Sales and Inventory Forecast Using Cortana Intelligence for Project “Madeira”

I’ve just finished with all my jobs and I can start to prepare for my trip to US on Directions. I’ll depart tomorrow morning and I’ve just find some space to put my things about one very nice feature in Project “Madeira” and I hope in NAV 2017 as well (just confirmed on Directions NA, it’s part of NAV 2017 – 25.09.).

This is part of August “Madeira” update, but I finally find enough time to show it. When you run Project “Madeira”, you need to install this feature because it is Extension. But this is very easy in “Madeira”.

1-1.jpgAfter you finish with installation, you can configure this in Setup Scheduled Forecasting using Sales & Inventory Forecast Setup. This is naturally and there is not some unnecessary details.

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When you decided how you want to put this feature to work, you can go on item list to see your predictions.

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What is the most important? Complete procedure is made by Cortana Intelligence and connection to Cortana Intelligence is automated configured in Project “Madeira”; you just need to use it – nothing more. As I already said, you only can change setup if you need it. This is the new power of new products – the perfect integration with other Microsoft tools to get the best possible results. I cannot wait to start using these new features.

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In any case, bye and see you in US tomorrow.

What about FEFO and Costing

After my the last article, I’ve got comments about FEFO. First, thanks for reading my blog :), and then yes, it deserves to write a few sentences about it, because it is very useful feature in NAV.

But first, what actually FEFO means? It is First-Expired-First-Out method. What is the first we have to notice about it? FEFO is a picking method, but it is not a costing method. This method is important for a lot of very specific industries (pharmacy, food…), but it is just one specific way how to configure your location.

FEFO.jpg

If you want to use FEFO, your items have to have configured a serial or/and lot numbers. In additional on each item tracking code setup, the SN-Specific Warehouse Tracking field or the Lot-Specific Warehouse Tracking field must be selected. And now, we can conclude that FEFO actually uses Specific Costing Method. It is FEFO, but it is nothing more then Specific method. Everything is the same as in all other Specific Method types, but when you select FEFO on your location, system will take care about picking order using expiration date.

SpecificFEFO.jpg

You can find more about FEFO on MSDN here or in Mark Brummel Application Design book.

Costing in NAV – Inventory Posting

Costing methods usually differ in the way that they value inventory decreases. But, regardless of what costing type you use, all of them have minimum one common thing. When the quantity on inventory is zero, the inventory value must also be zero. The next common thing is way of the posting all incoming and outgoing entries. This posting results entries as quantity and as value. Quantity posting describes the change in quantity on inventory and this transaction is stored in Item Ledger Entries. Value posting describes the change in inventory value and this transaction is stored in Value Entries. Each entry in Value Entries table is linked with entry in the Item Ledger Entries table. More entries in the Value Entries table can be applied with the same entry in the Item Ledger Entry.

Each Item ledger entry is applied against each other. All these applications between incoming and outgoing quantities in the Item Ledger Entries are stored in the Item Application Entry table as links between inventory increase and inventory decrease in an Item Ledger Entry. NAV records the entry number of the Item Ledger Entry corresponding to the inventory increase in the Inbound Item Entry No. field and the entry number of the Item Ledger Entry corresponding to the inventory decrease in the Outbound Item Entry No. field. The program also reduces the Remaining Quantity fields in the corresponding item ledger entries by the applied quantity.

Based on the Inventory Posting Setup, system will post all these entries to the General Ledger Entries.

InventoryPosting.jpg

 

Introduction in Dynamics NAV Costing

In almost all NAV implementations, we need to configure and use costing (inventory, manufacturing, jobs…). This is one of the main functionalities in all ERP solutions as well as in NAV. Because of that I will prepare the series of costing articles with an overview of the principles used within the costing area.

In this first part, I will make a small introduction about costing methods. Microsoft Dynamics NAV supports the five following costing methods:

  • FIFO
  • LIFO
  • Average
  • Specific
  • Standard

Now, in the following part I will just describe these costing types.

InvCost.jpg

FIFO

The FIFO costing method means “First In First Out”. It first assigns the value of the increases with the earliest posting dates on inventory. COGS is calculated using the value of the first inventory acquisitions.

An item’s unit cost is the actual value of any receipt of the item, selected by this explained FIFO rule. In inventory valuation, it is assumed that the first items placed in inventory are sold first.

LIFO

The LIFO costing method means “Last In First Out”. It first assigns the value of the increases with the most recent posting dates on inventory. COGS is calculated using the value of the most recent inventory acquisitions.

An item’s unit cost is the actual value of any receipt of the item, selected by previous explained LIFO rule. In inventory valuation, it is assumed that the last items placed in inventory are sold first.

Average

The Average costing method calculates a weighted average of the remaining inventory on the last date of the average cost period in which the inventory decrease was posted. COGS is calculated using the average value of the inventory acquisitions.

An item’s unit cost is calculated as the average unit cost at each point in time after a purchase. For inventory valuation, it is assumes that all inventories are sold simultaneously.

Specific

The Specific costing method overrides assumption about how cost flows from inventory increase to inventory decrease with the accurate cost information, creating a fixed application between these entries.

An item’s unit cost is the exact cost at which the particular unit was received.

Standard

The Standard costing method works with predetermined costs (rather than actual cost) for all inventory increases and it affects the value of the inventory decreases.

An item’s unit cost is preset based on estimated. When the actual cost is realized later, the standard cost must be adjusted to the actual cost through variance values.

Conclusion

This was only small introduction about costing types as preparation for the more advance knowledge about using costing in Microsoft Dynamics NAV. In the following articles, I’ll describe more about facts when users need to use these costing methods as best practices. I’ll write about all details in posting results and posting rules as well.

Posting Groups #10 – Item Returns Posting (Sale & Purchase)

In my earl posts about posting groups, I have showed purchase and sales processes. But both of these processes have its opposite processes.

If our customer wants to return items to us, we can use the Sales Return Order for this. When we finish posting, we will get Return Receipt and Sales Credit Memo as result.

On other side, if we want to return items to our vendor, we can use the Purchase Return Order for this. As result of posting, we will get Return Shipment and Purchase Credit Memo.

I will not prepare flow chart about using posting groups, because we can use the same schemas as we already have in Item Sale Posting and Item Purchase Posting posts.

First, I will describe sales return process. When we post Return Receipt, we will get only these G/L Entries:

##1

But, when we finish posting and post Sales Credit Memo, we will get more G/L Entries:

##2

The similar situation is in purchase return process. When we post Return Shipment, we will get again only these G/L Entries:

##3

But, when we post Purchase Credit Memo for this item, we will get more G/L Entries:

##4

And, on the end when we run Adjust Cost – Item Entries batch job, we will get the following G/L Entries (variance between expected and actual cost):

##5

Posting Groups #9 –Item Sale Posting with Payment Method

I have already showed item sale process posting here in Posting Group #2 post. But, we can have some specific variants of this posting. One of them is when we use Payment Method.

If you choose Payment Method code on sales document header, and this Payment Method has configured Bal. Account Type and Bal. Account No., NAV will automatically create the balancing journal line. This functionality is great when we are being paid in full at the time of sale, but we can use this feature in some other specific process.

You can see how system works with Payment Method on following flow-chart:

SalesPMC

When we finish with this Sales Order posting, we can find following G/L entries navigated to Posted Sales Invoice. You can see standard G/L entries about invoice and the last two of them, connected with Payment:

SI_PyM_GLe

Posting Groups #8 – Revaluation Posting

In my last post, I have touched Revaluation process, but only for Standard cost changing. We can use Revaluation for other cases, as well.

If we change cost only for items on stock, it will be the same situation as on previous example. But, if we want to change cost for already sold or consumed stock, it will be with some differences. First, when we change the cost, we will get the same entries, as I already show in previous post. But, when we run Adjust Cost – Item Entries batch job, we will get the new G/L entries.

I made three scenarios:

In the first scenario, I have raw material with FIFO cost type. I consume this raw material on production order to produce finish goods, configured as also FIFO cost type. In this case, result of posting in G/L entry will be as following:

RevPOfifo

In the second scenario, everything was the same, but only finish goods was configured as Standard cost type. In this case, result of posting in G/L entry will be a bit different, as following example:

RevPOstd

And, in the third scenario, I change the cost on already sold items. In this scenario, G/L entries will be as following:

RevSO