Re: Physical Inventory

[Lmittman@xxxxxxx]

Lisa:

With regard to your Physical Inventory questions, I have the following 
comments:

1.  Running INV920 only creates the G/L Entries for Inventory Transactions 
that have been posted.  Therefore, you are correct that if you post the 
Physical Inventory transactions during the month, your financial reports will 
be correct.

2.  However, the key question is rather "When and how will you actually 
conduct the Physical Inventory Counts?"

     a.  In BPCS, the Physical Inventory System requires that you run 
Inventory Month-End Close before you begin the Physical.  The reason is that 
this process establishes the Opening Balance field in the Inventory Files and 
therefore serves as a static or frozen reference point.

     b.  When you enter the Physical Count, the Count is compared to the 
Opening Balance field.  If there are differences, then the Opening Balance 
will be corrected during the Post process.

     c.  An Inventory Transaction will be written to account for the change 
and this record will flow through INV920 to your financial reports.

3.  With this process, you can begin to process transactions for the new 
month (if necessary) while you are verifying the Physical counts because the 
reference point (i.e. Opening Balance) is frozen until the next Month-End 
Close.  However, if you choose to do this, you must insure adequate controls 
so that the count will be accurate even if transactions are being processed 
prior to the actual physical post.  Often times, companies choose to verify 
and post the physical before allowing transactions for the new month.

4.  If you are suggesting that you want to conduct the physical sometime 
during a month, then the BPCS Physical Inventory System will NOT support this 
without modifications.  Again, this is because the assumption is that the 
Opening Balance field is the frozen reference point.  To do a mid-month 
Physical, you would need to have the current Onhand Balance as the reference 
point.

5.  For several clients, I have designed customized Physical Inventory 
Systems that provide more flexibility and control than base BPCS.  In some 
cases, we have changed the post process to create an Adjustment Transaction 
(i.e. Physical Inventory Adjustment) rather than changing the Opening 
Balance.  In this way, the Opening Balance is preserved and the count is 
treated as an Adjustment in the new month.

6.  If you must do the Physical during a month, then you must provide a 
mechanism to capture the Onhand Balance at the cutoff.  Then, the count must 
be compared to this cutoff value and adjustments would then be posted.


I hope that these comments will be of help.  If you have further questions, 
please feel free to contact me directly.

Thanks.

Les Mittman, CPIM
Advanced Systems and Products, Inc.
Chicago Phone:  (847) 831-9388


***********  Original Message  **************

Subj:    Physical Inventory
Date:   5/23/00 4:47:52 PM Central Daylight Time
From:   Lisa.Abney@universalflavors.com
Sender: owner-bpcs-l@midrange.com
Reply-to:   BPCS-L@midrange.com
To: BPCS-L@midrange.com



We're on BPCS 4.0.5 (non-CD), and are looking at the physical inventory 
process.
We've been on BPCS for 5 years, and have always said we have to do the 
physical
in conjunction with month end ... now we're asking ourselves "why?"  If we run
INV920 at month end to close the month, do the physical count/entry sometime
during that month, and then post sometime before running INV920 the next month
end, what happens?  As long as we have all our financial reports, etc., 
balanced
before we post, it seems like we should be OK.  Anyone else do this, and are
there any pitfalls to watch out for?
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