28 Mayıs 2014 Çarşamba

Microsoft Dynamics AX 2012 R3 - Inventory tracking and pricing

Microsoft Dynamics AX 2012 R3 - Target industries – Inventory tracking and pricing
The information in this document is intended for small to large manufacturing and distribution companies within industries where items are ordered by a piece unit and invoiced by the weight/volume/area of the item. The “sweet spot” is represented by companies within the food industry that specialize in proteins.
The following are some key characteristics of these companies:
  •  They do not usually trade between legal entities.
  •  They purchase raw material for consumption in production.
  •  They do not usually resell unprocessed raw material to customers.
  •  They manufacture and sell finished goods.
  •  Their customers require fixed sales order lead time.
  •  Their customers usually operate a rudimentary store warehouse.
The major variations for catch weight items can be divided based on two basic decisions about inventory tracking and pricing:
Do you price the item by weight or by pieces? This first decision will determine whether the item should be set up as a catch weight item. If you plan on pricing the items by piece rather than by weight, you should not configure the item as catch weight.
Do you track the weight of individual pieces or the aggregate weight of multiple pieces? This second decision will determine whether you should use the full visibility or partial visibility approach in defining the catch weight item.
Catch weight items
Catch weight items are commonly used for food products involving protein or for agricultural produce. They are also used in other industries, such as metals, mining, and paper. A catch weight item is characterized by two units of measure – weight/volume/area and pieces – for the purpose of reporting inventory transactions and viewing inventory balances.
Weight/volume/area represents the item’s inventory unit of measure, such as pounds or kilograms, although some industries might use volume or area instead (for example, square inches). This is the unit of measure at which the item is billed or invoiced. 
Pieces represent the item’s catch weight unit of measure, where you define the average weight per piece (also known as the nominal weight), and inventory transactions are ported in pieces and their actual weight. Examples of pieces include a 10-pound box, 100-pound package, 2,500-pound tote, 5-kilogram bag, 50-pound case, 200-kilogram crate, 275-gallon tote, 330-gallon tote, 8-GA 48×48 sheet, or some other unit of measure with zero decimal places (that is, 0 decimal precision). The catch weight unit is considered a “handling” unit of measure.
The multiple units of measure for a catch weight item should not be confused with a fixed unit of measure conversion factor (sometimes called a dual unit of measure), because each piece of a catch weight can have a different actual weight within the range defined for the item. 
The allowable variation in the weight per catch weight piece should be defined in such a way that customers who receive a product with the total weight at either end of the range will not be disappointed or have their expectations unmet. For example, a turkey might vary from as few as 6 pounds to as much as 28 pounds. However, a customer who wanted three turkeys might not be happy to receive three turkeys at just 6 pounds each. Therefore, the turkeys might be defined as four different items: small turkeys weighing between 6 and 9 pounds, medium turkeys weighing between 9.1 and 13 pounds, medium-large turkeys weighing between 13.1 and 18 pounds, and large turkeys weighing between 18.1 and 28 pounds. Each of these items would be defined with an average or nominal weight.
As shown in the preceding example, transactions are driven by the catch weight quantity. Sales orders, purchase orders, transfer orders, and production orders specify how many pieces of the catch weight item are needed. However, the actual weight of each piece is recorded, and the pricing is done according to that actual weight, not the number of pieces. 
A catch weight item is a stocked item that might be purchased or manufactured. Catch weight items do not require the batch number dimension, because batch numbers are optional, depending on the industry. The serial number dimension is required in some definitions of catch weight items. The catch weight item is defined in Microsoft Dynamics AX 2012 at the global enterprise level. An item cannot be a catch weight item in one company and a non-catch weight item in another company.
Inventory tracking 
There are two basic inventory tracking approaches to tracking by weight: 
  •  The weight of each piece – This approach provides partial visibility.
  •  The weight of a group of pieces – This approach provides full visibility.
 In the partial visibility approach, a unique identifier is not assigned to each piece of a catch weight item, whereas each piece has a unique identifier in the full visibility approach. The partial visibility approach reflects the dominant business model in food products, whereas the full visibility approach applies to special cases such as meat processing or cheese production. Examples of the full visibility approach include the tracking of individual hams or turkeys, cheese wheels, or combo boxes. Because the full visibility approach requires that the pieces of the catch weight items be weighed for every inventory transaction, consideration should be given as to whether weight scale equipment exists throughout the facility.
 If you have an item that is open (not contained) and suffers from evaporation (for example, 10 percent per day), this item probably would not be a good candidate for a catch weight item, because that extreme evaporation could continue to the point that the overall weight of the item falls below the minimum weight range established for that item. Because some evaporation might be a characteristic of a catch weight item, you can define how often the item is retested and an inventory adjustment is performed, so that the Microsoft Dynamics AX inventory balances can be synchronized with actual weights. In this scenario, it might be more advantageous to use a full visibility approach, so that each unit can be re-weighed periodically. Otherwise, if you use a partial visibility approach, you might find it too cumbersome to periodically re-weigh the entire inventory of the catch weight item. Typically, good candidates for catch weight methodology are items such as boxes of seafood, crates of vegetables, or cartons of potatoes. Many of these items might experience some evaporation, but that change of weight should be considered when the minimum and maximum weight tolerances for the catch weight item are established.
Partial visibility catch weight
In this approach, a unique identifier is not assigned to each piece of a catch weight item. The number of packages and their total weight must be reported upon receipt and for each subsequent inventory transaction, such as transfers, picking, and shipping. So, even if you are performing a partial picking for an order, the total weight for that number of packages has to be recorded. The inventory on-hand balances indicate the total number of pieces and the total weight of an item, as displayed in the On hand inquiry. Batch tracking can apply to the item, so that on-hand inventory balances will display the relevant batch numbers.

Full visibility catch weight

You can use a full visibility catch weight item to track inventory transactions by registering the actual weight against each catch weight unit. This works when an individual unit must be tracked, such as a whole chicken in poultry processing or a bundle of an expensive cheese in cheese production.

This approach means that a unique identifier must be assigned to each piece of a catch weight item. The Microsoft Dynamics AX functionality for serial numbers is used to assign each piece of the item’s inventory a unique serial number (serial number control) upon receipt (either from purchase or production), and you report the actual weight of each piece. This approach lets you record actual weight upon receipt, and the same weight can apply to subsequent inventory transactions that identify the serial number. The serial numbers are displayed as part of the On hand inquiry for inventory balances. Batch tracking can also apply in this approach, so that multiple pieces can have the same batch number.

This approach provides full visibility of a catch weight item’s inventory. This can be useful when a customer wants a specific weight or weight range (for example, three large turkeys in the 24 to 25 pound range). With a full visibility approach, inventory of items that meet the customer’s desires can be reserved specifically for the customer’s order. By contrast, with a partial visibility approach, the customer’s desires would become a suggestion to the warehouse picker to attempt to find inventory that meets those desires.

Using full visibility catch weight requires the following setup for the tracking dimension group: the serial number dimension is active, primary stocking is selected, physical inventory is tracked, and the Serial number control check box is selected.
Figure 1 - Tracking dimension groups form
If Serial number control is not selected, a serial number could be applied to more than one unit of inventory. This would mean that instead of configuring the tracking dimension to support full visibility, you are setting it up for a partial visibility catch weight item. The decision to include the batch number dimension depends on whether you need lot tracking, or whether you need to define expiration or sell-by dates for the item. In either of these cases, the batch number dimension would be required.


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