Sterling Selling and
Fulfillment Foundation
processes Return Orders and makes inventory adjustments.
The processes and inventory adjustments are as follows:
General
- Returns processing does not assume the use of the Sterling Selling and
Fulfillment Foundation Reverse
Logistics module. The inventory adjustment can just be flagged as
a "Return" type.
- The processing of returns and inventory adjustments
do not force a recalculation of average cost.
Note: The
updateInventoryCost API can be used to recalculate the inventory value.
For information about the updateInventoryCost API, see the Sterling Selling and Fulfillment Foundation:
Javadocs.
- Both returns and inventory adjustments force a
recalculation of inventory value, based on the quantity received or
issued.
- The return receipt impacts an on-hand supply type.
Supply types are configurable by the organization. This includes the
ability (at this level) to control whether quantities are considered
in on-hand calculations.
- All updates related to warehouse management systems
are assumed to be against on-hand supply.
- When adjusting inventory value based on the processing
of a return (a receipt) or an inventory adjustment (positive or negative), Sterling Selling and
Fulfillment Foundation publishes
the change to be used by a general ledger accounting application.
Positive
inventory adjustments
- If the average cost of the item is not known, it is taken into
stock at $0.00 cost and manual cost adjustments are required.
Negative
inventory adjustments
- If on-hand quantity results in a negative number, the inventory
value is also reflected as a negative number. No change is made to
the average cost due to this transaction.
- If an adjustment was made from a zero stock position and the average
cost of the item is not known, the inventory value remains at $0.00.
Returns
- If the average cost of the item is not known, it is taken into
stock at $0.00 cost and manual cost adjustments are required.
Returns and inventory adjustment scenarios
Return Scenario 1 and 2 illustrate how Sterling Selling and
Fulfillment Foundation processes
returns and makes inventory adjustments.
Returns - scenario 1 - see Figure 1
A return is created in Sterling Selling and
Fulfillment Foundation from
an existing sales order. The customer ships the product back to the
designated return node. In this instance, the product is returned
to the same facility from which it was shipped. The return is received
and moved into stock (as on-hand). Inventory value is recalculated
using the current average cost for the item at the return node. The
change in inventory value is published to the general ledger accounting
application.
Returns - scenario 2 - see Figure 1
A return is created in Sterling Selling and
Fulfillment Foundation from
an existing sales order. The customer ships the product back to the
designated return node. In this instance, the product is returned
to a different facility than that from which it was shipped. The return
is received and moved into stock at the return facility (as on-hand).
Inventory value is recalculated using the current average cost for
the item at the return node. The change in inventory value is published
for the financial application.
For both Return
scenarios 1 and 2 the general information flow is as follows:
- Sterling Selling and
Fulfillment Foundation recalculates
the Inventory Value
- Current Average
Cost = $4.75
- Current Inventory
Value = $2500
- New Inventory Value = $2500 + (10 * $4.75) = $2547.50
- Sterling Selling and
Fulfillment Foundation publishes
the information pertaining to the change in inventory value (used
for integration to financial applications).
Figure 1. Return scenario 1 & 2
Inventory adjustment - scenario 1 -
see Figure 2
After cycle counting, the inventory of item ABC at
Node1 needs to be decreased by 4 units. This is reported in the warehouse
management system and interfaced to Sterling Selling and
Fulfillment Foundation.
On completing the adjustment within the Sterling Warehouse Management System version 9.1, Sterling Selling and
Fulfillment Foundation recalculates
the inventory value to reflect the "loss" of 4 units of ABC at the
average cost of ABC at Node1. The change in inventory value is published
for the financial application.
- Sterling Selling and
Fulfillment Foundation recalculate
the Inventory Value
- Current Average
Cost = $11.20
- Current Inventory
Value = $12,500
- New Inventory Value = $12,500 - (4 * $11.20) =
$12,455.20
- Sterling Selling and
Fulfillment Foundation publishes
the information pertaining to the change in inventory value (used
for integration to financial applications).
Inventory adjustment - scenario 2 -
see Figure 2
After cycle counting, the inventory of item DEF at
Node1 needs to be increased by 13 units. This is reported in the warehouse
management system and interfaced to Sterling Selling and
Fulfillment Foundation.
On completing the adjustment within the Sterling Warehouse Management System version 9.1, Sterling Selling and
Fulfillment Foundation recalculates
the inventory value to reflect the "gain" of 13 units of DEF at the
average cost of DEF at Node1. The change in inventory value is published
for the financial application.
- Sterling Selling and
Fulfillment Foundation recalculates
the Inventory Value
- Current Average
Cost = $20.00
- Current Inventory
Value = $17,800
- New Inventory Value = $17,800 + (13*$20.00) = $18,060
- Sterling Selling and
Fulfillment Foundation publishes
the information pertaining to the change in inventory value (used
for integration to financial applications).
Figure 2. Inventory adjustments - scenario 1 & 2