We have a customer that is asking us to Manage their inventory for them. In this case we are going through standard process and the customer would like to pre-pay for entire order up front. So we will build to the order and stock the Finished Goods in our warehouse. At this point it has already been Ordered/Built/Shipped(?)/Invoiced. The missing step is that it will remain in our warehouse for up to 1 year and the customer will request that we ship on a schedule or on the fly. The shipments could be going to multiple locations as well.
Any thoughts or suggestions on how to do this?
I do not believe Epicor has an out of the box solution for this situation.
I think their customer managed inventory workflow expects you to ship/invoice as you fill the individual orders from the customers segregated inventory stored on the shelf, not the initial PO/production/receipt.
We are in a similar situation here where you lose visibility of the on-hand inventory as soon as you ship/invoice for the initial PO.
My latest crackpot idea was using our Pilot (or other alternative environment) to manage this inventory separately.
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I guess youâll have to think through different scenarios and see what is acceptable for your company. What is the most important (record-wise) to maintain as closely as possible?
You could do everything within the system including customer shipment and invoicing of individual finished goods. Then, instead of physically shipping them⌠they never leave your facility. In the system, they shipped⌠but you could adjust them back into a non-nettable warehouse bin so it donât appear in your normal inventory. Then you can Misc. Ship upon request.
The downside may be traceability, though. You will show that all of the finished good were shipped at the completion of the job. You may not be able to maintain good detail records of the individual shipments. (I canât remember if misc. shipments show up in Customer Tracker⌠but the Order will show everything shipped at once).
Another approach would be to add a line item to the sales order for a generic (stock) part. We have a part number 000-00000 for things like this. The description of the part on that sales order would be a list of the actual parts being sold. Put the entire sales order value on that generic part. Everything the customer actually orders would be made to stock. The generic part would be Customer-Shipped from stock at the completion of the stock job. That way you can invoice for the order total value and financially, youâre happy.
All actual finished goods are received to stock⌠into a warehouse bin with the Customerâs name on it. And you can do Customer Shipments from there upon request at zero $ pricing, so it wonât drive further invoicing.
This would give you better customer-shipment traceability⌠but the part transactions will show that they were sold at zero $.
Probably other variations you can dream up⌠perhaps better, more clever solutions? But those are two I can think of without having to customize anything. But again, each may have their drawbacks.
Perhaps walk through various scenarios in your pilot environment and see if any of them are acceptable to your department heads. Does everybody get what they need?
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I was just poking around and thought about using a deposit for the full amount and then applying the deposit as the items ship. We would still have the items in inventory at the end of the job but could go through the stand Customer Shipment process and apply the deposit to the releases as they are shipped.
Any thoughts on doing that, I know that we would still have the inventory in our system but we could transfer to a non-nettable bin after the job is complete, maybe?
The Financials are always fuzzy to me. And, again, may depend on how your finance side wants things to appear on the books.
I donât think a deposit payment is typically viewed as Revenue. Its more a liability on the balance sheet. So it would fall under unearned revenue.
So, when does you company want to recognize the revenue? Upon completion of the order/job? Or âup to a yearâ later when you finally ship the parts?
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Good point, regarding when the revenue is realized. Hadnât considered that.
CMI = Horrible
We use the CMI/SMI module and i have used it in a previous company. I would say you either follow the prescribed EPICOR process for CMI or do the deposit invoice process. I for one would suggest looking at the deposit invoice side if your financial team can handle it.
I HATE CMI
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I cannot find any documentation on this module CMI or SMI. Suggestions?
As you are on version 10, it may be worth contacting your CAM to see if they can help?
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A lot of companies want to recognise the revenue upfront which means you then have to go down the CMI process which then could mean loads of double handling of materials.
As a CEM we get advanced payments from customers to buy high value or long lead materials. We then âSellâ these to the Customer and use the CMI process to bring them in as Customer Owned. The problem with that is you have to receipt those parts from the original supplier and then do the CMI process transactions to get them CMIâd, this is obviously a lot of double handling on the system and can be prone to error.
We had a similar situation with a customer that held the physical stocks at their site but would only pay when they used the items. We created a Warehouse with a non-nettable bin and managed the stocks by moving inventory. Not sure if this might help?
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Can you outline a process in fewer steps that is less error prone that would take care of:
- Procurement cycle with supplier (order, receipt, payment)
- Sales cycle with customer (billing)
- Scheduling and MRP
- Inventory value/Product Costing
Mark,
Therein lies the problem, i dont think there is a process. You have to do the following when you are buying the materials -
- Procurement Cycle (Order, Receipt, Put Away, Pay)
- Sales (Order, Ship, Payment)
- CMI PO (Order, Receipt, Put Away in CMI location)
- Scheduling and MRP - We dont run MRP BUT if the above is done in a timely manner you should not have any issues
- EPICOR CMI Process takes care of costing for what are essentially âFree Issued Itemsâ and they are booked in on a Lot Number that is the same as it was receipted against from the supplier but with a âCâ on the end.
BUT and it is a big one, your product CoS will never be right with any materials that are free issue, without a lot of manual intervention by finance, which is why i dont like the CMI process.
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The solution we have been using creates a new part number with zero cost. But it, too, is unwieldy. The method has to use this part instead of the purchased part, so we (cough, cough) adjust out the purchase and adjust in the customer part. But if that changes or we use regular material in a rush, that messes everything up.
If it was a service where we literally working on their material, all would be fine with CMI, but since itâs really just segregated purchased materials, âŚ, ugh. I feel your pain.
Havnât tried contract purchases yetâŚ
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As we deal with component reels, we issue full reels to jobs so inevitably there will be an excess in the job. That makes matters worse for both CMI and Our stock especially if product is shipped before the excess is removed.
The whole CMI process is a nightmare and the only way i can see it not from an Inventory point of view is to use Advanced Billing (One of the many variants of it) to receive material payments from the customer. Then we go back to the when do you want to take the material sale etcâŚ
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I have done this type of transaction for a long time through three different software packages. I have always maintained the original process for Prebilled Inventory \ Customer Owned Inventory. Luckily it is a low number of items. We generally do it because the customer does not want to take the inventory by their cutoff date, or they are looking for tax advantages.
I create sales orders and sell the product to the customer.
I fix the Avg Cost to $0.
I fix the price list to $0.
I add the inventory back in.
When the customer comes in for pickup, it is a normal transaction at 0 cost and price. We are doing âcounter salesâ to farmers picking up flatbed loads of product.
I create a report to monitor the inventory.
When the product zeroâs out, I inform Sales Service to set a new price.
The only part I do not like is that the quantity sold is doubled over time, and any summary margin reports show half%.
I am thinking about changing the initial billing to a Misc Invoice that is offset by a Cost Adjustment to 0. This matches revenue and costs.
It is manual, but we have a low volume of these.
If you are on Epicor 10, itâs in the Inventory Management - Specialized Processing Course
Thanks for all of the replyâs, we already have a process to receive deposits against SOâs. We decided that it would be to complex to rethink this just for one customer so we opted to just take the payment for full amount as a deposit and use the standard procedures that we already have in place.
thanks for the feedback, it was really helpful for our internal discussions.
Our customers also require us to do the same. What we have done is create the same part number (as part ordered/built/shipped/invoiced) and use either CO (customer owned) or NC (no charge) behind it. (Ex: E01234-CO). We build E01234, create a pack slip and ship it to our location and then we receive it into the proper bin using the -CO or -NC part number. Itâs likely not the most efficient way, but doing it this way also makes searching customer owned parts easier.