Defining the Negative Inventory Option

Whether due to a time lag between the movement of stock and the recording of transactions or because of data entry errors, the system quantities might be less than the physical quantities in a given material storage location. For example, suppose you put away stock and then pick it to fulfill a customer order before the putaway transaction has been recorded. Regardless of the quantity discrepancies, it's critical to your organization to continue processing the transactions to keep the production schedules and customer shipments on track.

To help support fast-paced manufacturing and distribution environments, you can enable key transactions in PeopleSoft Inventory to drive quantity balances negative.

If you enable negative inventory for a business unit (by selecting the Allow Negative Inventory option on the Inventory Definition - Business Unit Options page), you can indicate whether you want the system to display warning messages before accepting transactions that result in negative quantities. These warning messages are not available in background (COBOL and Structured Query Report [SQR]) processes.

Transactions can drive these inventory available quantities negative:

  • Business unit/item quantities: the quantity available, quantity on hand, and quantity owned that are stored at the business unit and item level.

    If stock is in work in process (WIP) material storage locations and there are negative quantities, the quantity reserved stored at the business unit and item level can potentially be negative.

  • Item-lot quantities: the quantity available and quantity on hand that are stored at the business unit, item ID, and lot ID level.

  • Storage location quantities: the on-hand and available quantities of the item at the material storage location level (including container ID, staged date, lot ID, serial ID, and unit of measure).

This table lists transactions that update these inventory quantities. The transactions marked Yes in the Allow Negative Qty (allow negative quantity) column can drive inventory balances negative.

Note: You cannot enter negative quantities for transactions using the negative inventory option. For example, you cannot enter −10 as a quantity for a putaway transaction.

Transaction Type

Area Affected

Type

Allow Negative Qty?

Putaway

Complete Putaway

COBOL

No

 

Express Putaway

Page

No

Stock Fulfillment

Reserve Materials

Application Engine

No

 

Allocate Lots

Page

 

 

Lot Allocations

COBOL

No

 

Front-End Shipping

Application Engine

No

 

Order Release

Application Engine

No

 

Material Picking Feedback

Page

Yes

 

EDC Inventory Picking

COBOL

Yes

 

Shipping Requests

Application Engine

No

 

Picking Confirmation

Application Engine

Yes

 

Shipping/Issues

Component

Yes

 

Deplete On Hand Qty

Application Engine

Yes

 

Express Issue

Component

Yes

 

Fulfillment Workbench

Component

Yes

 

Shortage Workbench

Component

Yes

 

Fulfillment Engine EIPs

Application Engine

Yes

Adjustments

Adjustments

Page

Yes

 

EDC Adjustments

COBOL

Yes

Transfers

Transfers

Page

Yes

 

EDC Transfers

COBOL

Yes

 

Container Management

Page

Yes

Physical Accounting

Stock Quantity Update

Application Engine

Yes

For most functional areas, the Allow Negative Inventory option enables you to enter a quantity greater than what is available in the material storage location, lot, or business unit. The following sections describe special processing when negative quantities exist.

Putaway and Express Putaway

If the owned quantity for an average cost item is negative before the putaway transaction, the average cost is set to the actual cost of the putaway (for example, inbound purchase order cost), and the net difference in total inventory value is written off.

The write-off amount is calculated like this:

write-off amount = total value of item after putaway − (total value of item before putaway + total value of putaway) = (new average cost * (original qty owned + putaway qty)) − ((old average cost * original qty owned) + (putaway cost * putaway qty))

Material Picking Feedback

Serial Control:

For serial-controlled items, you can make an over-allocation; that is, you can allocate more than the on-hand quantity. This means that a serial ID that was allocated to a specific demand line can be picked for another demand line with an over-allocation.

When you make an over-allocation, the system issues a warning that the serial ID has been over-allocated. Once the over-allocation has been picked and confirmed, the on-hand quantity is set to 0, which prevents the serial ID from being picked and confirmed again. If you later attempt to fill the original allocation, the system generates an error message and does not permit the transaction.

Storage Containers:

Within a given material storage location, you can pick and confirm to drive a container quantity negative as long as the same container ID does not exist in another material storage location with a positive or negative quantity.

Express Issue

Serial Control:

For serial-controlled items, you can issue quantity that has already been allocated. However, you cannot drive the quantity negative by issuing more than the on-hand quantity. If a serial ID is allocated to a demand line but issued for another using an express issue, the serial ID cannot be picked and confirmed for the original demand line.

For example, if a worker uses a previously allocated serial-controlled item to fill another demand, the system allows the transaction but warns that the serial ID has been over-allocated. If the worker trying to fill the original allocation attempts to confirm the serial ID after the issue has been recorded, the system generates an error message and does not permit the transaction.

Storage Containers:

You can ship all items in a storage container quickly by using the Choose Containers link on the Express Issue page. The system creates an order line for each item in the container. However, if any items in the container have a negative quantity balance, the system issues an error message indicating that the container cannot be shipped. To ship items that have a negative balance, ship at the item level rather than the container level.

Adjustments

If the available quantity for the item is negative, you can perform a decrease, scrap, or miscellaneous issue ad hoc adjustment to drive the quantity further negative.

You cannot drive quantity negative when adjusting the quantity of a serial-controlled item.

Transfers and Container Management

If a storage container has any item with a negative available quantity, you can transfer the storage container after accepting the system warning.

You can transfer items with negative quantity on hand after accepting the system warning.

Serial-controlled items must have a quantity balance of 1 to be transferred.

Because storage containers are considered empty only if the quantity is 0, you cannot rebuild a container in another location if it already exists with a non-zero quantity.

Counting Inventory

You can perform cycle counts for items that have negative available quantities, but if you enter a count quantity, it must be greater than or equal to 0.

Inventory counts the on-hand quantity at the material storage location level. When you enter a count quantity (on-hand quantity) that is less than the reserved quantity, the Stock Quantity Update process drives the available quantity negative.

Inventory Status

You cannot change the inventory status of a particular item in a material storage location in which the on-hand or available quantity is negative or some quantity is reserved.

You can change the status of inventory that has positive quantity, even if that change drives quantity at the business unit or lot level negative (as long as negative balances are allowed for the business unit).

If you enable transactions to drive quantities negative, you can use the Negative Balances page to locate items with negative available quantities. From this page you can transfer to other pages to:

  • Make ad hoc quantity adjustments (on the Adjustments page).

  • Set up counting events for negative balance locations on the Setup Counting Event - Count Options page. These options are used by the Event Creation process page.

  • View the complete transaction history of an item to help track down what transaction might have caused the negative balance on the Transaction History Inquiry page.

When you select worklist entries created by the Negative Inventory workflow for each item that has a negative balance at the business unit, lot, or receiver level, you automatically jump to the Negative Balances page.

You can also generate the Negative Balance report, which lists items (based on your criteria) with negative available quantities.