Purchase Order Receiving Overview

Purpose: Use purchase order receipts to record the receipt of inventory on open purchase orders.

For more information:

• Entering Purchase Orders (MPOE)

• Maintaining Purchase Orders

• Purchase Order Inquiry (MPOI)

You can record receipt:

• in the warehouse, to record stock receipts immediately as merchandise is being brought into the warehouse.

• as an office function, where receipts are entered after the merchandise is put away.

Docking stock: You have the option of recording a purchase order as "docked" before you receive it. A docked status indicates that you have received inventory associated with the purchase order, but have not yet confirmed items or quantities. You can dock a purchase order just once or many times for different deliveries. Until you actually receive the purchase order, inventory inquires do not indicate that any of the associated inventory is on-hand in your warehouse.

A standard process might include:

• dock the purchase order

• count the merchandise and perform quality control

• receive the purchase order

Docking stock provides a record of when the inventory actually arrived at your warehouse, as opposed to when you completed quality control and recorded the receipt. This can be helpful if there is a question on whether the vendor delivered the merchandise on time.

If you dock stock, the system assigns a purchase order receipt control number at the time you dock it. In this case, you cannot use a purchase order receipt control to assign costs to a group of purchase orders.

For more information: See Docking Purchase Orders.

Batching your receipts for control purposes: A control number is assigned to each group of receipts entered. If you are receiving into suspense, you can track suspended inventory by control number and you can transfer an entire control group from suspense to inventory. You can also distribute any overhead costs associated with the receipt across all items received against purchase orders in the control group. (However, you cannot use these features if you dock stock.)

Receiving merchandise into suspense and transfer it to inventory at a later time: This gives you the opportunity to inspect the merchandise before it becomes part of your inventory.

Receiving merchandise into a pending warehouse: Pending warehouses are warehouses where you can place inventory that is on its way to its final destination, for example, a staging area.

• Pending putaway warehouse: Use a pending putaway warehouse to temporarily store saleable inventory on its way to its final destination warehouse. Inventory received into a pending putaway warehouse retains its on order status so that the inventory is visible in PO Layering, yet the system recognizes the inventory as being in a warehouse location so that you can manipulate it.

• Pending transfer warehouse: Use a pending transfer warehouse to temporarily store non-saleable inventory to determine if the inventory should be moved to its final destination warehouse or sent back. Inventory received into a pending transfer warehouse does not retain its on order status; the inventory is not visible in PO Layering. Stock moved into or out of a pending transfer warehouse will not increase or decrease the on order quantity in the pending transfer item warehouse.

You can define a warehouse as a pending warehouse using the Working with Default Warehouse Locations (WWDL) menu option.

When you place stock in a pending putaway warehouse, the system creates a record in the Pending Putaway Detail file. See Pending Putaway Overview for more information.

Using Suggest Warehouse Placement to have the system recommend the locations where the inventory should be placed: Values in the System Control file determine how this feature works. If you use a staging warehouse to receive inventory before you put it away, the system would suggest locations within your staging warehouse; the staging location indicates where the stock should ultimately be placed. See Working with Default Warehouse Locations (WWDL) for information on using a staging warehouse.

Additional functions during Purchase Order Receiving:

• print bar-coded labels containing the placement quantity and the location where the merchandise is stored.

• print license plate tracking bar-coded labels if you use radio frequency devices to manage inventory.

• add, change or view the messages associated with the purchase order, a line item on the purchase order, or with the vendor.

In this topic:

• Warning about Conflicting Jobs

• Inventory Costing Methods

• Using Receipt Controls

• Distributing Overhead Costs

• Receiving Inventory

• Suggest Warehouse/Location Placement

• Standard Warehouse/Location Placement

• Staging Warehouse/Location Placement

• Receiving Overages and Underages

Warning about Conflicting Jobs

A warning pop-up window displays automatically when you select this option if Pick Slip Generation or Location Replenishment are active (in the Active Procedures file).

Reason: The warning pop-up window displays because each of these options affect inventory at the location level in the warehouse, as does the current option you are trying to use.

Responding to the Warning: Press Enter to use the option anyway or press F12 to receive the items into inventory at a later time when the other jobs are finished running.

Active Procedure Warning Replenishment is active. Press ENTER to continue. F12=Cancel

Active Procedure Warning   Pick Slip Generation is active. Press ENTER to continue. F12=Cancel

Note: The warning pop-up window(s) displays again if you pressed Enter at the first warning window to perform the receipt, then pressed F9 to accept your entries. You can press Enter to continue or F12 to wait to receive the inventory until the conflicting job has finished.

Inventory Costing Methods

Available methods: The system supports the following three methods of determining the cost of inventory:

• Average costing

• Standard costing

• FIFO costing

The key differences between the methods are:

• Average costing: The system recalculates average cost when the items are received and updates the SKU file. The prorated amount of any overhead charges for the receipt and any additional item charges will be included in the average cost calculation. See Distributing Overhead Costs.

• Standard costing: The system does not recalculate standard cost at purchase order receipt.

• FIFO costing: The system creates a new FIFO cost layer for the receipt quantity, and decreases the on-hand quantity of this layer through sales or other transactions until the quantity is exhausted.

Note: The system will always perform the average costing calculation, even if you have selected another costing method. Because the system retains each item's computed average cost, you can change from standard to average costing at any time.

The Costing Method (A25) value in the System Control file controls the costing method for your company. See below for more information on each method.

Average Costing

When you use average costing, the system averages your costs over both the current on-hand inventory plus the incoming receipt. In addition, any overhead charges associated with the receipt, any additional charges for the item, and any discounts are included in the costing calculation. The system performs the costing calculation when you place the merchandise into inventory.

• The calculation is performed at receiving if you receive directly into your on-hand inventory

• The calculation is performed during Place Suspended Stock if you receive inventory into suspense. This function is used to transfer merchandise from suspense to inventory.

The system uses the following calculation to determine the average cost of an item:

(quantity on-hand x old average cost) + (quantity received x new purchase cost) / (quantity on-hand + quantity received)

The new purchase cost represents the actual cost at which the item was purchased plus any additional charges.

Standard Costing

When you use the standard costing method, you enter and maintain all cost information; the system does not update any cost information automatically.

The system retains the standard cost for each item, the cost at receiving for each receipt, and the cost at payables for each item invoiced. Overhead charges for a receipt control group, a purchase order or a vendor/item are not included in the cost at receiving. The system always performs average costing calculation and retains each item's average cost, even when you use the standard costing method.

You can update the standard cost with the landed cost (primary vendor price + additional charges) through:

• Updating Standard Cost (MSCC)

• the Update Standard Cost periodic function (see System Operations Working with Periodic Functions (WPER))

• creating your own query reports to compare the standard cost of an item against its current cost, and making any necessary adjustments manually.

FIFO Costing

When you use FIFO Costing, the system tracks the cost and the quantity for each receipt in a warehouse separately. For example, you receive 10 units on 1/10 at $1.00, then receive 5 units on 1/20 at $2.00. The system uses a cost of $1.00 for the first 10 units of the item you sell (or if you decrease the on-hand quantity through any other transaction); it then uses a cost of $2.00 for the next 5 units.

To switch to FIFO costing, you must run a conversion program; you cannot change by simply changing the setting of the Costing Method (A25) system control value. The conversion is necessary because FIFO costing requires additional detail files to track the unit costs for each transaction, which may be derive from different FIFO layers.

Receipt Cost Calculation

The system includes the following in the receipt cost calculation:

• cost of item

• discounts: You can include the following discounts in the receipt cost calculation:

• primary vendor discount: (the value defined in the Discount % (Primary discount percentage) field.

• additional vendor discounts: option 7 in Work with Vendors.

• vendor terms discount: the value defined in the Terms field. The Apply A/P Terms Discount Percent at Purchase Order Receiving (D76) system control value must be set to Y in order for the system to include the vendor terms discount.

• additional charges. You can include the following additional charges in the receipt cost calculation:

• purchase order additional charges: You can define purchase order additional charges at the Work with PO Header Estimated Charges Screen and Work with PO Detail Estimated Charges Screen.

• vendor item additional charges: You can define vendor item additional charges at the Work with Vendor Item Additional Charges Screen.

• receipt control additional charges: You can define receipt control additional charges at the Work with Additional Charges Screen.

• costing calculation method: The costing calculation method determines which amounts are included in the receipt cost calculation. You define the costing calculation method in the P/O Receipt Costing Calculation Method (A57) system control value.

• W (weight): the system calculates the receipt cost using the weight of the item/SKU.

• U (units): the system calculates the receipt cost using the units of the item/SKU received. Prorating costs by unit is not currently supported.

• C (cube): the system calculates the receipt cost using the cube of the item/SKU. Prorating costs by cube is not currently supported.

• blank (standard): the system calculates the receipt cost using the item cost plus any additional charges and discounts.

Weight Receipt Cost Calculation

If you use the weight method of averaging costs (W in the P/O Receipt Costing Calculation Method (A57) system control value), you must enter the total incoming weight of the shipment on the Create Purchase Order Receipt Control screen.

Note: To use the weight receipt costing method, the P/O Receipt Control # Entered (A56) and Allow Additional Costs to P/O Receipts (A60) system control values must be set to Y.

When a shipment is received, the receiving control number that is assigned represents the total number of purchase orders being received, the total cartons; and the total shipping weight, or the total cubic measurement of the shipment.

The system uses the total weight to determine a cost per pound for the receipts. The cost per pound is added to the purchase cost of each item received in the control group, based on the weight of each item and is included in the average costing calculation for each item. The item weight is defined in the Ship wgt. (Shipping weight) field in Work with Item/SKUs (fast path = MITM).

For example, if the cost per pound for the control group is 1.50 and an item weighs two pounds, an additional amount of 3.00 will be added to the purchase cost of the item when determining the cost at receiving and the new average cost.

1. The system calculates any discounts defined in Working with Vendors (WVEN) when the purchase order is created to determine the net cost.

See Merchandising Entering Purchase Orders (MPOE) for more information on how the system calculates the net cost during purchase order entry.

Discounts:

• the primary vendor discount

• additional vendor discounts

• the vendor terms discount

 

2. The net cost of the item is used to calculate the average cost, including any additional charges.

Additional charges: For the weight receipt costing method, the system includes:

• the commission percent and duty percent vendor item additional charges

• the purchase order additional charges if the Include PO Estimated Charges in Receipt Cost Calculation (G29) system control value is set to Y.

• the brokerage fee and freight charge receipt control additional charges

If a primary vendor discount is defined, the system calculates the additional charges based on the discounted cost. If any additional vendor discounts are defined, the system calculates the additional charges based on the non-discounted cost.

These calculations are used to determine the average cost of an item when additional charges are prorated by weight:

3. The cost per pound for the control group is determined if brokerage or freight additional charges were defined for the receipt control group on the Work with Additional Charges screen. The cost per pound is calculated as: overhead costs / total weight = cost per pound

4. The cost per pound is then multiplied by the ship weight (defined in the Ship wgt. (Shipping weight) field in Work with Item/SKUs) of the item to determine the additional cost: cost per pound x item/SKU weight = additional cost

5. Any vendor item charges (commission percent or duty percent defined in Working with Vendor Items (WVNI)) and exchange rate conversions (defined in Working with Currency (WCUR)) are calculated to determine the adjusted cost: net cost x rate of exchange x vendor item charges = adjusted cost

6. The New purchase cost is calculated by adding the additional cost to the adjusted cost: additional cost + adjusted cost + net cost = new purchase cost

7. The new purchase cost is used in the average cost calculation: quantity on-hand x old average cost) + (quantity received x new purchase cost) / (quantity on-hand + quantity received) = new average cost

 

Example: An example of how the system determines the average cost of an item when additional costs are prorated by weight is presented below.

overhead costs: brokerage = 8.00; freight = 12.00

total weight = 50.00

item/SKU weight = 2.00

net cost = 45.00 (50.00 - 10% for primary discount)

vendor item charges: commission = 5%; duty = 10%

old average cost = 50.00

quantity on-hand = 30

quantity received in Purchase Order Receipts = 25

 

Step 1: Calculate the cost per pound

overhead costs (8.00 + 12.00) / total weight (50.00) = cost per pound (.40)

Step 2: Calculate the additional cost

cost per pound (.40) x item/SKU weight (2.00) = additional cost (.80)

Step 3: Calculate the adjusted cost

net cost (45.00) x rate of exchange (1.00) x vendor item charge (5% + 10%) = adjusted cost (6.75)

Step 4: Calculate the new purchase cost

additional cost (.80) + adjusted cost (6.75) + net cost (45.00) = new purchase cost (52.55)

Step 5: Calculate the new average cost

[quantity on-hand (30) x old average cost (50.00)] + [quantity received (25) x new purchase cost (52.55)] / [quantity on-hand (30) + quantity received (25)] = new average cost (51.16)

Standard Receipt Cost Calculation

If you use the standard method of averaging costs (blank in the P/O Receipt Costing Calculation Method (A57) system control value), the system includes additional charges and discounts to the item cost to determine the receipt cost of the item.

Note: To use the standard receipt costing method, the P/O Receipt Control # Entered (A56) and Allow Additional Costs to P/O Receipts (A60) system control values must be set to N.

In order to include additional charges in the receipt cost of an item, you cannot use standard costing; instead you must define FIFO or AVERAGE in the Costing Method (A25) system control value.

1. The system calculates any discounts defined in Working with Vendors (WVEN) when the purchase order is created to determine the net cost.

See Merchandising Entering Purchase Orders (MPOE) for more information on how the system calculates the net cost during purchase order entry.

Discounts:

• the primary vendor discount

• additional vendor discounts

• the vendor terms discount

 

2. The net cost of the item is used to calculate the average cost, including any additional charges.

Additional charges: For the standard receipt costing method, the system includes:

• the purchase order additional charges if the Include PO Estimated Charges in Receipt Cost Calculation (G29) system control value is set to Y.

• the vendor item additional charges if the Default Vendor Item Additional Charges (I21) system control value is set to Y. This system control value defaults the vendor item additional charges to the purchase order; as long as the Include PO Estimated Charges in Receipt Cost Calculation (G29) system control value is set to Y, the system includes the vendor item additional charges in the receipt cost calculation.

If a primary vendor discount or any additional vendor discounts are defined, the system calculates the additional charges based on the non-discounted cost.

Note: Receipt control charges are not included in the standard receipt costing method.

3. The New purchase cost is calculated by adding the additional charges to the item cost: item cost + vendor item charges + purchase order charges) = new purchase cost

4. The new purchase cost is used in the average cost calculation: quantity on-hand x old average cost) + (quantity received x new purchase cost) / (quantity on-hand + quantity received) = new average cost

Using Receipt Controls

Purpose: You can group your receipts into batches and assign a control number to each batch if desired. This allows you to:

• Enter overhead cost information to have the system distribute the costs across items received against multiple purchase orders

• Track items placed into suspense by control number

The Create P/O Receipt Control Screen displays during Purchase Order Receipts when the feature is used, where you can enter your overhead cost information.

Important: You cannot use receipt controls to group purchase orders if you dock stock. See Docking Purchase Orders.

See Distributing Overhead Costs for more information on the system control values related to purchase order receipt controls.

Distributing Overhead Costs

Overhead costs: When you receive a shipment, you might incur additional costs that you want to distribute across the cost of all items received. These costs might include freight charges, duty charges, import charges, brokerage fees, commissions, surcharges or any other user-defined costs.

You can include overhead costs in the cost of an item by applying them to items:

• received on multiple purchase orders

• received on a single purchase order

• purchased from specific vendors

Prorating costs across multiple purchase orders: When overhead costs apply to multiple purchase orders, you can assign the purchase orders to a receipt control group. The system prorates the overhead costs across all items received on the purchase orders in the control group.

These system control values allow you to assign purchase orders to control groups and enter overhead costs:

• P/O Receipt Control # Entered (A56): When this system control value is set to Y, the system displays the Create P/O Receipt Control Screen and enables the system to assign a control number to each receipt group.

• Allow Additional Costs to P/O Receipts (A60): When this system control value is set to Y, the system allows you to advance to the Work with Additional Charges Screen, where you can enter the overhead costs associated with the purchase orders in the receipt control group.

• P/O Receipt Costing Calculation Method (A57): Use this system control value to define how to prorate costs across items at receipt. Valid values are Units (U), Cube (C), or Weight (W).

Important: If you dock purchase orders, you cannot use purchase order receipt controls to assign costs, because the system uses the receipt control number to track purchase order docking. See Docking Purchase Orders (MDPO) for information on docking stock.

Additional vendor/item charges: If the P/O Receipt Costing Calculation Method (A57) is W (weight), you can also define commission percent and duty percent overhead costs in Working with Vendor Items (WVNI). If the P/O Receipt Costing Calculation Method (A57) is C (cube) or U (unit), you can define any vendor item additional charge.

Additional PO estimated charges: You can also define overhead costs to apply to each detail line on a purchase order or to a specific detail line on a purchase order if the Include PO Estimated Charges in Receipt Cost Calculation (G29) system control value is set to Y.

Additional charge calculation guidelines: The table below presents the guidelines the system uses in determining the purchase order additional charges to factor into the cost of an item at purchase order receipt when using receipt controls.

PO Receipt Cost Calculation Method	PO Receipt Control Addl Charges (F7 when working with the receipt control)	Vendor Item Additional Charges (option 9 in WVNI)	PO Additional Estimated Charges (F16 when creating the PO or option 16 when maintaining)
Units (U) or Cube (C)	All types of additional charges apply, whether unit or percentage	All unit charges except duty (type D) apply All percentage charges apply	All, whether unit or percentage, if Include PO Estimated Charges in Receipt Cost Calculation (G29) is Y
Weight (W)	Only freight (type F) and brokerage (type B) apply, whether unit or percentage	Only commission (type C) and duty (type D) percentages apply	All, whether unit or percentage, if Include PO Estimated Charges in Receipt Cost Calculation (G29) is Y
Standard (blank)	none	All, whether unit or percentage, if Default Vendor Item Additional Charges (I21) is Y and Include PO Estimated Charges in Receipt Cost Calculation (G29) is Y	All, whether unit or percentage, if Include PO Estimated Charges in Receipt Cost Calculation (G29) is Y

Which costs are updated? The Average cost and the Last purchase cost in the SKU file are always updated when you receive a purchase order.

If you use FIFO Costing, the FIFO cost is always updated with the weighted average FIFO cost when you receive a purchase order.

The standard cost is not updated at purchase order receipt, regardless of the costing method you use.

Note: Additional charges you enter by pressing F15 when receiving a specific purchase order. Do not update any of the costs in the SKU file.

Additional costing factors: The following system control values control the discounts you factor into the Last purchase cost and the Average cost in the SKU file based on purchase order receiving:

• Apply A/P Terms Discount Percent at Purchase Order Receiving (D76): If this field is set to Y, the system the A/P terms code assigned to the vendor through Working with Vendors (WVEN), and subtracts the related discount percentage from the cost at receiving.

• Apply Discount to Manual Cost (D96): If this field is set to Y, the system subtracts any discounts assigned to the vendor.

Receiving Inventory

Receiving choices: You can receive merchandise:

• directly into inventory

• into suspense

• into a pending putaway warehouse

• into a staging warehouse

If you choose to receive new merchandise directly into inventory, the system updates inventory immediately, and the merchandise is available to be reserved and picked.

If you choose to receive inventory into suspense, inventory is not updated until the merchandise is transferred from suspense to inventory. Suspended merchandise is not available for reservation and picking.

If you receive into a pending putaway warehouse, the system creates a record in the Pending Putaway Detail file and creates a PO layering record for the "final destination" warehouse. The pending putaway detail record indicates the quantity to be placed in the "final destination" warehouse and the expected due date when the inventory will be moved.

If you receive into a staging warehouse, you would normally define the staging warehouse as non-allocatable, and the staging locations as non-pickable, to prevent the system from attempting to reserve or pick from the staging area.

You control whether merchandise can be received into suspense by completing the Allow Receipt to Suspense (A59) field in the System Control file. You can receive an entire purchase order into suspense, or only specific items. You determine how the inventory will be received during purchase order receipts.

When the entire quantity of the item is received, the purchase order detail line is closed. When the entire purchase order is received, the purchase order is closed. See Receiving Overages and Underages for information on special receipt quantities.

Receiving into inventory: When merchandise is received directly into inventory, it is available for reservation and picking immediately.

If you receive merchandise directly into inventory, the system:

• decreases the on-order quantity

• increases the on-hand quantity in the item warehouse and the item location

• recalculates the average cost

• performs vendor item analysis

• creates an Inventory Transaction History record

• If the Track Cost Changes (J69) system control value is set to Y, writes a record to the Cost Change Audit file. See Reviewing Item/SKU Cost History for more information

All or part of a purchase order can be received into inventory.

You can use the Suggest Warehouse Placement function to recommend the locations where the items should be placed when the inventory is received. See Suggest Warehouse/Location Placement.

Receiving into suspense: Placing merchandise into suspense can help you quickly move merchandise from the loading dock to a secured setting where it can be processed for quality control. When merchandise is received into suspense, it is not available for order fulfillment. The merchandise must be transferred from suspense to inventory using the Place Suspended Stock function.

If you receive merchandise into suspense, the following system updates occur at receiving:

• The On-order quantity for the item is reduced

• The In-suspense quantity for the item is increased

You can place any portion of a receipt into suspense.

When you receive into suspense, the system does not update:

• on-hand quantity

• average cost

• vendor item

• Cost Change Audit file

These updates occur when you transfer the merchandise from suspense to inventory using the Place Suspended Stock function.

Inventory can be moved out of suspense by Item/SKU, by Purchase Order number, or by Purchase Order Receipt Control group.

You can use the Suggest Warehouse Placement function to recommend the locations where the items should be placed when merchandise is moved from suspense to inventory.

Receiving into a pending warehouse: Pending warehouses are warehouses where you can place inventory that is on its way to its final destination, for example, a staging area. Inventory in a pending warehouse is not available for reservation and picking.

• Pending putaway warehouse: Use a pending putaway warehouse to temporarily store saleable inventory on its way to its final destination warehouse. Inventory received into a pending putaway warehouse retains its on order status so that the inventory is visible in PO Layering, yet the system recognizes the inventory as being in a warehouse location so that you can manipulate it.

• Pending transfer warehouse: Use a pending transfer warehouse to temporarily store non-saleable inventory to determine if the inventory should be moved to its final destination warehouse or sent back. Inventory received into a pending transfer warehouse does not retain its on order status; the inventory is not visible in PO Layering. Stock moved into or out of a pending transfer warehouse will not increase or decrease the on order quantity in the pending transfer item warehouse.

You can define a warehouse as a pending warehouse using the Working with Default Warehouse Locations (WWDL) menu option.

When you receive merchandise into a pending warehouse, the system:

• Creates a pending putaway detail record. If a pending putaway detail record already exists for the purchase order and item/SKU, the system adds the receipt quantity to the existing pending putaway detail record. The pending putaway detail record indicates:

• The quantity of the item in the pending warehouse for this receipt. The on hand quantity for the item at the item warehouse level indicates the total pending putaway quantity for the item.

• The “final destination” warehouse where the inventory will be placed.

• The expected due date of the inventory; this due date will display in order entry, order maintenance, order inquiry, inventory inquiry, and item availability for the “final destination” warehouse.

• Creates a PO layering record for the “final destination” warehouse.

• Decreases the on-order quantity for the item in the “final destination” warehouse.

• Creates an inventory transaction history record for the pending warehouse.

• If the Track Cost Changes (J69) system control value is set to Y, writes a record to the Cost Change Audit file. See Reviewing Item/SKU Cost History for more information

The following updates do not occur when merchandise is received into a pending warehouse.

• The on-hand quantity for the item in the "final destination" warehouse is not changed.

• The costing calculation is not performed.

• Vendor Item analysis is not performed

These updates occur when the merchandise is transferred from the pending putaway warehouse to the "final destination" warehouse.

See Pending Putaway Overview for an overview of the updates the system performs when you place inventory into a pending warehouse.

Receiving into a staging warehouse: When you receive into a staging warehouse, the same updates take place at receiving as when you receive into inventory. However, you normally define the staging warehouse to be non-allocatable and non-viewable in Order Entry, and define each location to be non-pickable; the result is that the inventory is not generally available or visible on the system until you place it in your main warehouse.

See Working with Default Warehouse Locations (WWDL) for an overview of defining default locations within a staging warehouse. See Radio Frequency Setup for details on how to set up a staging warehouse on your system.

The logic that the system uses to suggest location placement when you use RF and a staging warehouse is described under Staging Warehouse/Location Placement.

Suggest Warehouse/Location Placement

Purpose: Use the Suggest Warehouse/Location Placement function to have the system determine where merchandise should be placed. The system searches through the available locations in your warehouse to determine where you should place the merchandise. You can accept, reject or change any of the system suggested placements for an item.

There are two main procedures available for suggesting placement, based on settings in your system control file. If you are using a staging warehouse and radio frequency devices in your warehouse management, you would have a default staging warehouse defined in the System Control file and the LPN Tracking (E16) field set to Y. If this is the case, the system suggests locations within your staging warehouse; see Staging Warehouse/Location Placement. If you do not have a default staging warehouse defined in the System Control file and if the LPN Tracking (E16) field is set to N or blank, the system uses the standard suggest placement routine; see Standard Warehouse/Location Placement.

Suggest Warehouse Placement can be used during the following functions:

• Receiving Purchase Orders (PORC): when merchandise is being received into inventory

• Placing Suspended Stock (SUSP): when merchandise is being transferred from suspense to inventory

• Suggest Warehouse Placement (MSLO): when you are placing items in locations independent of the Purchase Order Receipts and Place Suspended Stock functions.

Standard Warehouse/Location Placement

If you do not use radio frequency devices or a staging warehouse to manage your inventory, the system will attempt to place the merchandise in a single location where the item is currently stored, if possible. If a single location cannot be found, the system will spread the merchandise across as many locations where the item is stored as is necessary. If the full quantity cannot be placed in existing item locations, the system will search for any suitable location (e.g., a location class compatible with the item type, a location that is not frozen, etc.) that can hold the placement quantity.

Note: The Suggest Warehouse Placement function searches existing warehouse locations only; new warehouse locations will not be created using this function.

Your company decides the criteria for how locations are suggested and the order in which the system will search for available locations.

System control values: The following values in the System Control file allow you to define whether to use suggest placement, and how the system will search for available locations when recommending stock placements. The following values are used:

• Suggest Location Placement (A27), which controls whether the function is used.

• Type of Location to Search First during Suggest Location Placement (C40), which defines the location type that will be searched first.

• Type of Location to Search Second during Suggest Location Placement (C41), which defines the location type that will be searched second.

• Type of Location to Search Third during Suggest Location Placement (C42), which defines the location type that will be searched last.

• Suggest Split Locations during Suggest Location Placement (C43), which determines whether the merchandise can be placed in a location the contains other merchandise when the system is searching for any available location.

• Location Capacity Method (A31), which determines how the system determines when a location is full.

Suggest Warehouse Placement searches primary, secondary and bulk locations in the sequence you define. You do not have to include all three location types. For example, you can choose to suggest only primary locations, or only bulk and secondary locations for item placements. Temporary locations cannot be recommended for placements.

Searching for locations: The Suggest Warehouse/Location Placement program does the following to search for a location in which to place the merchandise:

1. Locations that have the Location type code defined in the Type of Location to Search First during Suggest Location Placement (C40) value are searched in location code sequence until a single location for the placement is found.

2. If a location is not found, locations that have a Location type code defined in the Type of Location to Search Second during Suggest Location Placement (C41) value are searched, if a location type is defined, until a single location for the placement is found.

3. If a location is not found, locations that have a Location type code defined in the Type of Location to Search Third during Suggest Location Placement (C42) value are searched, if a location type is defined, until a single location for the placement is found.

4. If the full quantity cannot be placed in one location, the system searches through all applicable locations again, in the same sequence. Each location will be filled to capacity until the full quantity has been placed.

5. If the full quantity cannot be placed in the existing locations where the item is stored, the system will search for any available location in the warehouse that can hold the full placement quantity. The Suggest Split Locations during Suggest Location Placement (C43) value determines whether the merchandise can be placed in a location that contains other merchandise when the system is searching for any available location. If this value is yes, the system can place two different items in the same location. If this value is no, only empty locations will be evaluated if the system has to search for any available location.

Determining location capacity: The system evaluates the location capacity when determining whether the placement quantity can fit in a location. The location capacity can be evaluated by units, by cubic volume, or by weight. The unit capacity, cubic capacity, and weight capacity for a location are defined in the Location file. See Creating and Maintaining Locations (WLOC).

Determining location capacity by units: When determining capacity by units, the system evaluates the number of units currently on hand in the location against the placement quantity to determine if the quantity can fit in the location. The total quantity cannot exceed maximum number of units defined in the Item Location file or the Location file.

In addition, the system checks the combined item weight to ensure that the location can support the on-hand quantity and the proposed placement quantity.

Determining location capacity by volume: When determining capacity by volume, the system evaluates the cubic volume of the units currently on hand in the location against the cubic volume of the placement quantity to determine if the quantity can fit in the location. The Fill factor defined for the location is used to determine the total cubic volume that can fit in the location. See Creating and Maintaining Locations (WLOC).

If item dimensions (height, length, and width) are defined in the Item/SKU file, the item dimensions will be used to calculate the cubic volume. If item dimensions are not defined, the Cube factor is used.

In addition, the system checks the combined item weight to ensure that the location can support the on-hand quantity and the proposed placement quantity.

Staging Warehouse/Location Placement

The system uses this procedure when you are using a staging warehouse and, generally, radio frequency devices to manage inventory. You must have both a default staging warehouse defined in the System Control file and the LPN Tracking (E16) field set to Y for this logic to work, in addition to the Suggest Location Placement (A27) value.

In this scenario, the system will always suggest that you place inventory in a default location (defined through Working with Default Warehouse Locations (WWDL)) within your staging warehouse. The staging warehouse location type indicates where you should ultimately place the stock. For example, if you receive stock into the default bulk location in the staging warehouse, this indicates that the stock should go to the actual bulk storage area in your main warehouse.

After you accept the purchase order, you can print LPN (license plate number) labels that provide information such as the item/SKU, staging warehouse location, and main warehouse location. You can then use these labels for scanning radio frequency transfers.

See Radio Frequency for complete information on using radio frequency devices for inventory management.

Related system control values: Use the following system control values to indicate how the system should suggest locations for placement when you use staging warehouse placement:

• Type of RF Location to Search First (F12)

• Type of RF Location to Search Second (F13)

• Type of RF Location to Search Third (F14)

• Round Up Quantity in RF Suggest Warehouse Placement for B/O (F16)

Valid values for the first three system control values above are *BACKORDER, *PRIMARY and *BULK. The last system control value can be set to Y or N.

Usage scenarios: The following scenarios illustrate how the RF staging placement system control values work together.

Scenario 1: Search Backorder First with Backordered Quantity

You receive 95 units of item AA100, which comes in cartons of 10. You have zero on-hand in the item's primary location, which has a maximum capacity of 40. There are 15 outstanding units backordered.

The staging placement system control values are set as follows:

• Type of RF Location to Search First (F12) = *BACKORDER

• Type of RF Location to Search Second (F13) = *PRIMARY

• Type of RF Location to Search Third (F14) = *BULK

• Round Up Quantity in RF Suggest Warehouse Placement for B/O (F16) = Y

The system suggests placement as follows:

• 20 units go to the default backorder location. You can pick these units right away to fulfill backorders. The system rounds up to 2 cases.¹

• 35 units (3 cases plus the 5 loose units) go the default primary location. Notice that the system does not break an additional case to restock primary to its full capacity.

• 40 units (the remainder) go to bulk.

Note: If you received 100 units rather than 95 in the above scenario, the system would have suggested 40 units go to primary rather than 35.

Scenario 2: Search Primary First with Backordered Quantity

You receive 100 units of item AA100, which comes in cartons of 10. You have zero on-hand in the item's primary location, which has a maximum capacity of 40. There are 15 outstanding units backordered.

The staging placement system control values are set as follows:

• Type of RF Location to Search First (F12) = *PRIMARY

• •Type of RF Location to Search Second (F13) = *BACKORDER

• Type of RF Location to Search Third (F14)= *BULK

• Round Up Quantity in RF Suggest Warehouse Placement for B/O (F16) = N

The system suggests placement as follows:

• 40 units go to the default primary location.

• 60 units go to bulk. You can fulfill all outstanding backorders from the 40 units to go to primary, so there is no need to suggest placement in a backorder location.

Scenario 3: Search Primary First with No Backordered Quantity

You receive 100 units of item AA100, which comes in cartons of 10. You have 35 on-hand in the item's primary location, which has a maximum capacity of 40. There are no outstanding units backordered.

The staging placement system control values are set as follows:

• Type of RF Location to Search First (F12) = *PRIMARY

• Type of RF Location to Search Second (F13) = *BACKORDER

• Type of RF Location to Search Third (F14) = *BULK

• Round Up Quantity in RF Suggest Warehouse Placement for B/O (F16) = N

The system suggests placement as follows:

• 60 units go to bulk. The system cannot suggest any units go to primary without breaking a case.

Scenario 4: Suggest Primary Only

You receive 100 units of item AA100, which comes in cartons of 10. You have zero on-hand in the item's primary location, which has a maximum capacity of 40. There are 15 outstanding units backordered.

The staging placement system control values are set as follows:

• Type of RF Location to Search First (F12) = *PRIMARY

• Type of RF Location to Search Second (F13) = blank

• Type of RF Location to Search Third (F14) = blank

• Round Up Quantity in RF Suggest Warehouse Placement for B/O (F16) = N

The system suggests placement as follows:

• 40 units go to the default primary location.

The system does not suggest any placement beyond the primary location, because only the first RF location type system control value contains a location type to select.

More general guidelines: Please also note the following about staging warehouse placement:

• You must specify at least the Type of RF Location to Search First (F12) if you use RF in your warehouse and want to have the system suggest location placement.

• You must specify a primary location for the item or SKU (a “primary primary”) to have the system suggest placement in a default primary or backorder location. (The “primary primary” location is stored in the Primary loc (Primary location) field in the SKU file.)If there is no primary primary defined for an item, the system will suggest placement in the default bulk location only.

• Do not set more than one of the three "type of RF location" system control values to the same setting. If any two of these fields contain the same type of location, the system skips the second when determining where to suggest placement; in other words, it will not suggest twice the necessary quantity be placed in a primary location if you set two of the system control values to *PRIMARY.

Receiving Overages and Underages

Overages: At times, a vendor may overship an item. The Over Receipt % (A61) value in the System Control file allows you to receive more than the quantity ordered for an item if the quantity received is within the tolerance limit.

If a vendor ships you more merchandise than you ordered, the system allows you to record the receipt if the overage is within an acceptable tolerance limit. For example, if you set the Over Receipt % (A61) to 10%, you can receive a quantity up to ten percent above the amount that was ordered. If the overage exceeds the tolerance amount, the following message displays:

The Override Tolerance (A18) value in the Security file lets you accept any overage amount the vendor may ship. When this option is allowed, the system accepts any receipt quantity you enter without displaying a message.

Underages: At times, a vendor may undership an item and may not be able to fulfill the entire purchase request. The Under Receipt % (A62) value in the System Control file allows the system to close a purchase order line if only a certain percentage of the order quantity is received.

If a vendor short-ships an item and the quantity received is within the defined tolerance, the purchase order line will be closed even if the full order quantity was not received. This allows you to close purchase order lines when vendors short-ship merchandise and are unable to complete the shipment.

For example, if you define the Under Receipt % (A62) at 10%, a purchase order line will be closed when at least 90% of the merchandise is received. If you order 100 units and receive 92 units, the line will be closed when the receipt for 92 units is accepted.

If the vendor ships you the balance of the merchandise at a later time, you can add a line to the purchase order during Purchase Order Receipts to record the additional receipt, if you have the proper authority. The Add PO Detail Line during PO Receipts (A21) value in the Security file determines whether you can add lines to a purchase order at receiving.

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1. If there were 2 or more default backorder locations with a maximum bin quantity of 10, the system would suggest 10 units to each default backorder location.