Understanding Definition of Operations

You can monitor items from the moment that they leave a supplier's warehouse. You create receipt routes to determine the series of operations through which you process items until the items become part of the inventory.

You must define the operations that make up each receipt route. You must also determine the updates that occur as you transfer items to each operation. For example, you specify the operation at which items become on-hand inventory. When you enter items at the on-hand operation, the system creates journal entries to reflect the items in inventory, and you can create a voucher to pay for the items.

You can direct the system to create journal entries each time you transfer items to and from an operation in a receipt route. You do this so that the value of the items at each operation appears in the general ledger. For example, you might want the general ledger to reflect the value of items currently at the dock.

When you create a receipt route, you must indicate whether to pay for items that you remove (disposition) from the route based on the reason that you remove them. For example, you might want to pay for items that you rework but not for pay items that you return.

A receipt route is a series of operations through which you process items upon receipt. These operations might include:

• Transit

• Dock

• Staging area

• Inspection

• Stock

To create a receipt route, you must define the series of operations that make up the route. For example, you can create a receipt route that is made up of two operations, staging area and stock and another receipt route that is made up of three operations—staging area, inspection, and stock.

You determine the updates that the system performs as you process items through a receipt route by specifying at which operation:

• Items are available to promise.

• Items are received for supplier performance purposes.

• Items are at an on-hand status.

Each update field on the Work With Receipts Routing Codes form represents a field in the F41021 table. The system maintains balances of inventory items in this table. You can have the system update the availability of an item at any operation in a receipt route. For example, you might want the ability to promise items to customers (enter sales orders) when the items arrive at the dock instead of waiting until the items are in stock.

You access the Item Availability Definition form from the Branch/Plant Constants form to indicate which fields the system uses to calculate item availability. For example, you can specify that the system add the balance in the Update Transit Quantity field to the current on-hand balance to calculate availability.

You must specify at which operation the system records the receipt date for items. For example, you can specify that the system record the receipt date when items arrive at the dock. The system compares the receipt date to the date that the supplier promised to deliver the items to determine supplier performance.

You must specify at which operation the item is eligible for payment. When you transfer items to the payment eligible operation, the system creates journal entries to reflect a liability for the items and you can create a voucher to pay for the items. The system also updates:

• Item costs.

• Landed costs.

• Cost variances.

• Item transaction histories (Cardex).