Psychic Inventory

The Wikipedia article on carrying cost includes an interesting concept called "psychic stock." While we are all familiar with reorder points and safety stock, psychic stock may be a new concept. In retail, this is best demonstrated by the process of fronting shelves. For those of us who had grocery store jobs in our high school or college past, there are terrible memories of sliding items to the front of the shelf to make the shelves appear full even if the next truck wasn't due for another 2 days.

So how does this apply to wholesale distribution and GP?

One of the worst things you can tell a customer is that you are out of stock of an A item they want to order. Wouldn't it be nice if you could provide your customer service reps the ability to see into the future and determine if the item a customer is requesting will be available even if the current inventory is zero? To accomplish this, Dynamics GP provides you with the Available to Promise or ATP functionality.

Available to Promise looks at existing sales, purchase, and manufacturing orders and determines what will be available when your customer requests delivery. If your customer requests delivery a week from now and you have a PO due tomorrow, your customer service rep can easily see that quantities will be available.

Now for the bad news: First, Available to Promise is only "available" for Advanced Management users. It is not included or available for Business Essentials. Second, the calculation is only as good as the dates on the documents. If you CSRs or your purchasing department accept the current default on documents, ATP will calculate based on those dates. Garbage in, garbage out.

Cross-Docking with GP

Cross-docking is the act of transferring goods directly from an incoming receipt to an outgoing order without putting the stock away. Obviously, cross-docking can improve your inventory turns, reduce material handling costs, and improve customer satisfaction through the quicker delivery of orders.

So how can you cross-dock with Dynamics GP. The first step is to begin using the Backordered Items Received report. This report prints out when a purchasing receipt is posted and lists all the items on the receipt that are backordered on a sales order. This is a step in the right direction but the report has a couple issues:

1. It only prints after the receipt is posted. Many companies do not post receipts until the goods are put away to keep the bin quantities accurate.
2. It is a paper report. Are your receiving people realistically going to print and review a paper report after they post the receipt?

A more proactive approach can be implemented using the purchase order dates discussed in an earlier post. If you know the expected receipt date of an item, you can create a report or smartlist showing items expected in the next few days that are also backordered sales order items. This report or smartlist can be posted daily in the receiving department to alert personnel to cross-docking opportunities.

As I final note, I would suggest that if you do not have some cross-docking opportunities, you are carrying too much inventory. You cannot afford to have everything your customers want in stock at all times. But that is another post…

Easy Expediting and Vendor Performance Management

Expediting purchase orders and monitoring vendor performance are key to increasing inventory turns and improving your return on assets. Dynamics GP provides some easy to use, but often overlooked tools for monitoring expected and actual delivery dates.

Each line of a purchase order has a required date and two vendor promised dates. These dates default to the purchase order date but should be entered and maintained by the purchasing department. A standard smartlist is provided to show overdue purchase order lines.

The system also records the first and last receipt date for each purchase order line. This allows you to report on a vendors historical performance by comparing the required and/or vendor promised dates to the receipt dates and calculating the number of times a vendor is late on delivery and the average lead time for each item.

Dead Stock Walking

So you went through all the trouble of identifying your dead stock, appointed someone to get rid of it, finally got it out of your warehouse and next week a replenishment order for the same dead stock shows up. Its hard to blame the purchasing people since they saw demand and wanted to make sure you were stocking the things that sell. What could you have done better?

In Dynamics GP, there are two safeguards you can use to avoid replenishing dead stock. First, as soon as the item is identified as dead, change the inventory type to discontinued. This will prevent the item from being added to a purchase order and allow you to delete it at year end if desired.
Second, all dead stock sales should be on a separate document type in Sales Order Processing and the line items should have the exceptional demand box checked. This will allow you to easily identify these sales and remove them from any replenishment calculations.

Perplexing GP Questions

There are quirks and annoyances in Dynamics GP like all systems but some design decisions are more puzzling than others. One thing in purchasing that has always bugged me is that there are no user defined fields available on a purchase order. I know that I can now use Extender to add fields but most other transactions and cards have at least 2 user defined fields.

Then to make it more bizarre, receiving transactions are blessed with 35 user defined fields including 20 dates. Who needed 20 user defined dates on a receiving transaction? And how long does it take them to receive items?

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.

GP and Management Reporter service packs

Dynamics GP 2010 service pack 1 was released today and Management Reporter 2.0 service pack 1 was released last week. Let the upgrading commence.