Inventory Management



Stores Location are identified within the organisation, for receipt and issue of material. The system references these locations for carrying out transactions of receipts, quality inspection and issue of goods. The system is designed to track the movement of goods from the gate of the premises to issue and return of items. A "Gate register" operated at the entry point of the premises facilitates recording of goods entering the premises. At the "Stores Location" the goods receiving flow is determined by a goods receiving method predefined in the item master , vendor , or special instructions on the purchase order.

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Goods Receipt



Some of the options in goods receiving flow are :

  • Direct to user - Typically large capital goods
  • Receipt to stores – Available to Issue
  • Receipt to quality inspection to stores- Available to Issue
  • Receipt – stores-quality inspection-Quarantine

e.g. Assume 100 units are received and a selected sample will be inspected. All unites are put-away to stores but not released for issue until the sample is approved.

  • Receipt of Non Stock Item - Inspection by User Dept

e.g. Made to order goods are directly inspected and installed by the user.

  • Receipt of services

Depending upon the option selected above, ITM automatically intimates the department involved through work-flow, for their action on the receipt.

The system will account for reduction in stock drawn for inspection, testing and quarantine to reflect a true "available to issue" position.

All receipts are referenced with a Purchase order to the supplier hence it will be mandatory for every Receipt to have a corresponding purchase order. Receipts are also checked for accepted quantity variance (Min and max acceptance quantity) to ensure cost effective purchase and minimizes data entry errors.

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Rejections & Returns



Material received in stores location may have to be returned to the supplier for:

  • Variance with PO terms and conditions
  • Rejection of materials by Stores before QC approval
  • Rejection of material by QC for non conformations to standards and tolerances
  • Rejections on Production line
  • Non performance of performance guarantees and warranties
  • Non requirement of goods

The system makes the requisite changes in the inventory status, Quarantine stocks, Order status, accounts payable according to business rules defined, when a return takes place. Materials can be rejected only by designated authority along with justification for the rejects which are communicated to the concerned vendor. The system has options, for a vendor to provide replacement for rejected goods or credit note to reduce its payable position.

The "Purchase Return" module ensures the necessary entries are made in all the effecting modules and the Accounts Payable module.

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Issue of Goods



The material can be issued for the following

  • To a production process :

    In the production system, within the process, the goods can be issued to a particular lot or batch. Consumption can be only against a bill of material, which is pre-defined for the finished goods. Consumptions are directly linked to costing and variance to analyse the reason for over or under consumption. This option can be implemented only when the "Shop floor Control" module is implemented, however links will kept open for future integration

  • To a maintenance activity :

    Maintenance activities will be automated in the "Plant Maintenance" module of ITM. Against a maintenance activity a part can be issued. This will help in analyzing the performance of machines and parts. This option can be implemented only when the "Plant Maintenance" module is implemented, however links will kept open for integration

  • General consumption :

    Other consumption option can be used to issue goods to various departments and cost center from inventory. Extensive data about the consumption is maintained by the system for analysis

    In absence of "Shop floor Control" and "Plant Maintenance" modules, all the issues will be considered as general consumption.

Materials are issued on FIFO method. The system will also provide the "Shelf Life" and expiry date of available stocks for raw material so as to indicate stocks having low "Shelf Life". Based on pre-defined business rules, materials can be automatically allocated to issue to avoid expiry and wastage.

The system is designed to relate and identify items, to storage bins, stack bays. Within the "Stores Location" materials are classified and stored in various "designated locations". The system maintains stocks on basis of "designated locations". The "Locator" function provides assistance in issue, control of items and facilitates physical verification of stocks.

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Inventory Control



Inventory can be classified based on ABC, FSN and other consumption patterns. The system will automatically generate a purchase order proposal based on

  • Re-order period : A new order is automatically placed at a specific period of time with the order quantity dependent on current level of stocks.

  • Re-order level : A new stock is only ordered when its level falls below a predetermined level, with the order quantity being fixed in advance

System will have options for remainder for re-testing and physical counting based on the definition in item master.

System will automate the transfer of stock from one location to another. The goods, which are issued from one location and have not reached the destination, will be reflected as goods in transit.

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Inventory Costing



Costing of inventory can be done based on moving average, FIFO, LIFO or average, the system will automatically maintain the costing information on-line from various inventory transactions. The inventory carrying cost can be calculated and reflected in the analysis.

For job work, the costing will be done considering, the cost of material issued to supplier for conversion and conversion charges charged by the supplier.

For import purchase, costing will include the cost of clearing agent, freight and other duty to the material account.

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Accounts Payable 




Bills



The system automatically creates accounting entries for the purchase order transactions after receipts are reported based on predefined rules.

The bill document is automatically created in the system based on receipt and when supplier’s bill is received the number and date can be entered. It ensures that no duplicate payments are made against supply of goods. Due date are calculated based on the order and on confirmation can create payment voucher automatically. Rejection of materials automatically creates debit note entry in the accounts payable .If a Payments created in the system, needs to be cancelled, the system will have a provision to capture the cancellation information and automatically reverse the accounting effect.

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Freight Payable



It tracks payments related to the receipt viz., freight handling charges etc on an consignment –to-consignment basis and ensures singularity of payment. The system will match the receipt document, order terms for delivery and create payable for the transporter.

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International Payables



The multi currency support of ITM allows payment in any currency and maintains the books of accounts in base currency. Bank commission applicable on domestic as well as international purchases will be handled in the accounts payable.

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Commission Payable



As per the order terms, if any commission to be payable to any agent, system will automatically create payable for the agent.

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Taxation



The system provides various tax summary, required for accounting of purchase and tracks the statutory forms issued.

The accounts payable module will keep the links open to General Ledger module for further integration. Based on the receipt of goods or even purchase order, you can project the fund requirement for future.

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Management Tools



  • Analysis of historical data to understand market trends.
  • Analysis of business behavior and trends.
  • Analysis of consumption patterns.
  • Analysis of Vendor Performance.
  • Purchase expense analysis.
  • Department wise profit and costing analysis.

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Base Work Flow™



Base Work Flow™ makes the movement of documents automatic, eliminating the need for human to figure out who should get the information next, collapsing the travel times and avoiding wrong routing. The system is programmed to send information along different paths depending on the contents and the nature of the documents.

Base Workflow™ automates the 3 R's of an activity

  • Routing: Routing refers to the direction and where objects flow. Objects include documents, forms, data, and applications. Routing also accounts for the person / process to whom the work is being routed.

  • Rules: Rules that determine what information is to be routed and to whom.

  • Roles: They are identified independent of the people who carry them out. Defining roles ensures the flexibility of the process; if for example work is to be routed to Mr. Shah and he is unavailable, the recipient under the new conditions would have to be specified.

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Email : marketing@baseinformation.com   March 2000, Base Information Management