Items are integral to to the great majority of ERP solutions, meaning understanding the fields tied to each is critical. This blog unfortunately may not go down as enthralling content or be nominated for any Booker Prizes but hopefully it will clear up some lingering doubts regarding fields in the Item Card. We are all guilty of looking at fields without total understanding of their function and glossing over it because we assume it’s not relevant. The truth is, until we know what a field can do, we don’t know how useful it can be!
I will just highlight that to keep this blog from becoming the sequel to War and Peace you never asked for, I won’t cover every field, only the ones which I think could be most unfamiliar to users looking at the system for the first time. The item card fields will be broken and covered over the course of four blogs. Nobody should have to endure it all in one sitting! Remember, Business Central can give a useful definition for many fields in the system where you are left stuck, simply hover your mouse over it.
The ‘Item’ tab
The ‘Type’ field allows you to specify the type of Item it is. ‘Inventory’ relates to your very standard item, perhaps a component or finished goods – something you may make and sell.
Non-inventory relates to Items that are typically small and in large quantities. For example, with nuts and bolts, you may have thousands of them in stock and so you treat them as non-inventory to stop yourself from having to keep track of quantities. Non-inventory items can still be added to bills of materials. Whilst the quantities aren’t tracked, you can still track the consumption of the component in orders.
An item of type ‘Service’ (not to be confused with a Service Item which is something completely different!) is a non-physical item such as a consultancy charge or electricity. It can be bought, sold or consumed in a job journal. Setting something like this up as an item allows things such as costs and posting rules to be easily defined.
Item Category Code
The Item Category Code allows you to group goods by characteristic. For example, if you were a furniture manufacturing company, you might have categories for different types of sofas. One might be leather sofas, another velvet sofas and thirdly polyester sofas. The ‘Service Item Group’ is essentially the same, but instead allows you to group service items instead.
Automatic Ext. Texts
The ‘Automatic Ext. Texts’ field relates to putting lines of texts onto documents. It gives you an option to have it on or off. If you have it turned on, then the text you have set up will be automatically added to the document of your choosing. If you search for ‘Extended Texts’ in the search bar and create a new one. You should get a screen like this:
The Lines area allow you to input lines of texts onto documents. When you have the field on the Item Card ticked, it will assume by default that you want this on every one of your documents that you have it set for. As you can see in the image, you can specify which documents will display the text. Where you don’t have this turned on and you want the extended text that you created on a document, you will have to add this manually each time on the type of order you want it on. To do this, click o ‘Line’, ‘Functions’ and ‘Insert Ext. Texts’. Here, you will get get an option to choose which texts to add. A comment Line will be populated underneath and then all that’s left to do is check it looks ok on a preview of the document.
GTIN stands for Global Trade Item Number. This is a means of tracking goods, which when used, can be linked with barcoding to process goods when receiving. The number can be up to a maximum of 14 characters and incorporates several different identifiers. These include: European Article Number (EAN), International Standard Serial Number (ISSN), Universal product Codes (UPC) and more. Where it’s eight characters long, it typically relates to very small items. The longer the GTIN, the more identifiers it will have present. The key thing to take away is, being global, a GTIN is not just an internal reference, it is a globally recognised identifier for your product.
Common Item No.
The Common Item No. gives you the ability to map your item numbers with those of an associated business. It’s a reference field only.
The Purchasing Code allows you to define that an Item isn’t to come into inventory. As this is done at an item level, you can have it set so that items purchased go straight to the customer’s warehouse. Within the Purchasing Codes setup, you can specify whether this is for Drop Shipments or Special Orders.
To clarify, drop shipments are orders of standard items that are delivered direct from your supplier to your customer. A special order is when you purchase a specific item and quantity for your customer. This stock will arrive at your location and subsequently be shipped to the customer. With this in mind, using the Purchasing Code field helps to display what you are using this item for and how you are managing it.
The ‘Inventory’ tab
The shelf number is informational only. This provides information on where to find the item in the warehouse.
Created From Catalogue Item
A catalogue item is something which can’t be sold until converted to an item. By default they represent an item that you wish to sell in the future, but until that point, a record of the item isn’t required in the system. Sales quotes can be made for catalogue items but no orders or invoices. This is only possible after the entity has been converted to an item in the Catalogue Item Card. This isn’t a particularly common field but allows you to reduce the number of records in your item list until the point it’s required. When you click to ‘Create Item’, an Item record will be created. Inside the Item Card, the ‘Created From Catalogue Item’ field will be enabled and non-editable.
The Stockout Warning field allows you to state whether a warning should appear when you create an order bringing you to negative inventory levels.
Prevent Negative Inventory
Prevent Negative Inventory lets you state whether to allow the posting of transactions that would bring the items stock levels below zero.
Over-Receipt Code lets users account for an established percent of goods over what was ordered. For items purchased in bulk, it may not be realistic to expect the exact quantity you purchased. The over-receipt code allows you to say that, up to 100% extra stock received is permitted. As you can see, this can be coupled with approvals.
The ‘Cost & Posting’ tab
The baseline cost of an item based on prior estimations. The standard cost will likely be reviewed periodically as to keep variances to a minimum. Standard cost items can be recalculated at a BOM level or for a singular component.
FIFO stands for First In First Out. This means where goods in inventory are sold, the oldest in stock and its associated value are assumed to be removed first. This is one of the most used costing methods and is often used in businesses which sell items with a limited shelf life.
LIFO stands for Last In First Out. This assumes that the most recent items brought into stock will be sold first.
Average costing is calculated as the average purchase cost within a specific time bucket. When selling the goods, it assumes all units of this item have an identical value. This is more likely to be used by businesses where costs are unstable or where goods are difficult to differentiate from one another, for example, chemicals.
Specific costing uses the exact cost attached to the specific unit. This is typically for goods with higher values. If this was for goods which were held in mass quantities, it would be very difficult to control. It’s more suited to items with lower volume and serially tracked goods.
The standard cost, as mentioned before, is the base estimation of cost, a figure the business decides will be used. The specific figure may be different for each purchase and these differences will be recorded as variances.
The Unit Cost is calculated differently depending on which costing method is being used. For standard costing, the Unit Cost is the same as the Standard Cost.
When using FIFO, the Unit Cost is an average of the item costs in the system. For example, if I had 10 items costing £5 each, the standard cost would be £5 as well as the unit cost. However, if I brought 10 more items at a cost of £10, the standard cost would be £5 and the unit cost would be £7.50. If I then proceeded to sell two of my 20 items, my unit cost would increase as FIFO works on the basis of removing the oldest stock first, which in this instance is the cheaper items.
LIFO unit cost calculation works in the same manner, with the only obvious point to note being that the first stock sold would be the last that arrived. So if we used the same figures as before, the unit cost would decrease.
With specific costing, the unit cost again is the average of all the costs of the items. It is worth mentioning here that whereas other costing methods except LIFO assume the oldest item is sold first, with specific costing, it’s the user’s decision. This means that the unit cost will be affected by the cost of the unit chosen to be sold. For example, if I had one item at £10, another at £20 and a third at £30, then the unit cost would be £20. But, due to the nature of specific costing, I can choose to sell the middle value if I like, which in this case would keep the unit cost at £20.
Average doesn’t work on the basis of current stock like the others. It instead works on a total over time. The Average equates to the total stock divided by total no. units. The figure won’t change on selling a unit, regardless of whether that unit was a higher or lower cost. If we use the figures in the FIFO example from before, the Unit Cost would stay at £7.50 until all the stock is used up.
Obviously, over time stock needs to be replenished. Business who use Average costing use periods to show change over time. These may be monthly, quarterly or even more distant but the key thing to note here is the calculation of Average costing will start to become more laborious as the cost of the original stock (if there’s any left over) will need factoring into the Average cost calculation of the new period. Finally, it’s worth noting Average costing is used very infrequently.
Indirect Cost %
This field specifies the percentage value of the item’s last purchase cost that stemmed from indirect costs, such as shipping.
Last Direct Cost
The last direct cost is the value of the last unit cost of the item. So, if my unit cost was £100 on the item card but on the latest purchase order I had I bought the item at £40, then £40 is what my last direct cost value would be.
Cost is Adjusted
The adjustment of cost is a process which if ticked, can be an automatic process. The setup for this can be found in Inventory Setup. This is detailing the process of automatically updating the cost for all outbound entries based on the costs of inbound entries. For example, you expect a laptop to cost £350. Before the invoice arrives, you have created a sales order for £475. When the the purchase invoice arrives, you see the cost is actually £400. The Cost is Adjusted field will automatically update the cost associated with the sales order.
The batch job which can be done in its place manually is called ‘Adjust Cost – Item Entries’.
Cost is Posted to G/L
This field determines that all individual costs are posted to the G/L.
The posting group fields let you define where to post transactions for entities, such as items. A more in-depth blog on posting groups will be written in the not-so-distant future so stay tuned!
Commodity codes are codes used in certain nations by tax authorities. They are used to classify different types of goods.
Country/Region of Origin Code
This is simply a marker on where the item was produced.
Thanks very much for reading! Don’t hesitate to send over any questions, comments or enquiries to us here.