QAD Inventory Control

Terminology
• ABC Analysis: Classification of a group of items in
decreasing order of annual dollar volume or other criteria.
– A class represents 10% -20% by number of items, and 50% -70%
by dollar volume
– B class usually represents about 20% by number of items, and
20% of the dollar volume
– C class contains 60% -70% of the items and represents about
10% -30% of the dollar volume.
 Terminology
• Assay Percent: An assay is a test of the physical and chemical
properties of a sample.
• Backflush: Back flush is nothing but automatic goods issue.
System will automatically post goods issue when we confirm the
operations.
• Cycle Count. A cycle count records the number of items physically
counted, compares that number with the system quantity-on-
hand, and (optionally) updates quantity-on-hand to equal the
number counted.
 Terminology
• Enterprise Material Transfer: EMT is the automated translation of a
sales order into a
purchase order within a specific entity. It also includes the creation of
sales orders in another entity.
• Key Item : A key item is an item for which there must be sufficient
quantity-on-hand for a work order to be released and a picklist
printed. Key items are critical items.
• Location: Each time you perform an inventory transaction such as an
issue, receipt, or transfer, you must specify both a site and location.
 Terminology
• Lot and Serial Numbers: If required, a lot number must be entered
during issues and receipts. A lot number applies to the entire
transaction quantity entered. If serial numbers are required for an item,
a unique serial number must be entered for each item during issues
and receipts.
• Shelf Life: Shelf life is typically defined for items that spoil or degrade
over time. You can use shelf life to set the expiration date for inventory.
QAD EE calculates an expiration date when an item is received into
inventory by adding the number of days specified for shelf life to the
receipt date.
 Inventory Flow
PO Receipt Receiving

Stockroom Inspection

Manufactur Finished
ing Goods

Shipment to
Customers Shipping
 Inventory Flow
• Raw materials are stored until they are needed for manufacturing. Products are stored until
they are needed to fill a sales order or work order. Items stored for these purposes are called
Inventory.
• Inventory is controlled by:
• Issues (Inventory removed from a stocking location)
• Receipts (Inventory added to a stocking location)
• Transfers (Inventory removed from one location and added to another)
• Cycle Count Adjustments (On-hand inventory balance adjustments at a specific location for
items selected for counting)
• Physical Inventory (Counting entire inventory and changing inventory balance)
• Lot and Serial Control
• Inventory Status Codes
• Shipping Groups
 Inventory Flow
• Most inventory transactions result from:
• Sales order allocations and shipments
• Purchase order receipts
• Work order issues and receipts

• However, a few transactions, such as unplanned issues

and receipts, are created in the Inventory
Control module.
 Business Considerations
• Two Costing Methods:
– Standard (GL) Cost Set
– Average Cost Set

• QAD EA is usually a standard (also called general

ledger or GL) cost system, although it can be used
as an average cost system.
 Business Considerations
• Cycle Count
Frequency is determined by item’s ABC Class. Cycle Count Worksheet Print
determines how to manage the count. Cycle counting lets you count select items
on an on-going basis, focusing attention on items that are more likely to have
errors.

• Physical Inventory
Use physical inventory to conduct a count of items and products on hand. Counts
are manually recorded with inventory tags. Tag counts are entered to update live
inventory balances. Physical inventory lets you count everything once a year
(perpetual).
 Business Considerations
• Incoming Inspection: Inspection required is specified by item in Item
Planning maintenance (1.4.7) or Item-Site Planning Maintenance
(1.4.17).
• Inspection lead time is calculated only if the item has Inspect set to
Yes in Item Planning Maintenance or Item-Site Planning Maintenance.
• Lot and Serial Numbers: To track items through the system as items
enter inventory and are worked on. Lot group in Item Inventory Data
Maintenance (1.4.5) determines the format used when assigning
automatic lot numbers.
Set Up Inventory Control
 Set Up Inventory Control
• Inventory Status Codes: used to determine if the inventory balance at a site
or location is:
• Available for sales order and work order allocations. Allocations are used
to reserve inventory and assist in picking inventory to be shipped or issued
• Nettable for MRP calculations
• Issued even if the site or location has a zero or negative inventory balance
• Inventory status codes can restrict particular transactions at specific
locations. For example, you can restrict issues from an inspection location.
 Set Up Inventory Control
• Inventory Status Code Maintenance: Use
Inventory Status Code Maintenance (1.1.1) to
create and modify inventory status codes.
• Use Site Maintenance (1.1.13) to assign default
inventory status codes to sites
• Assign inventory status codes to locations using
Location Maintenance (1.1.18)
 Set Up Inventory Control
• Available:
• If this field is Yes, on-hand inventory balances with this status are
considered to be available.
When allocating inventory, the system calculates the quantity available to
allocate as the total quantity on-hand at all inventory locations flagged
Available Yes. Any locations flagged Available No are not considered by
this calculation.
• Unavailable inventory status codes identify inventory not to be shipped to
customers or used in the manufacturing process at the current time, such
as inventory waiting for inspection or defective material to be reworked.
 Set Up Inventory Control
• Nettable :
• During the planning process, MRP calculates the net quantity
on-hand as the sum of the
quantity in all locations flagged Nettable Yes. Locations flagged
Nettable No are not considered by this calculation.
• Non-nettable inventory status codes identify inventory not to
be shipped to customers or used in the manufacturing process
because it is defective or reserved for some other use.
 Set Up Inventory Control
• Overissue:
• If Yes, then inventory can be issued from a
location even if that issue results in a negative
balance on hand. To prevent this, set the
Overissue field to No. This stops overissues in
all inventory transactions.
 Set Up Inventory Control
• Restricted Transaction: Enter a code identifying the
restricted inventory transactions for on-hand balances
with this
inventory status code.
• When you process an inventory transaction, the system
checks the inventory status of the affected item and site
or location to verify that the transaction is not restricted.
If it is, an error message displays and you cannot proceed.
Set Up Inventory Control
 Set Up Inventory Control
• Inventory Control: Inventory Control (3.24) sets
count tolerances, establishes accounting
procedures, and defines picking logic.
• Q (QOH), item tolerances are calculated as a
percentage of quantity-on-hand.
U (Usage), item tolerances are calculated as a
percentage of annual usage.
 Set Up Inventory Control
• Inventory Control – Accounting: In QAD EE, financial control settings
are updated separately in Inventory Accounting Control (36.9.2).
• How current cost is calculated:
– Average (default): Current costs are updated during item receipts and other
inventory related activities using a simple weighted-average calculation
– Last: Each item’s current cost is equal to the unit cost from the last receipt or
inventory update.
– None: The system does not automatically update current costs. They must be
maintained.
 Set Up Inventory Control
• Items: Use the transactions in menu number 1.4 to set up and
maintain item records.
• You must create an item record/number for every inventory item.

• Inventory Accounts
Use Inventory Account Maintenance (1.2.13) to assign different
GL accounts to combinations of
product line, site, and location.
 Set Up Inventory Control
• Load Inventory Balances:
• You can load current balances into the system using one of
three techniques.
• 1 Cycle counting via the Cycle Count Worksheet and Cycle
Count Results transactions in the Inventory Control Menu
• 2 Physical counting using the transactions in the Physical
Inventory menu
• 3 Entering unplanned receipts (3.9)
Using Inventory Control
 Using Inventory Control
• Inventory Flow Debits/Credits
• Receipts and Issues
Receipts (items received from a supplier Value of inventory increased and
or shop) inventory account debited

Issues (items removed from stock) Work in Process (WIP) account is debited
(increased) if it is a work order issue

Inventory account is credited (decreased)

 Using Inventory Control
• Inventory Flow Debits/Credits
• Transfers
• Movement from one inventory location to
another, for example, from inspection to
stock.
– Within a site, transfers do not affect inventory
value
 Using Inventory Control
• Inventory Flow Debits/Credits
• Shipments
A shipment is a movement from finished Inventory credited
goods to the customer.
Cost of goods sold is debited.
Invoicing debits Accounts Receivable
 Using Inventory Control
• Inventory Transactions – Receipts
• Receipt transactions are created by:
– Purchase Order Receipts (5.13.1)
– Work Order Receipt (16.11)
– RMA Receipts (11.7.1.13)
– Receipts - Unplanned (3.9)
 Using Inventory Control
• Receipts – Unplanned
• A receipt not related to any open sales, purchase,
manufacturing, or quality order is an unplanned receipt.
• Use unplanned receipts to record:
– Miscellaneous inventory receipts (floor stock items sent back from
production or materials sent back from engineering, for example)
– Can also be used to enter initial inventory balances when first
implementing
 Using Inventory Control
• Inventory Transactions – Issues
Issue transactions are created by:
– Sales Order Shipments (7.9.15)
– Work Order Component Issue (16.10)
– Purchase Order Returns (5.13.7)
– Return to Supplier Menu (RTS) (3.8)
– Issues - Unplanned (3.7)
 Using Inventory Control
• Issues – Unplanned
• An issue not involving open sales, purchase,
manufacturing, or quality order is an unplanned issue
• Use unplanned issues to record miscellaneous inventory
issues such as:
– Floor stock items sent out to production
– Materials sent to engineers for building 10-100types or testing
 Using Inventory Control
• Inventory Transactions – Transfers
• Occasionally inventory is moved to a different location for
storage (from inspection to stock, for example). This is known
as a transfer-inventory movement instead of inventory use.
• Transfer transactions are created by:
– Transfer - Single Item (3.4.1)
– Transfer - Multi Item (3.4.2)
– Transfer With Lot/Serial Change (3.4.3)
 Using Inventory Control
• Inventory Transactions – History
• Transaction Detail Inquiry 3.21.1
– Every inventory transaction is registered in an inventory transaction
history table.
– Transactions by Item Browse/Inquiry (3.21.2) lists transactions
in reverse order by transaction
number for a specific item.
– Other reports such as Transactions by Order Report (3.21.3)
and Transactions Accounting Report (3.21.16)
 Using Inventory Control
• Stock Availability Browse
Use Stock Availability Browse (3.6.11) to
check on the availability of stock in a single
site or in all
sites.
 Using Inventory Control
• Inventory Detail Maintenance
Review and modify the attributes of items held in inventory at a
particular site and location. Expire
date can be set manually or by the system if shelf life is defined
in Item Inventory Data.
• Modify using:
– Inventory Detail Maintenance (3.1.1)
– Detail Maintenance by Item/Lot (3.1.2)
– Multi-Lot Inven. Detail Update (1.22.19)
 Using Inventory Control
• Cycle Count
A cycle count is a periodic count. The frequency
with which an item is counted is based on its
ABC class.
– Review total item quantities on hand for a site
– View allocated and unallocated quantities for an
item
 Using Inventory Control

Colored
box is
QAD
 Using Inventory Control
• Cycle Count
• When a new count is taken, the quantity counted is entered and compared
to the quantity on hand.
• If the new count is within tolerance, the inventory quantity on hand is
updated to the count quantity.
• If the count is not within tolerance, the count is registered but the balance
is not updated. The count has to be registered as a recount before an out-
of-tolerance quantity can be forced into the system.
• Use Cycle Count Worksheet Print (3.13) in SE, (3.13.1) in EE
Cycle counts are recorded and used for Cycle Count Results Entry (3.14)
Using Inventory Control

Physical Inventory