Inventory Controller or Manager Role
This role is for anyone dealing with the management and control of inventory. A service organization needs to closely manage "People and Parts", so your role is to manages the parts which is critical in customer satisfaction (correct and timely delivery) and company cost control . This role consists of managing inventory items, packages, service items, vendors, purchase orders, stock levels, returns, and inventory reconciliation.
Goals of the Inventory controller/manager:
- Keep a good list of items including inventory, packages, and services to make it easier for users creating orders and proposals.
- Make items inactive that are no longer used.
- Keep accurate inventory counts.
- Prepare parts required for orders (service, install, and itemized invoices).
- Maximize inventory "turns" while still providing good response to customer service. See WikiPedia Inventory Turns for more information.
Inventory Turns Definition from Wikipedia:
In business management, inventory turns often referred to as stockturn, stock turns, turns, and stock turnover. This measures the number of times invested in goods to be sold or used over in a year. An item whose inventory is sold (turns over) once a year has higher holding cost than one that turns over twice, or three times, or more in that time. The purpose of increasing inventory turns is to reduce inventory for three reasons. Increasing inventory turns reduces holding cost. The organization spends less money on rent, utilities, insurance, theft and other costs of maintaining a stock of good to be sold. Reducing holding cost increases net income and profitability as long as the revenue from selling the item remains constant. Items that turn over more quickly increase responsiveness to changes in customer requirements while allowing the replacement of obsolete items. Which is a major concern in fashion industries. However high turns may indicate that the inventory is too low. This often can result in stock shortages.
- Establish minimum level inventory levels and maintain these levels.
- Keep Purchase Orders (PO's) flowing so that PO's are sent to vendors and tracked as received in SME.
- Manage Just In Time (JIT)inventory so parts are ordered as needed, especially for parts that become obsolete quickly such as computer parts.
- Monitor approved Proposals so you are aware of upcoming orders.
- Manage customer or vendor returns.
- Manage vendor and subcontractor lists.
Here are the details tasks of the Inventory Controller and Manager Role:
- Inventory Items: There are three types of items in the inventory section: Inventory items (including non-inventory), Packages, and Services. Inventory items includes any parts or equipment regardless of whether you are managing the counts (inventory) or not (non-inventory). Inventory items are managed in the Inventory Section and Inventory module. You want to think of Inventory items from 3 levels:
- Level 1 - Inventory Items: This includes the description of the item, settings such as default vendor, minimum on hand, default stock and bin locations, Pricing Levels, and more. The key is to get this information setup properly right at the beginning to make it easy for users and the inventory managers.
- Level 2 - Stock: Although the inventory count information is shown on the main page of the inventory item, it is not directly editable as an item. Instead stock levels are controlled through adding of stock (typically only initially), purchase orders (PO's), and inventory reconciliation adjustments. The stock tab shows the stock by warehouse locations. New stock can be added to a new warehouse location or stock can be added to an existing location, HOWEVER, it is NOT recommended to add stock. Most stock transactions should go through purchase orders.
- Level 3 - Material Details: Includes details of inventory such as serial numbers, warehouses, and stock lots. If the system has an inventory item with multiple serial numbers all serial numbered items are unique, so they will show as separate items in the material details and are tracked throughout the system.
- This just provides a high level view of inventory, there are many more details. Review the Inventory section for more information.
- If you sync SME with QuickBooks (QB), all QB items will initially transfer into SME. New items added in QB will be added into SME. However, new items added in SME will NOT sync to QB unless specifically told to do so and the QB accounts are set. The Link Options tab provides options for syncing with QB.
- The inventory manager must maintain an accurate count of inventory items. Here are a few considerations for setting up and managing inventory:
- Initial stock levels must be accurately established when first setting up SME. If syncing with QB, initial QB stock levels are transferred to SME. Initial stock can be added based on the warehouse location in the stock tab. If the warehouse is already listed just add stock, if the warehouse is not listed select "New Stock Location".
- Make sure all items have a default vendor to make sure the automatic PO from service and install orders works properly.
- Make sure that important parts and equipment has the flag "Add to Cust Eq" is selected so that this inventory item is tracked as customer equipment when ordered for customers.
- Set the estimated Labor Hours for inventory that need to be installed. This will provide the estimated labor item times the quantity to help automatically create labor from inventory.
- Add a small jpg photo to help users recognize inventory items.
- Track inventory JIT (Just in Time) counts. For non-inventory items, you do not care about JIT counts, they can be any amount. However, for Inventory items there should be no JIT except for items currently on service or install orders or itemized invoices. JIT counts are items place on orders that are not in stock (or not picked from the right warehouse) and have not yet been put on a PO. If you are seeing high JIT counts, you will need to reconcile these levels.
- Watch minimum level inventory and order more of the parts you want min levels in stock.
- Receive PO items into inventory.
- Use Inventory Reconciliation in Utilities>SMP Utilities>Inventory for bulk changing of inventory such as end of year. Note that making adjustments such as this mean that something is not being tracked properly or you are having shrinkage. You should determine the cause of the inventory differences from physical inventory.
- Service Items: Service items can be used for a variety of purposes such as fixed rate type services, services to be performed by subcontractors, or other service type items such as freight, shipping, etc. Some companies using SME, use service items for all charges to customers and only use labor items for scheduling purposes. Other companies use service items for subcontractors with the cost being the amount they pay the subcontractor and the price the amount they charge to the customer. Notice that service items include multiple descriptions, these can be used for different purposes. For example, the Service Description can be used for the technician or subcontractor while the Invoice description is used for the customer invoice.
- Packages: Packages have a few different functions. They can be used from a marketing perspective for a bundle of items that provide a discount when purchased together. They can be used to make it easier for ordering since all items are grouped together requires the selection of just one package rather then many items. A package can be used as a finished goods item that is assembled from multiple inventory and service items. They can also be used as kits for a group of items that need to be brought together for a kit, sometimes just used once. Packages are equivalent to Inventory Groups in QuickBooks.
- Vendors: This module includes both vendors and subcontractors. You want to think of a subcontractor as a special type of vendor that can be added to service items on service orders and can also be scheduled on orders. Vendors are used for purchase orders, RMA returns, and as defaults for inventory items. The vendor module also tracks past Products Purchased and Purchase Orders ordered from the vendor.
- Purchase Orders: Purchase Orders (PO) should be used for all adding of inventory items (rather than stock adds) for proper inventory control. You can do PO's directly from orders (service, install or itemized invoice), or you can add items to the PO from orders, or you can directly order parts, or you can order all parts below min level.
- Stock Levels: Any inventory items that have a non-zero minimum level inventory value can be automatically be ordered.
- You can manually order for min levels from a PO and select Actions>Add from Minimum Level Inventory.
- You can also automatically create all PO's requiring min levels. Note that this method creates all PO for parts below minimum level inventory. It will make the order based on the default vendors for the inventory. Note also, that if you have other un-received PO's it will create a new PO since the parts are still below the min until open POs are received and go into stock.
- Returns: RMA is Return Material Authorization used to return items either from a customer equipment list to your stock OR from your stock to the vendor. If parts need to move from customer to vendor, this requires two RMA transactions, one from customer to stock and another one from stock to vendor. SME does not always handle the accounting side of RMA's so you need to manage the credit's to customer or from vendors.
- Inventory Reconciliation: Usually at year end a physical inventory is performed and then reconciled with SME. Any adjustments required should be understood, however SME provides an inventory reconcile tool in Utilities>SMP Utilities>Inventory>Inventory Reconciliation. See the Inventory Reconciliation section for more info.