Thursday, September 30, 2010

Effective Inventory Item Ranking

Jon Schreibfeder is an inventory guru who has written several white papers for Microsoft and provides many of his articles for free on his website. If you are responsible for inventory in your organization, these articles can make you look like a genius.


His article on item ranking proposes a 3 way ranking system for items based on total cost of goods sold, number of hits, and profitability. Dynamics GP only stores one rank and provides 4 methods of calculating this rank using the Item ABC Analysis Routine:


















The Usage Value option would rank item based on total cost of goods sold for a time period but to apply the other rankings requires some SQL work.

Hits: The number of times an item has been sold is calculated from the SOP30300 table using only non-voided invoices.

select items.itemnmbr, items.itemdesc, isnull(soplinesum.hits,0)
from iv00101 as items
left join (select COUNT(itemnmbr) as hits, itemnmbr from sop30300 as a
join sop30200 as b on a.soptype = b.soptype and a.sopnumbe = b.sopnumbe
where b.soptype = 3 and b.voidstts = 0
group by a.itemnmbr) as soplinesum
on items.itemnmbr = soplinesum.itemnmbr

Profitability: The query to calculate item profitability is similar but uses extended price and cost to return a sum of gross profit by item.

select items.itemnmbr, items.itemdesc, isnull(soplinesum.profit,0)
from iv00101 as items
left join (select sum(a.xtndprce-a.extdcost) as profit, itemnmbr from sop30300 as a
join sop30200 as b on a.soptype = b.soptype and a.sopnumbe = b.sopnumbe
where b.soptype = 3 and b.voidstts = 0
group by a.itemnmbr) as soplinesum
on items.itemnmbr = soplinesum.itemnmbr


Now the real fun begins. The results from these queries can be exported to Excel for analysis. Create a formula that returns the percentage of total hits or profit for each item and then sort by that percentage. This will give you a basis to begin assigning ABC ranks by hits and profitability.

If you want to store all 3 ranks in Dynamics GP consider using inventory categories or extender fields.

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