Chapter 6 - SC - Inventory - Warehousing - V2 Part 2 - Updated PDF

Department of Industrial Engineering and Engineering Management University of Sharjah 1 0405452: Enterprise Resource Planning Systems Course Overview...

Department of Industrial Engineering and Engineering Management University of Sharjah 1 0405452: Enterprise Resource Planning Systems Course Overview Fall 2024-2025 Dr. Ali Cheaitou Course developed in Collaboration with  Chapter 6 – Part 2 Supply Chain, Inventory , & Warehousing Management 2 Advanced Inventory Management 3 3 Routes 4 4 Push and Pull Strategies Push Pull Trigger Stock Move/Production Customer Order Direction Forward (from the decision) Backward (from the need) Based on Demand Forecast Actual Demand No excess inventory and High likelihood to deliver Advantage(s) hence decreased storage the customer on time cost High stock levels and Ordering dilemmas (quality Downside(s) difficult forecast of service) 5 5  Routes: one king to rule them all Two strategies embodied within a single object. Routes define paths the product must follow when a procurement (order), by another entity, happens or a stock move is decided. Pull Rules Translate the Pull mechanism going backward. Routes Describe how procurement decisions (orders) on specific locations should be fulfilled, which inventory move to make, and whether the procurement is MTO or MTS. Push Rules Translate the Push mechanism going forward. Push rules trigger the move of products into specific locations. They automatically move the product to a new location. - Typically, we combine several rules into one route if we want the product to follow a specific path from A to Z in our supply chain 6 Routes: Order of Priority To fulfill a procurement order of another entity, the system will search for rules belonging to routes that are defined in: Sales Order Product Product Warehouse Lines Category 1 2 3 4 Used to handle case-by-case exceptions Used for typical paths within the that require a human check warehouse premises (Inbound flow, Outbound flow, etc.) - Tell the system what to do in case there is a procurement or a stock move, which routes to follow, which path, which moves or 7 actions to make Activate Multi-Step Routes 8  Activate Multi-Step Routes 1- We can access the routes specific to a given warehouse pressing on “Set Warehouse Routes” in the Settings (previous screen) Or by going to Inventory >> Configuration >> Warehouses >> Choose a specific WH 2- Then select the icon “Routes” from the chosen WH. 9  Activate Multi-Step Routes 1- Press on the Routes icon (top- right) 10  Conflicting routes The sequence of the routes is used to choose between two or several conflicting routes. 1- We can access the routes list by going to Inventory >> Configuration >> Routes 2- In simple words, the first route on the list will be the first route to be applied 11 Conflicting routes: avoid them Use 2D representation of routes to track conflicting rules through a Diagram view: Go to “Products” → Select a Product → “Inventory” We can see that the route for the product is simple and tab → View Diagram straightforward, from the vendor location to stock using 12 Purchase (Receive) and then from stock to the customer location for Sales (Deliver) Inbound and Outbound flows: from 1 to 3 steps Inventory → Configuration → Warehouses → Select a specific Warehouse ○ To be configured and applied at warehouse level. ○ 3 options for incoming and outgoing 13 Inbound and Outbound flows: from 1 to 3 steps Inventory → Configuration → Warehouses → Select a specific Warehouse ○ Select three-step rules 14 Inbound and Outbound flows: from 1 to 3 steps Inventory → Configuration → Routes → Select 3 step routes. ○ Choose the Receiving in 3 Step Route 15 Inbound and Outbound flows: from 1 to 3 steps Inventory → Configuration → Routes → Select 3 step routes. ○ There are two rules in the list. ○ Choose the Push-Pull rule WH: Input→ Quality Control and see the details. 16 Inbound and Outbound flows: from 1 to 3 steps ○ Go to the Purchase module and create a new RFQ— Purchase Order. ○ You will see that a Delivery has been scheduled. 17 Inbound and Outbound flows: from 1 to 3 steps ○ Go to the Inventory module. ○ You will see Internal Transfer (4 Waiting) 18 Inbound and Outbound flows: from 1 to 3 steps ○ 2 Internal Transfer are related to the PO created and they are waiting for other operations. ○ They are Internal Transfers. 19 Buy to resupply ○ To be configured at the warehouse level. ○ To be applied at the product or product category level. ○ Specifies whether purchases from external suppliers can be delivered to this warehouse. ○ Don’t forget to set a supplier as well as purchase price on each product. 20 Manufacture to resupply Requires the Manufacturing Module to be set up. ○ To be configured at the warehouse level. ○ To be applied at the product or product category level. ○ Specifies whether manufacturing orders can be triggered by this warehouse. ○ Don’t forget to configure a Bill of Materials for the finished or semi-finished products to be manufactured. 21 Manufacture … in multiple steps ○ To be configured at warehouse level. ○ To be applied at product or product category level. ○ 3 options: Manufacture (1 step) Pick components and then manufacture (2 steps) Pick components, manufacture and then store products (3 steps) 22 Resupply from other warehouses ○ To be configured at the warehouse level. ○ To be applied at the product or product category level. ○ Creates a two-steps route from the source warehouse (W2) to the destination warehouse (W1) ○ Another warehouse (W2) must be created to have the option 23 Dropshipping ○ To be configured in the settings (Purchase > Configuration > Settings). ○ To be applied at the sales order line level. ○ Creates a specific operation type to move the product from the supplier to the customer without transiting through the company’s stock. 24 Dropshipping ○ In the Sales module, create a new Sales order. ○ Add a product (Add the Route column if it is not there). ○ Choose “Dropship”. 25 Scrap Products ○ To be configured in the settings (Inventory > Operations > Adjustments > Scrap). ○ Specify the product and scraped quantity and then validate 26 Creating a new Route 27 27 ○ Routes: applicable on Inventory > Configuration> Warehouses> Choose a Warehouse> Routes At which level do you icon> press on New. allow the route to be applied? ○ Warehouse ○ Product Categories ○ Products ○ Sales Order Lines 28 Routes: Actions Which action(s) are you going to take to answer the procurement or a forward move? ○ Pull from ○ Push to ○ Push & Pull ○ Buy ○ Manufacture 29 Routes: Operation Type In which operation type are you going to package the move generated by the route? 30 Routes: Source and Destination The destination location is the procurement location (pull); the source location is the destination location of the previous move (push). 31 Routes: Supply Method Do you build a chain of moves (trigger another rule) or do you constitute a buffer stock in the source location? Or a bit of both? Take From Stock: the products will be taken from the available stock of the source location. Trigger Another Rule: the system will try to find a stock rule to bring the products into the source location. The available stock will be ignored. Take From Stock, if Unavailable, Trigger Another Rule: the products will be taken from the available stock of the source location. If there is no available stock, the system will try to find a rule to bring the products to the source location. 32 Routes: Stock → Customer with Automatic Replenishment 33 Routes: Stock → Customer with Automatic Replenishment Take From Stock: the products will be taken from the available stock of the source location. Trigger Another Rule: the system will try to find a stock rule to bring the products into the source location. The available stock will be ignored. Take From Stock, if Unavailable, Trigger Another Rule: the products will be taken from the available stock of the source location. If there is no available stock, the system will try to find a rule to bring the products to the source location. 34 Routes: Stock → Customer with Automatic Replenishment Activate both the “Buy” and “Make to Stock” routes for the product “Large Desk”. 35 Routes: Stock → Customer with Automatic Replenishment Create a new Quotation (in Sales) for the Large Desk for a customer with a quantity larger than the existing stock (here 81 vs existing 51). Press on Confirm. 36 Routes: Stock → Customer with Automatic Replenishment Press on the delivery icon. You can also press on “Purchase” icon to see the RFQ that has been created due to this sales order. 37 Routes: Stock → Customer with Automatic Replenishment Press on the delivery icon → Waiting for another operation → A replenishment order (Request for quotation) has been automatically created in the Purchase module. → This was done by the MTO route that triggered the Buy route. 38 Routes: Stock → Customer with Automatic Replenishment Go to Purchase Module: → A new RFQ has been added automatically for the Large Desk. → Press on this new RFQ. 39 Routes: Stock → Customer with Automatic Replenishment Go to Purchase Module: → The quantity is equal to the Sales order amount since the available quantity was 51 (less than 81) → We can see the icon of the sales order related to this RFQ → Confirm the RFQ. 40 Routes: Stock → Customer with Automatic Replenishment Click on “Receive Products” then “Validate”. 41 Routes: Stock → Customer with Automatic Replenishment The products (81) have been received in our WH. Now go to the Sales Module again to check the Sales order that triggered the RFQ. 42 Routes: Stock → Customer with Automatic Replenishment The products (81) have been received in our WH. Now go to the Sales Module again to check the Sales order that triggered the RFQ. Go to the Delivery icon in the sales order. 43 Automatic Ordering 44 44 Automatic Reordering Press on New 45 Automatic Reordering You should be in developed mode (General Settings → Activate Developer Mode) Choose: - Product - Min Quantity (in Stock) → Reorder point - Max Quantity (in Stock) → Target level - The product must have a VENDOR defined (default) - Press Order Once to trigger the Reordering policy. - This creates an RFQ 46 Automatic Reordering Go to Purchase Module: - Find the related RFQ (P00019) - Confirm the order (the order should be confirmed manually). - Then receive the products. 47 Automatic Reordering To activate generating the orders automatically through the Scheduler (run automatically once per day): - Operations → Run Scheduler. - The following message will appear: 48 Automatic Reordering Now, in Sales, create a sales order with 250 units. A new RFQ with 250 units will be created (since we have in the stock 100 units and the max quantity is set to 100). - Go to Purchase and confirm the Purchase Order and receive the goods. - Check the inventory level. 49 Inventory Reports 50 50  Stock Report Check the quantity on hand, free to use, unit cost, total value, outgoing and incoming. 51 51 Move History Report Check movements history of the product 52 52  Locations Report Check where is the product in your warehouse/inventory 53 53  Forecasted Report Check the forecasted quantity for your product (On hand + Incoming - Outgoing) 54 54 Best Practices Important for the Warehouse Manager to create a to-do list and track operations through the dashboard Use default operations first Add an extra operation type for each type of operation in your warehouse not reflected in the standard configuration Decide when to start tracking your products Set up alert mechanisms using the dashboard 55 Best Practices Order of importance: Product Category > Stock Location > FIFO (default) Generic strategy at product category level or main location Case by case strategy at sub location level or for a specific product category Use planned transfers as much as possible Negative quantities are not a bad thing! BUT you should track them in the inventory report and correct them through inventory adjustments 56 Best Practices Endless possibilities, endless combinations BUT a single path should be applied for each product. Beyond this single path, foresee exceptions (manual procurement or sales order line procurement). Keep routes simple ○ Don’t over complexify a flow: truly balance the additional time and cost to handle an extra operation and the added tracking value you get from the operation ○ Go step by step: manual operations first, routes second, reordering rules third 57 Thank You! #Odoo /odoo @odoo.official @odoo 58 Inventory Valuation Optional 59 59 Focus on the Inventory Valuation Costing Method Inventory Valuation Standard Price Standard AVCO Automated FIFO 60 60 Use case For Costing Methods Receive 8 Products at $10 Receive 4 Products at $16 Deliver 10 Products Receive 2 Products at $6 61 61  Standard Operation Unit Cost QTY on hand Delta Value Inventory Value 0 0 0 Receive 8 Products at $10 Receive 4 Products at $16 Deliver 10 Products Receive 2 Products at $9 62 62  Standard Operation Unit Cost QTY on hand Delta Value Inventory Value $10 0 0 Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 Deliver 10 Products Receive 2 Products at $9 63 63  Standard Operation Unit Cost QTY on hand Delta Value Inventory Value $10 0 0 Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 $10 12 +4*$10 $120 Deliver 10 Products Receive 2 Products at $9 64 64  Standard Operation Unit Cost QTY on hand Delta Value Inventory Value $10 0 0 Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 $10 12 +4*$10 $120 Deliver 10 Products $10 2 -10*$10 $20 Receive 2 Products at $9 65 65  Standard Operation Unit Cost QTY on hand Delta Value Inventory Value $10 0 0 Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 $10 12 +4*$10 $120 Deliver 10 Products $10 2 -10*$10 $20 Receive 2 Products at $9 $10 4 +2*$10 $40 66 66  Average Operation Unit Cost QTY on hand Delta Value Inventory Value 0$ 0 0$ Receive 8 Products at $10 Receive 4 Products at $16 Deliver 10 Products Receive 2 Products at $6 67 67  Average Operation Unit Cost QTY on hand Delta Value Inventory Value 0$ 0 0$ Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 Deliver 10 Products Receive 2 Products at $6 68 68  Average Operation Unit Cost QTY on hand Delta Value Inventory Value 0$ 0 0$ Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 $12=144/12 12 +4*$16 $144 Deliver 10 Products Receive 2 Products at $6 69 69  Average Operation Unit Cost QTY on hand Delta Value Inventory Value 0$ 0 0$ Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 $12=144/12 12 +4*$16 $144 Deliver 10 Products $12 2 -10*$12 $24 Receive 2 Products at $6 70 70  Average Operation Unit Cost QTY on hand Delta Value Inventory Value 0$ 0 0$ Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 $12=144/12 12 +4*$16 $144 Deliver 10 Products $12 2 -10*$12 $24 Receive 2 Products at $6 $9=36/4 4 +2*$6 $36 71 71  FIFO Operation Unit Cost QTY on hand Delta Value Inventory Value 0$ 0 0$ Receive 8 Products at $10 Receive 4 Products at $16 Deliver 10 Products Receive 2 Products at $6 72 72  FIFO Operation Unit Cost QTY on hand Delta Value Inventory Value 0$ 0 0$ Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 Deliver 10 Products Receive 2 Products at $6 73 73  FIFO Operation Unit Cost QTY on hand Delta Value Inventory Value 0$ 0 0$ Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 $12=144/12 12 +4*$16 $144 Deliver 10 Products Receive 2 Products at $6 74 74  FIFO Operation Unit Cost QTY on hand Delta Value Inventory Value 0$ 0 0$ Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 $12=144/12 12 +4*$16 $144 Deliver 10 Products $16 2 -8*$10 $32 -2*$16 Receive 2 Products at $6 75 75  FIFO Operation Unit Cost QTY on hand Delta Value Inventory Value 0$ 0 0$ Receive 8 Products at $10 $10 8 +8*$10 $80 Receive 4 Products at $16 $10 → cost of the 12 +4*$16 $144 first in stock Deliver 10 Products $10 then $16 2 -8*$10 $32 -2*$16 Receive 2 Products at $6 $16 → cost of the 4 +2*$6 $44 first in stock 76 76 Let’s do it in Odoo 77 77  Continental Vs Anglo-Saxon Note: DEBUG/Developer mode required! 1- Anglo-Saxon and continental methods are explained in the accounting chapter. 2- We need to know which method the company uses. 3- If the accounts are not available, create them in the chart of accounts in the Accounting Module (Configuration →Chart of Accounts). A- First account is Stock Valuation (put any code), type is current assets and reconciliation is not ticked B- Second account is Stock Valuation IN (put any code), type is current assets and reconciliation is ticked C- Third account is Stock Valuation OUT (put any code), type is current assets and reconciliation is ticked 78 D- Journal is always inventory valuation journal  Continental Vs Anglo-Saxon Note: DEBUG/Developer mode required! 1- Anglo-Saxon and continental methods are explained in the accounting chapter. 2- We need to know which method the company uses. 3- If the accounts are not available, create them in the chart of accounts in the Accounting Module (Configuration →Chart of Accounts). A- First account is Stock Valuation (put any code), type is current assets and reconciliation is not ticked B- Second account is Stock Valuation IN (put any code), type is current assets and reconciliation is ticked C- Third account is Stock Valuation OUT (put any code), type is current assets and reconciliation is ticked 79 D- Journal is always inventory valuation journal Define your product Category 80 80 Use case For Costing Methods Receive 8 Products at $10 Receive 4 Products at $16 Deliver 10 Products Receive 2 Products at $6 81 81 Let’s Check the Inventory Valuation 82 82  Landed Cost Landed cost refers to the total cost of a product once it has arrived at its final destination. It includes all the expenses incurred in purchasing, shipping, and delivering the product. Landed cost is an essential concept for businesses involved in international trade or logistics, as it helps determine the true cost of goods. Here’s what typically goes into calculating the landed cost: 1.Product Cost: The base cost of the product itself. 2.Shipping Costs: Expenses for transporting the product from the supplier to the destination, which could include ocean freight, air freight, or other logistics services. 3.Customs and Duties: Import duties, tariffs, and taxes imposed by the destination country. 4.Insurance: Coverage for the goods while in transit. 5.Currency Conversion: If you’re purchasing goods from a foreign supplier, fluctuations in exchange rates can affect the final price. 6.Handling Fees: Charges for loading, unloading, or storage of the goods during transportation. 7.Brokerage Fees: Fees paid to customs brokers or agents who assist in clearing the goods through customs. 83 83 Enable Create Receipt Valuation 84 84 Enable Create Receipt Valuation 85 85 Enable Create Receipt Valuation 86 86 Enable Create Receipt Valuation 87 87