipulate inventory throughout the supply chain.

Stocking Features

Consider the types of inventory that you have, what you use them for, and where and how you store them. Also consider the company's needs based on the business activities and the requirements of the customers and suppliers.

Typically, the company maintains one or both types of inventory:

• Stock items

• Non-stock items

Stock items are stored products or parts that are ready for sale. Non-stock items are items that are used by the company, such as office supplies. Non-stock items may also include:

• Kit components

• Consignment items

• Customer supplies

• Standing order items

If the company stores both stock and non-stock items, you must determine the most efficient method to identify, store, and track them. You must also decide how to use the JD Edwards EnterpriseOne Inventory Management system to determine how to:

• Identify and store stock and non-stock items.

• Account for stock and non-stock items.

• Identify and track prices in multiple currencies.

• Identify and store items that require special handling such as refrigeration.

• Identify items that require quality analysis or testing.

• Determine obsolete items.

• Identify and account for broken or defective parts.

Item Identification

The following topics assist you in determining how you want to identify inventory items in the system.

Item Cross-Referencing

Typically, customers use several methods of identification when they order inventory. For example, assume that customers order inventory with their own part numbers or that vendors require that you order items using their part numbers. Using the JD Edwards EnterpriseOne Inventory Management system, you can establish these numbers as cross-reference numbers that are interchangeable on forms and reports or during transaction processing.

Cross-referencing is also useful if you have contracts that require parts or items from a specific customer. For example, sometimes items that are used for government contracts must be kept separate in the storage, manufacturing, and accounting processes.

Item Locations

The JD Edwards EnterpriseOne Inventory Management system enables you to track the items through a vast number of item locations that you created in the system. The branch/plants can represent anything from warehouses to stores to trucks.

Each branch/plant can define its own set of rules, which enable you to separate divisions of universal items for which you can implement unique rules, costs, prices, and so forth. Within each branch/plant, you can create locations online that resemble the structure of the physical locations (for example, aisles, bins, and shelves) within the branch/plant. For example, you can define locations by classifying them into groups that accommodate:

• Consignment items.

• Items requiring rework or repair.

• Returned items.

• Special items belonging to a particular customer.

After you establish item locations, you can use the information to:

• Verify specific locations

• Display item descriptions

• Review available quantities

• Review lot statuses

After you establish a branch/plant, you can further define it by identifying locations, which include zones, aisles, bins, lots, and so on.

Lots

You can identify and segregate inventory by lots within locations for special lot control or layered costing. This feature enables you to provide unique descriptions, cost information, and expiration dates. You can:

• Assign a lot number to an item or have the system assign it upon receipt of the item.

  Lot numbers are frequently used to track inventory items. Tracking by lot numbers enables a company to manage inventory in situations such as a manufacturer's recall or to rotate perishable product.

• Place a lot on hold when a problem occurs within the lot.

• Assign a status to a lot, for example, to indicate that it is in quarantine or inspection.

• Review transactions by lot.

• Identify perishable lots so that you can sell the oldest goods first.

• Track items that were bought or produced at the same time in case you have to retrieve those goods from the customers.

When a car manufacturer must recall a model for repairs to a component, it is typically due to a defect in one individual component of the car. With lot control, the company can identify the specific lots that are affected by the defect, the cars containing the lots, and the consumers who own the cars. Lot control enables a company to precisely identify which manufactured items contain any discrete component by lot number.

Lot processing enables you to manage and maintain information about groups of items. Often, a lot consists of a group of items that are components of a final product (for example, parts of a bicycle).

After you determine how to store the inventory, you must set up physical locations to use the available storage space. A physical location, also known as an item location, is where you actually store an item. You must also determine how to identify item locations and lots in the system to enable you to locate items quickly and perform daily operations efficiently.

Physical and Logical Warehouses

If you typically receive large shipments of items that take up a lot of space, you can distribute the item into physical and logical warehouses and use the JD Edwards EnterpriseOne Inventory Management system to track each item. The following topics define physical and logical warehouses.

Physical Warehouses

Using the JD Edwards EnterpriseOne Inventory Management system, you can maximize the dimensions and layout of the physical warehouse to:

• Use overflow areas more efficiently.

• Assign locations.

• Track work in process.

• Identify and track items in transit.

• Identify similar items.

Logical Warehouses

A logical warehouse is a location that does not physically exist. You designate a logical warehouse to resemble an actual physical warehouse, and define its locations in a format that fits the needs. You can define locations for:

• Damaged goods

• Demo inventory

• Consigned items

• Customer inventory

• Returns

• Rework

• Expensed inventory

Additionally, you can define pseudo locations that represent physical locations for products that you sell but do not stock, such as products that are stocked at the supplier's facility and shipped from there.

Item Counts

You can use the JD Edwards EnterpriseOne Inventory Management system to identify discrepancies between the online amounts and the cycle and tag counts. You can conduct as many cycle and tag counts as you need at any time. You also can:

• Print count sheets.

• Enter and verify counts.

• Review variances online or by report.

• Update correct counts.

You can quickly access this quantity information for inventory:

• On hand

• Committed to orders

• On back order

• On purchase orders

You can use both interactive and batch capabilities to compute reorder points and quantities.

Item Costs

Maintaining accurate and complete records on the value of inventory is one of the major concerns of most businesses today. With automatic unit cost computation, you can maintain an unlimited number of costs by item and location. The JD Edwards EnterpriseOne Inventory Management system can automatically compute weighted average and last-in costs after goods are received or adjusted.

The JD Edwards EnterpriseOne Inventory Management system, with its variety of cost bases, can also help you maintain appropriate valuation of the inventory. Various methods of valuation can help you take into account differences in value resulting from:

• Age

• Changing costs

• Design changes

• Technology changes

With ABC Analysis, you can identify the items in greatest demand and most profitable inventory. The ABC Analysis report details total sales, gross margin, or on-hand value for each item for one or all locations.

Kits and Components

A kit is not a discrete inventory item. A kit consists of a number of discrete items that are sold together as a unit. A computer system is a good example of a kit: the entire system is not an inventory item but the components of the system are inventory items. You can group these components as one kit for a specific time or purpose, and then regroup them as a different kit as necessary. The kit is never an inventory item; rather, it is based on a relationship among other inventory items.

To better understand kits, consider the trend toward mass configuration in industry. Mass configuration enables consumers to configure anything, from electronic systems to automobiles, from a vast list of component parts. Each kit that is sold can be unique, even though all its component parts are standard. Mass configuration offers consumers flexibility in their purchases.

Supplemental Data

You might need to store item information that is not included in the standard master tables. This additional information is supplemental data.

You can use supplemental data at either the item master level or the branch/plant level. You define types of supplemental data for inventory items to specify categories of additional information and the specific information that you want to track for each category.

Examples of supplemental data include:

• Quality performance information.

• Legal descriptions.

• Repair and replacement records.

• Government procurement information.

• Hazardous material regulations.

• General remarks.

See JD Edwards EnterpriseOne Financial Management Application Fundamentals 8.12 Implementation Guide

Item Numbering and Description

The JD Edwards EnterpriseOne Inventory Management system provides multiple methods of identifying items. You can use actual item numbers, numbers that you designate, or a combination of both. Actual item numbers are numbers that identify pertinent information about an item such as:

• Material used.

• Year produced.

• Specific contract.

• Special processes of manufacture.

• Country of origin.

• Tests or quality analyses that are performed.

Each item can have up to three inventory item numbers:

• Primary number.

• Secondary number (for vendor, manufacturing, or industry standards).

• System-assigned number.

You can use the cross reference capabilities for an unlimited item identifiers within the system.

In addition to identifying items numerically, you can describe each item with information such as:

• Standard description.

• Technical description with specifications.

• Warning message.

• Vendor information and availability.

You can use any of the item descriptions or numbers interchangeably on forms, reports, or in transaction processing.

Container Management

Companies frequently sell product in containers that must be returned. A propane tank is an example of such a container. When a company sells propane in a returnable container, the consumer buys only the fuel and not the container. Because containers are of high value and the company maintains ownership of them even when they are in the possession of the customers, it is essential that you carefully track container transactions.

When companies conduct this type of transaction with other companies, the buying company generally does not provide the initial tanks or containers. The selling company provides the containers and charges a deposit for them. As containers move back and forth as full and then empty, the deposits are tracked and increased or decreased as necessary. Over time, additional deposits and varying deposit prices contribute to the complexity of the transactions. The JD Edwards EnterpriseOne Inventory Management system addresses the challenges of managing containers.

Container management integrates with the JD Edwards EnterpriseOne Procurement system and the JD Edwards EnterpriseOne Sales Order Management system to:

• Extract all information concerning container transactions from the other systems and maintain this information in tables that are specific to container management.

• Track the movement of both empty and full containers.

• Track customer deposit or rental charges for containers.

• Determine when customers need to be invoiced for deposits and credited for the return of containers.

• Print invoices for deposit and rental fees and credit memos for refunds.

• Enable you to review container balance and customer deposit information and print the necessary reports.

Inventory Interoperability

Interoperability among different products is key to successfully implementing the seamless flow of data among the systems. The interoperability function provides an interface that facilitates exchanging transactions with external systems. Interoperability in the JD Edwards EnterpriseOne Inventory Management system includes functions for inbound and outbound transactions.

JD Edwards EnterpriseOne Inventory Management Business Processes

We discuss these business processes in the business process chapters in this implementation guide.

Item Classification

Items can be classified into groups. The JD Edwards EnterpriseOne Inventory Management system provides for numerous purchasing, sales, and distribution classifications. Using these classifications, you can report on purchasing or sales activity using many different facets of item characteristics. These classifications are also used to determine how products move through or reside within the warehouse.

Unit of Measure Conversions

Items can be purchased and sold in many different package sizes. The system enables you to define package size and the relationships among packages. For example, a pallet can be expressed as each or as cases based on user-defined conversion tables. The system performs standard conversions, such as pounds to ounces or eaches to dozens.

Dual Units of Measure

A unit of measure that does not have a fixed conversion is called a dual unit of measure. You can maintain inventory and perform transactions for items in two units of measure. For example, you specify a dual unit of measure for an item that is sold by quantity but purchased by cost or priced by weight. Similarly, a transaction can use a dual unit of measure for which a standard conversion exists. For example, if an item's unit of measure is weight, you can consider a transaction in tons or pounds to be a dual unit of measure. In this case, the dual unit of measure is the unit of measure that is used on item ledger records and item balance records for the dual quantity.

These order entry programs enable you to enter either the transaction quantity that is related to primary unit of measure or the transaction quantity that is related to secondary, dual unit of measure:

• Purchase Orders (P4310)

• Sales Order Entry (P4210)

• Manufacturing Work Order Processing (P48013)

A standard conversion is used to determine the other quantity. You can set tolerance limits and use a picking option to specify whether the picking process is based on the primary unit of measure or the dual unit of measure. You can also use the picking option for inventory commitments to specify which unit of measure to use for commitment when inventory for a sales order is hard committed.

Manufacturing Information

You can define the elements of items to assist in the manufacturing process. This information can enhance inventory planning and leadtime forecasting. As companies move toward leaner inventories, such forecasting is critical to successful operations. For example, in just-in-time systems a stock-out can cripple a manufacturing process. Accurately forecasting completion leadtimes and material requirements is essential to optimizing such a process.

Item Grade and Potency Information

Grade and potency are closely monitored qualities in industries such as food and drug manufacturing. These qualities must be recorded and tracked as components are received. In many cases, recording and tracking processes are strictly regulated, and noncompliance can result in stiff penalties. Furthermore, regulatory agencies require extensive documentation. The JD Edwards EnterpriseOne Inventory Management system enables you to track and document quality requirements.

Inventory Transactions

Companies use inventory transactions to move items within and among their facilities. The JD Edwards EnterpriseOne Inventory Management system defines inventory transactions as:

• Issues

• Adjustments

• Transfers

Issues

Issues are typically used to remove inventory from a location. An issue can be used in each of these situations:

• Damaged goods.

  Product can be damaged. You can issue this product to a loss location or account.

• Marketing demonstration.

  A sales representative may require an inventory item for demonstration purposes during the sales cycle. To maintain accountability, this item can be issued to the sales representative.

• Internal use.

  Some businesses need to remove product from inventory for internal use. For example, an oil company might use product for its delivery fleet. You can use an issue to move an item from inventory to internal disposition.

Adjustments

Adjustments are used to reconcile discrepancies between physical inventory counts and on-hand system quantities. You can use an adjustment in these situations:

• Shrinkage.

  Items occasionally disappear from inventory through theft or loss. Adjustments can be used to document these losses.

• Unrecorded gain.

  Sometimes a missing item reappears. Adjustments can be used to document the gain in inventory.

• Initial balances.

  When you are creating records for a new warehouse, adjustments can be used to record initial inventory levels.

Transfers

A transfer documents the movement of an item. You can use a transfer in these situations:

• Movement from location to location.

  When you must move an inventory item between locations in a warehouse or on the shop floor, you can make a transfer to document this type of movement.

• Movement from vehicle to location.

  Product movements from vehicles to locations in a warehouse are common. You can use a transfer to track this type of movement.

• Movement from plant to plant.

  Inventory movements among facilities must be recorded to accurately maintain inventory records. You can use a transfer for this type of movement.

Physical Inventories

To be competitive on a global scale, companies must maintain accurate inventory. Companies that do not maintain accurate inventory can lose:

• Customers due to backorders and untimely deliveries.

• Working capital that is tied up in unnecessary stock.

• Profits due to costly interruptions in production runs.

The JD Edwards EnterpriseOne Inventory Management system provides two methods for conducting periodic physical inventory reconciliations:

• Cycle count

• Tag count

Cycle Count

Use a cycle count to periodically count individual items. Items are selected, counted, and reconciled with system records. Use a cycle count for costly or fast-moving items that require frequent accountability.

Tag Count

A tag count is more detailed than a cycle count. During a tag count, every item in a facility is counted by its location. The tag count is appropriate for a full scale, end-of-the-year physical inventory.

JD Edwards EnterpriseOne Inventory Management Integrations

This flowchart illustrates how the JD Edwards EnterpriseOne Inventory Management system integrates with other JD Edwards EnterpriseOne systems:

JD Edwards EnterpriseOne Inventory Management integration with other systems

This diagram illustrates how the JD Edwards EnterpriseOne Inventory Management system integrates with other systems:

System integration with manufacturing systems

We discuss integration considerations in the implementation chapters in this implementation guide. Supplemental information about third-party application integrations is located on the Oracle | Peoplesoft Customer Connection website.

The JD Edwards EnterpriseOne Inventory Management system stores item information for the JD Edwards EnterpriseOne Sales Order Management system, the JD Edwards EnterpriseOne Procurement system, and manufacturing systems. It also stores sales and purchasing costs and quantities that are available by location, and places holds on locations from which you do not sell items.

You update the general ledger inventory account balances with any change in inventory valuation, count variances, or movement.

The JD Edwards EnterpriseOne Inventory Management system integrates with the following JD Edwards EnterpriseOne systems:

Electronic Data Interchange

Electronic Data Interchange (EDI) is the computer to computer exchange of business transactions such as purchase orders, invoices, and shipping notices in a standard format.

The Data Interface for Electronic Data Interchange is an application interface containing interface files, tables, and programs. The Electronic Data Interchange system works with third-party translation software that translates EDI standard data into a JD Edwards EnterpriseOne flat file format so that the application software can manage the data.

When you receive documents, the third-party translation software:

• Retrieves the data using network communications.

• Translates the data from EDI standard format to JD Edwards EnterpriseOne application table format.

• Moves the translated data into the JD Edwards EnterpriseOne EDI flat files.

The inbound conversion program moves the translated data into the JD Edwards EnterpriseOne EDI interface tables. The JD Edwards EnterpriseOne Electronic Commerce system then moves the data into the appropriate application tables. When you send documents, the system performs these procedures in reverse order.

JD Edwards EnterpriseOne Inventory Management Implementation

This section discusses the global implementation steps for the JD Edwards EnterpriseOne Inventory Management system.

In the planning phase of the implementation, you should use all sources of information, including the installation guides and troubleshooting information. A complete list of these resources appears in the preface in About This Documentation with information about where to find the most current version of each.

When determining which electronic software updates (ESUs) to install for JD Edwards EnterpriseOne Inventory Management, use the EnterpriseOne and World Change Assistant. EnterpriseOne and World Change Assistant, a Java-based tool, reduces the time required to search and download ESUs by 75 percent or more and enables you to install multiple ESUs at one time.

See Software Updates and Tools 8.96

For information about the Rapid Start solution for implementation of JD Edwards EnterpriseOne Inventory Management, review the documentation available.

See Rapid Start Solution.

See Also

About This Documentation Preface

Global Implementation Steps

This table lists the implementation steps for JD Edwards EnterpriseOne Inventory Management: