The penultimate episode of the series on inventory in IT systems covered the description of slightly more sophisticated IT solutions than simple inventory recording. In this episode, the author characterizes the most sophisticated approach to inventory that has been implemented in one of the ERP-class systems available on the market.
Inventory in the MAX system
An original approach to the issue of inventory in IT systems (from the recording and analytical group) was implemented in the MAX system. In addition to typical algorithms performing distributed inventory analysis, this system was equipped with functionality allowing for dynamic design of inventory logistics and tracking their levels in individual logical locations of the company. The goal of this solution is to assist the user in obtaining accurate information about inventory and identifying those areas of management where improvements can be made (e.g., reducing costs). To achieve this goal, information about the logical storage location of physical inventory is stored in the system database, which enables a logical view of inventory levels. Physical inventory levels are stored in production warehouses, main warehouses, and defined physical storage spaces. A logical view of inventory levels in individual locations is provided by so-called inventory accounts. Information about warehouses and storage spaces is related to physical inventory quantities. In contrast, inventory accounts record the logical state of inventory, which is independent of the actual locations of the inventory.
Fig. 1 illustrates a different view of inventory recording.
Inventory accounts are used to manage inventory and conduct its analysis in terms of both quantity and finance. They show the amounts of frozen financial resources in specific inventory items, provide information about inventory movements, and are used to transfer inventory values to financial ledgers.
Inventory levels recorded in storage spaces are handled only if the system user (inventory planner) adopts such a tracking strategy. If the storage space management option is disabled, the lowest level of tracking detail will be the relationship: material item – warehouse – inventory account.
An example of using inventory accounts is shown in Fig. 2. Inventory accounts are represented in the figure as rectangular frames. Frames marked with a solid line are so-called “balanced accounts”; they contain accurate information about inventory levels, and for this reason, their quantity is of significant importance. The remaining frames (dashed line) denote so-called “unbalanced accounts,” i.e., “to-nowhere” accounts, for which the concept of a balance is irrelevant. The system of inventory accounts in the MAX system is a formalized system that has an entry and an exit: every transaction must have a “From” and “To” address. This means there is a need to represent locations outside the system. The way to do this is precisely through “To-nowhere” accounts.
The article comes from the magazine “Logistyka” 4/2003.