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    Using Inventory Periods in Microsoft Dynamics NAV 2013

    Inventory Periods are used in Dynamics NAV for a variety of purposes:

    • They preclude inventory Value Changes in a Closed Inventory Period
    • They are one factor in setting the “Allow Posting Dates” for closed period entries when running Adjust Cost-Item Entries (see my earlier blog, Adjust Cost – Item Entries Program and Prior Period Adjustments in NAV)
    • They provide for a diagnostic report when trying to close an inventory period

    The online Help definition for Inventory Periods in Dynamics NAV 2013:

    Specifies a period of time in which you can post changes to inventory value. An inventory period is defined by the date on which it ends, or the ending date. When you close an inventory period, you cannot post any changes to inventory value, either expected or invoiced, before this ending date, and you cannot post any new values to inventory before the ending date. If you have open item entries in the closed period, meaning positive quantities that have not yet been consumed by (applied to) outbound transactions, you can still apply outbound quantities to these entries, even if the period is closed.

    Screenshot of the Inventory Period Screen in Dynamics NAV 2013

    Figure 1 – Screenshot of the Inventory Period Screen in Dynamics NAV 2013 also showing the form for creating new Inventory Periods

    What I like the most about Inventory Periods is that when you attempt to close an Inventory Period, you might get an error saying there are “Open outbound Item Ledger Entries” that need to be resolved. If you have open outbound Item Ledger Entries, you can be sure that your Inventory Valuation for those items is not correct.

    Closing an Inventory Period…

    Figure 2 – Closing an Inventory Period…

    …Can result in an error indicating you have open outbound Item Ledger Entries

    Figure 3 - …Can result in an error indicating you have open outbound Item Ledger Entries

    If you get this error message, you can run the test report to see what is causing the problem.

    Run the Test Report to find out what is causing an error

    Figure 4 – Run the Test Report to find out what is causing an error

    Inventory Period Test Report results

    Figure 5 – Inventory Period Test Report results

    After you have resolved the “open/outbound” Item Ledger Entry issues, you can close the period knowing you are not carrying forward valuation problems to the next period.

    For more information on this topic or another Dynamics NAV topic, please contact ArcherPoint.


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    Reducing the Quantity of Inventory Sub-Ledger Entries Posted to the General Ledger in Microsoft Dynamics NAV

    I often hear the comment that Dynamics NAV posts too many Inventory Sub-Ledger entries to the General Ledger.

    There is a way in Dynamics NAV to reduce the number of General Ledger entries when running the batch report “Post Inventory Cost to G/L”. When running the batch report, select “Per Posting Group” and the system will summarize the inventory transaction Value entries by Posting Group and make substantially fewer General Ledger Entries.

    Post Inventory Cost to G/L report screen

    Figure 1 – Post Inventory Cost to G/L report screen

    If you have been live on Dynamics NAV for some time and you have few to no problems with Inventory to General Ledger Reconciliation, you might want to use this method. The drawback, however, is that you lose the ability to do an easy detailed analysis if you have Inventory to General Ledger Reconciliation problems.

    All is not lost, though, as you can find all of the Value Entries for a General Ledger Entry by going to the General Ledger Entry and finding all of the Value entries that were part of the summarized General Ledger entry.

    Select an item from the General Ledger Entry and select Value Entries…

    Figure 2 – Select an item from the General Ledger Entry and select Value Entries…

    …to find all of the Value entries that were part of that summarized General Ledger entry

    Figure 3 – …to find all of the Value entries that were part of that summarized General Ledger entry

    And the converse is true: From a Value Entry, you can find your way to the General Ledger Entry that was posted.

    You can also get to the General Ledger from a particular Value Entry that has been posted

    Figure 4 – You can also get to the General Ledger from a particular Value Entry that has been posted

    If you are experiencing too many General Ledger Entries being posted from the Inventory Sub-ledger and you are not experiencing Inventory to General Ledger Reconciliation problems, I would recommend that you give this method a try.

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Ensuring All Items are Posted When Using a Nightly Batch Job

    Running Adjust Cost-Item Entries and Posting Cost to G/L in Microsoft Dynamics NAV

    Whether you use the Dynamics NAV automatic features to run the Adjust Cost-Item Entries and Post Cost to G/L processes during nightly batches or run them manually, nearly all of the time these processes work correctly and produce the correct results. However, from time to time, something goes wrong that will leave the Inventory Sub-Ledger and the General Ledger out of balance.

    Every now and then (and certainly at the end of every month) you need to run the Inventory to G/L Reconcile Report to see that there are no Inventory Values to be Posted to the G/L.

    Values in the “Inventory Value to be Posted” column of the Inventory to G/L Reconcile Report indicates outstanding values still to be posted

    Figure 1 – Look for values in the “Inventory Value to be Posted” column of the Inventory to G/L Reconcile Report to ensure there are no outstanding values still to be posted

    If you see a value in the “Inv. Value to be Posted” column, there are remaining entries that have not made it to the General Ledger.

    Ensure that all inventory values are posted to the G/L

    Figure 2 – Ensure that all inventory values are posted to the G/L

    When you have run the report and it looks like everything has posted, run the report again.  If everything has posted, the report will print no output and look like this:

    View of the Inventory to G/L Reconcile Report when all items have been posted to the G/L

    Figure 3 – View of the Inventory to G/L Reconcile Report when all items have been posted to the G/L

    If there are remaining lines when you run the report the second time, this means there are items that are set up incorrectly and are not posting to the General Ledger. These will be listed as “skipped items”.  You will then need to resolve the incorrect setups and run the report repeatedly until all items are posted.

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Unexpectedly High New Standard Cost in Microsoft Dynamics NAV

    There are times when you are using the Dynamics NAV Standard Cost Method and rolling up a Standard Cost for a Produced Item you get an unexpectedly high Standard Cost.

    A probable cause is that you have selected "Cost Includes Setup" in the Manufacturing Setup and that you have a setup time in a Routing Line but forgot to enter a value for ‘Lot Size’ on the item card.

    Checking or unchecking the “Cost Includes Setup” in the Manufacturing Setup window can affect Standard Cost

    Figure 1 – Checking or unchecking the “Cost Includes Setup” in the Manufacturing Setup window can affect Standard Cost

    From the Dynamics NAV Help for Lot Size on the Item Card:

    If the item routing includes fixed costs such as setup time, then the value in this field is used to calculate the standard cost price and distribute the fixed costs of manufacturing the item.

    Here is the Routing for the Bicycle Item 1000 that shows Setup Time in the Routing.

    Setup Time in the Routing table

    Figure 2 – Setup Time in the Routing table

    When I roll up the standard cost for Item 1000 with the Lot Size set to zero, I get $533,399.

    Setting the Lot Size to zero…

    Figure 3 – Setting the Lot Size to zero…

    …yields a Standard Cost of $533,399

    Figure 4 – …yields a Standard Cost of $533,399

    When I set the Lot Size to 10, I get a Standard Cost of $383.099

    Setting the Lot Size to 10…

    Figure 5 – Setting the Lot Size to 10…

    …yields a Standard Cost of $383,099

    Figure  6 – …yields a Standard Cost of $383,099

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    What are Rounding Value Entries in Microsoft Dynamics NAV?

    I received a question the other day from a client about an unexpected and unexplained Rounding Value Entry that was created by the Adjust Cost – Item Entries program in Dynamics NAV.

    The Rounding Value Entry was associated with a Purchase Receipt that was made several months before the Rounding Value Entry was created.

    The Purchase Receipt was for a large quantity of items that were sold individually over thousands of sales order shipments.

    From Dynamics NAV Help:

    Rounding

    Rounding residuals can occur when valuing the cost of an inventory decrease that is measured in a different quantity than the corresponding inventory increase. The program calculates rounding residuals for all costing methods when you run the Adjust Cost – Item Entries batch job.

    When using the Average costing method, the rounding residual is calculated and recorded on a cumulative, entry-by-entry basis.

    When using a costing method other than Average, the rounding residual is calculated when the inventory increase has been fully applied (when the remaining quantity for the inventory increase is equal to zero). The program then creates a separate entry for the rounding residual. The posting date on the rounding entry is the posting date of the last invoiced value entry of the inventory increase.

    In this case, there were no alternate units of measure on this item, but I believe that due to the large quantity of the receipt and the large number of small shipments, cost/value rounding was introduced over time.  When the last unit of the purchase receipt was dispersed, the system (Adjust Cost – Item Entries) needed to make the cost of the inbound purchase order equal to the cost of the outbound sales, so it calculated the difference between the costs of the outbounds and made a Rounding Value Entry to the purchase receipt.

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Lot and Serial Tracking in Microsoft Dynamics NAV Clarified

    Dynamics NAV provides for very robust Serial Number and Lot Number Tracking.

    When I advise clients about Serial and Lot Tracking, I say, “Only do it if you have to, as it adds additional user effort to record a transaction.” There are situations where you must use serial or lot tracking. These situations are primarily in the life science industries, where you might be producing medicines or if there is a human safety aspect to your product. Another situation is where you are subject to recalling defective products.

    To accommodate most of the lot and serial number tracking scenarios that we find in manufacturing and distribution, Dynamics NAV gives us setup screens to pick and choose what we want to track.

    In the screenshots below from NAV 2013, we see that there are two columns—one for inbound to inventory item transactions and one for outbound item transactions. We can also see under the ‘General’ section a check box for ‘Lot or Serial Specific Tracking’.

    If we do not check ‘Lot Specific’ or ‘SN Specific’ in our setup, then we are allowed to pick and choose from the left and right columns the transactions in which we want to make it mandatory for the user to enter a serial or lot number before posting a transaction.

    For example, if we only select Inbound/Lot Purchase Tracking, then the only transactions that will require a lot number to be recorded will be purchase receipts.

    On the other side of the business, if we only select Outbound/Lot Sales Tracking, then the only transactions that will require a lot number will be sales shipments.

    It is important to note that unless you select ‘Lot or Serial Number Tracking,’ the system will not validate whether or not you have entered a correct serial or lot number, or for that matter, if the serial or lot number exists in stock.

    To have full lot or serial traceability, you much select the ‘Specific’ option. In this case, the system will not allow you to post an outbound transaction unless there is an adequate quantity of the lot or unless the serial number exists in stock.

    Setup Screen for Lot Specific Tracking

    Figure 1 – Setup Screen for Lot Specific Tracking

    Setup Screen for Serial Number Specific Tracking

    Figure 2 – Setup Screen for Serial Number Specific Tracking

    As an example, I have selected an item that requires ‘Lot specific Tracking’.

    Example of selecting an item with Lot Specific Tracking…

    Figure 3 – Example of selecting an item with Lot Specific Tracking…

    To record a positive inventory adjustment, I must also enter the lot number for the item being put into inventory.

    …requires that a lot number is provided for positive inventory adjustment

    Figure 4 – …requires that a lot number is provided for positive inventory adjustment

    To record a negative inventory adjustment, I must select a lot number that exists in stock.

    Recording a negative inventory adjustment requires a lot number from existing stock

    Figure 5 – Recording a negative inventory adjustment requires the user to select a lot number from existing stock

    If I enter a number that doesn’t exist for an outbound entry, I get an error.

    Entering an invalid number in the Item Tracking screen…

    Figure 6 – Entering an invalid number in the Item Tracking screen…

    The Item Tracking screen returns an erro

    Figure 7 – …results in an error

    To view results, filter on your lot or serial numbers in the Item Tracking screen

    Now, to view the results of your item tracking efforts, you go to the Item Tracking screen in Dynamics NAV and set filters to find your lot or serial number.

    Figure 8 – To view results, filter on your lot or serial numbers in the Item Tracking screen

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Item Substitutions in Microsoft Dynamics NAV

    There are times in a manufacturing company where substitute items that are not on the Bill of Material are OK to use if the preferred item is not available. Often this substitution has to be approved by an engineer and is usually in the form of a ‘Usage Variance’.

    If substitutions are a common event, it might be useful and time saving for the engineering department to set up ‘Item Substitutions’ ahead of time so that an individual variance doesn’t have to be approved and signed each time.

    To set up a Substitution in Dynamics NAV, go to the Item Card for which a substitute is available.

    Item Substitution entry

    Figure 1 – Item Substitution entry

    Then enter the item number that is OK to be used as a substitute.

    Enter the item number of the item that can be used as a substitute

    Figure 2 – Enter the item number of the item that can be used as a substitute

    Now, go to the component list of a production order and select the substitution that was approved by the engineering department.

    From the component list of production order…

    Figure 3 – From the component list of production order…

    …select the approved substitution

    Figure 4 - …select the approved substitution

    The production order component list now contains the substituted item.

    The production order component list shows the substitution

    Figure 5 – The production order component list shows the substitution

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Using Send-Ahead Quantity in Microsoft Dynamics NAV Routings

    From a production scheduling point of view, it may be advantageous to ‘overlap’ production steps to reduce the elapsed time to produce a lot of goods.

    From the APICS Dictionary

    Send-Ahead is the movement of a portion of a lot of material to a subsequent operation before completion of the current operation for all units of the lot. The purpose of sending material ahead is to reduce the manufacturing lead time.

    Other names for ‘Send-Ahead’ are Split Lot or Overlapped Production.

    Figure showing ‘Send-Ahead Quantity’ in Dyamics NAV

    Figure 1 – Figure showing ‘Send-Ahead Quantity’ in Dyamics NAV

    To illustrate this, I created a Dynamics NAV production order for 10 bicycles using the routing from above. The due date of the production order is 9/14/2014 and the starting date that was calculated by the system is 9/10/2014, 11:39 AM.

    Figure showing production order showing starting and ending dates

    Figure 2 – Figure showing production order showing starting and ending dates

    Now, when I have changed the Send-Ahead quantity on the first three routing steps and refreshed the production order, I get a starting date of 9/13/2014, 10:49 AM, which will result in a 3-day reduction of elapsed time.

    Changing the Send-Ahead Quantity of the first three routing steps…

    Figure 3 – Changing the Send-Ahead Quantity of the first three routing steps…

    …results in a reduction of three days

    Figure 4 - …results in a reduction of three days

    Keep in mind that the total ‘effort hours’ remain the same, but the elapsed time is reduced. The advantage is that there are more operations being performed at the same time, as opposed to doing each operation when the entire lot is completed at each operation.

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    A Brief Definition of Time in Microsoft Dynamics NAV Manufacturing

    In order to set up Routings in Dynamics NAV and understand their Cost Accounting effects, one needs to know how time is defined.

    In a Routing there are ‘Value Added Times’ and times just for scheduling purposes. 

    Value Added Times

    Setup Time– The time to set up a machine or to get ready to produce

    Run Time– The time it takes to produce a part in a Work or Machine Center

    Non-Value Added Scheduling Times

    Queue Time– The time a lot (Production Order) typically waits to be worked on in a Work or Machine Center (some would call this ‘Buffer time’).

    Wait Time– The time at the end of a production operation that the item(s) need to wait before being moved to the next operation or to stock.  This might be cooling time, curing time, or paint drying time.

    Move Time– The time that it takes to move the lot (production order) to the next operation’s Work Center.

    Showing the various Routing times in Microsoft Dynamics NAV

    Figure 1 – Showing the various Routing times in Microsoft Dynamics NAV

    When NAV rolls up Standard Cost, it only uses Setup time and Run Time. When time is recorded in the NAV Output Journal, only Setup Time and Run Time are recorded. The other times are used only for scheduling and do not contribute to the product’s cost.

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Purchasing Lead Time in Microsoft Dynamics NAV

    There are actually two Purchasing Lead times in Dynamics NAV.

    If we look at the Replenishment and Planning Tabs of a Dynamics NAV Item Card or SKU Card, we see Lead Time Calculation and Safety Lead Time. The Lead Time Calculation is what most people would call Purchasing Lead Time. The reason it is called Lead Time Calculation is that the user is allowed to enter a Dynamics NAV date calculation—for instance, 1M-1D or 5W or 35D.

    View of Replenishment and Planning Tabs in Microsoft Dynamics NAV

    Figure 1 – View of Replenishment and Planning Tabs showing entries for Lead Time Calculation and Safety Lead Time

    When you think about Purchasing Lead Time, think of it as Purchasing Notification Time. I define it as the amount of time before the product needs in order to be delivered to your company that the Purchasing Agent needs to be alerted. This would include the time the supplier needs to make the product, the time in transit, and the time the Purchasing Agent needs to negotiate the purchase agreement and prepare and deliver the purchase documents. When MRP is run using the Calculate Plan with the Planning Worksheet, the starting date will be Due Date – Safety Lead Time – Lead Time Calculation.

    Safety Lead Time is not really Lead Time at all, but the amount of time before the product is needed for production or distribution that it should be delivered to your company. I sometimes call this Dock Time or perhaps Quality Control Time. For instance, if the product is needed on Monday and it has a 3-day Safety Lead Time, it should be delivered on the previous Tuesday.

    Diagram showing how Safety Lead Time is used in Microsoft Dynamics NAV

    Figure 2 – Diagram showing how Safety Lead Time is used

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Determining Which GL Accounts Purchase Receipts and Invoices will Post to in Microsoft Dynamics NAV

    The other day, the question came up about how to determine which Dynamics NAV General  Ledger Accounts are posted to for a Purchase Receipt and Invoice.

    First, we need to find our way to the Item Ledger Entry for the receipt you want to analyze.

    Item Ledger Entry showing the receipt to be analyzed

    Figure 1 – Item Ledger Entry showing the receipt to be analyzed

    The Dynamics NAV feature ‘Navigate’ will take us to the General Ledger Postings.

    Clicking on the Navigate feature on the Item Ledger Entry window

    Figure 2 – Clicking on the Navigate feature on the Item Ledger Entry window…

    This is the result of the navigation:

    Display the detail of the Item Ledger Entry

    Figure 3 - …will display the detail of the Item. Selecting Show from this screen…

    And if we select ‘Show,’ it will take us to the General Ledger Postings.

    View of the General Ledger Postings

    Figure 4 – …will take the user to General Ledger Postings

    The problem is, this only shows us the postings related to the Purchase Receipt and doesn’t include the postings related to the Purchase Invoice.  To see both, we need to drill down on the ‘Cost Amount (Actual)’ to see the Value Entries Related to this Purchase Receipt.

    Be able to see both the Purchase Receipt and the Purchase Invoice

    Figure 5 – To see both the Purchase Receipt and the Purchase Invoice, drill down on the Cost Amount (Actual)…

    Now we can ‘Navigate’ on the Purchase Invoice Document No. to get to the General Ledger Postings as a result of the Purchase Invoice.

    Navigate on the Purchase Invoice Document Number to get to the General Ledger Postings

    Figure 6 – …which will allow the user to Navigate on the Purchase Invoice Document Number to get to the General Ledger Postings…

    Now, by selecting ‘Show,’ we can see the General Ledger Postings we created when we posted the Purchase Invoice.  If we combine the General Ledger Postings from the receipt and the invoice, we can see the entire results for this Purchase Receipt.

    The General Ledger Postings for the Purchase Invoice can be seen

    Figure 7 – …now, by selecting Show, the General Ledger Postings for the Purchase Invoice can be seen

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    When the Unit Cost and Standard Cost Are Not Equal on NAV Inventory Valuation Report

    I got a call the other day from a client who said when they run the Dynamics NAV Inventory Valuation Report that the unit cost on the report is not equal to the Standard Cost of the Item.

    To illustrate, see the example below. The Standard Cost for Item 1000 is 427.499, but when I run the Inventory Valuation Report, the Unit Cost is 423.508.

    Standard Cost shown on Item Card

    Figure 1 – Standard Cost for an item is shown as 427.499…

    ...however, the Unit Cost for the same item is 423.508

    Figure 2 - …however, the Unit Cost for the same item is 423.508

    The probable reason for the mismatch is that someone rolled up the Standard Cost but did not do an Inventory Revaluation to update the existing inventory value

    If we look at the Item Ledger Entries for this item, we can see that, although we are using Standard Cost, we have ‘layers’ in inventory with a different Unit Cost.

    Item Ledger Entries for the item

    Figure 3 – Item Ledger Entries for the item shows inventory values with different Unit Cost, even though it is set to Standard Cost

    If we use the Dynamics NAV Standard Cost Worksheet to roll up the Standard Cost for this item, we see that the new standard is set to 427.499. In addition to that, the system rolled up the standard cost for all of the low level sub-assemblies.

    The Standard Cost Worksheet shows the standard is set at 427.499

    Figure 4 – The Standard Cost Worksheet shows the standard is set at 427.499

    Now, when we ‘implement’ the Standard Cost Changes, the system automatically creates a Revaluation Journal.

    Selecting the “Implement Standard Cost Changes” from the Standard Cost Worksheet…

    Figure 5 – Selecting the “Implement Standard Cost Changes” from the Standard Cost Worksheet…

    …causes the system to automatically create a Revaluation Journal

    Figure 6 - …causes the system to automatically create a Revaluation Journal

    After we have posted the Revaluation Journal, we see that the Inventory Valuation Report Unit Cost reflects the Item Standard Cost of 427.499.

    Now the Inventory Valuation Report Unit Cost reflects the Item Standard Cost

    Figure 7 – Now the Inventory Valuation Report Unit Cost reflects the Item Standard Cost of 427.499

    The likely cause of the mismatch is that the users are rolling up the Item Standard from the Item Function to Roll Up Standard Cost and are neglecting to then run the Revaluation Journal.

    Users must also remember to run the Revaluation Journal when Calculating Standard Cost from the Item Card

    Figure 8 – When Calculating Standard Cost from the Item Card, users must also remember to then run the Revaluation Journal

    Users are advised to use the Standard Cost Worksheet instead of the Item Card for rolling up Standard Costs

    Figure 9 – Rather than rolling up Standard Costs from the Item Card->Calc. Standard Cost, users are advised to use the Standard Cost Worksheet instead

    My advice is to never roll up Standard Costs from the Item Card, but to always use the Standard Cost Worksheet. When the Standard Cost Worksheet is implemented, it will automatically create a Revaluation Journal.

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Setting Up Production Lead Time in Microsoft Dynamics NAV if You’re Not Using Routings

    There are manufacturing companies using Dynamics NAV that want to offset the start time on production orders to accommodate production time even though they are not using Routings.

    To illustrate, I set up a test item called BOB PRODUCED.  Note that the item has a BOM, but not a Routing.

    Setting up an item with a BOM but without a Routing

    Figure 1 – To offset start time on production orders without Routings, start by setting up an item with a BOM but without a Routing

    Notice, also, that when I create a Production Order for the item, the Starting Date and the Ending Date are on the same day.

    The Production Order for the item has Starting and Ending Dates on the same day

    Figure 2 – The Production Order for the item has Starting and Ending Dates on the same day

    To add lead time to a Produced Item, enter the lead time into the Lead Time Calculation field on the item card.

    Add Lead Time into the Lead Time Calculation field on the Item Card

    Figure 3 – Add Lead Time into the Lead Time Calculation field on the Item Card

    Now, when I refresh the Production Order, we can see that the Starting Date is offset to 8/25/14, 20 days before the Ending Date. This sets up your lead time.

    Refreshing the Production Order shows the Starting Time offset by the amount of the Lead Time

    Figure 4 – Refreshing the Production Order shows the Starting Time offset by the amount of the Lead Time

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Some Advice on Setting up the Item Base Unit of Measure in Microsoft Dynamics NAV

    In Dynamics NAV, it is vitally important that you set up the Item Base Unit of Measure correctly because if it is set up incorrectly and you have already processed transactions, you will not be able to change the unit of measure.

    If we look at an Item Card in NAV, we can see that there are three places to enter an Item’s Unit of Measure: 

    • Base Unit of Measure
      • All on-hand information is displayed in the Base Unit of Measure
      • All costing is based on the Base Unit of Measure
    • Purchasing Unit of Measure
    • Sales Unit of Measure

    The Item Card shows three places to enter an Item’s Unit of Measure

    Figure 1 – The Item Card shows three places to enter an Item’s Unit of Measure

    If there is only one Unit of Measure for the Item, you will not run into any problems. However, for instance, if you sell the item in a different Unit of Measure than you stock it, the best thing to do is to set the Base Unit of Measure with the smallest unit that will be stocked.  For example, if you buy the item by the case of 12 but sell it individually, you will want to set the Base Unit of Measure to ‘Each.’  If you set the Base unit of Measure to ‘Case,’ then sell individually, you could end up with fractions of a case in Inventory.

    To illustrate, I set up an item with a Base Unit of Measure of ‘Case’ with an alternate unit of measure of ‘Each’ and a conversion factor of 1/12 = .08333.

    Unit of Measure example showing one unit for a CASE and a fractional unit (1/12) for EACH

    Figure 2 – Unit of Measure example showing one unit for a CASE and a fractional unit (1/12) for EACH

    I posted an Item Journal that put One Case into Inventory.

    One CASE is placed into inventory

    Figure 3 – One CASE is placed into inventory

    I then sold one EACH. We can see that we now have a fractional quantity on hand of .91667 CASE.

    Selling a single item leaves a fractional Quantity on Hand value (11/12)

    Figure 4 – Selling a single item leaves a fractional Quantity on Hand value (11/12)

    While this is not catastrophic, it would be much better to see 11 EACH on hand as opposed to .91667 CASE.

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Using Master Templates in Microsoft Dynamics NAV

    The other day a client asked me if there was a way to copy Item Cards when setting up new items in Dynamics NAV 2013. I replied that I did not think so, but perhaps there is a better way to make it easier and more accurate when creating new Master Records.

    In Dynamics NAV, you can create Master Templates that can be ‘applied’ when creating new Master Records. These Master Records can be Items, Customers, Vendors, and so on.

    In my sample database, there are already Master Templates set up.

    Sample Master Templates in Microsoft Dynamics NAV 2013

    Figure 1 – Sample Master Templates in Microsoft Dynamics NAV 2013

    This is the setup for an Item Master Template:

    Setup for an Item Master Template

    Figure 2 – Setup for an Item Master Template

    You can see that when a user is setting up new Items, for instance, the user only needs to select the type of Item they want to create.

    First, you enter the new Item Number:

    When using Item Master Templates, begin by entering a new Item Number

    Figure 3 – When using Item Master Templates, begin by entering a new Item Number

    Then select ‘Apply Template’:

    Next, select Apply Template

    Figure 4 – Next, select Apply Template

    Then, from the list, select the type of Item you wish to create:

    Select the type of Item you wish to create from the list

    Figure 5 – Select the type of Item you wish to create from the list

    The system then populates the Item Card with the information that was set up in the Master Template:

    Microsoft Dynamics NAV populates the Item Card with the information that was set up in the Master Template

    Figure 6 – Microsoft Dynamics NAV populates the Item Card with the information that was set up in the Master Template

    Then, all that is left to do is to populate the fields with the data that is unique to the item, such as Description, Vendor Item Number, etc.

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Lot-for-Lot versus Reorder Point in Microsoft Dynamics NAV

    When we are talking about Replenishment Planning in either a manufacturing or distribution environment, there are two fundamental replenishment planning methods:

    • Reorder Point (Also known as Min/Max and sometimes incorrectly as Kan Ban)
    • Materials Requirement Planning (MRP)

    The Reorder Point method is typically used in a distribution environment.  The Reorder Point method is ‘reactive’ in that it waits until you are low on inventory before recommending a replenishment order.

    MRP is typically used in a manufacturing environment where there are multiple levels in the Production Bill of Material and the replenishment time to produce finished goods is fairly long.  MRP is ‘proactive’ in that it attempts to predict when you will be low on inventory and recommends a replenishment order to arrive at the date when you will be running out of needed inventory.

    With that, in some scenarios these methods can be used for either purchased or produced items.

    With Min/Max, the system waits until you have reached the ‘Reorder Point’ and then recommends that you order either a Fixed Quantity or enough to get you up to the Maximum Inventory that you have set on the Dynamics NAV Item or SKU card.

    If we look at the Planning Tab of a Dynamics NAV Item Card, we see that we have the option to choose:

    • Fixed Order Quantity
    • Maximum Quantity
    • Order
    • Lot-For-Lot

    For Reorder Point Planning, our choices are Fixed Order Quantity or Maximum Inventory.

    View of the Planning Tab of a Dynamics NAV Item Card

    Figure 1 – View of the Planning Tab of a Dynamics NAV Item Card

    If I select Fixed Order Quantity, the system opens up the fields for Reorder Point and Reorder Quantity.  It is then up to the user to populate the two fields with the Reorder Point and the Reorder Quantity.  These quantities need to be calculated outside of Dynamics NAV and ported back into NAV.

    Choosing Fixed Order Quantity opens fields for Reorder Point and Reorder Quantity

    Figure 2 – Choosing Fixed Order Quantity opens fields for Reorder Point and Reorder Quantity

    Now, when I run the Requisition Worksheet, I get a recommendation to order 100 of the item because the inventory level is below 10.

    Requisition Worksheet gives recommendation to reorder when inventory levels fall below a predefined level

    Figure 3 – Requisition Worksheet gives recommendation to reorder when inventory levels fall below a predefined level

    For MRP planning I set the Reordering Policy to ‘Lot-for-Lot’.  If I set the Reordering Policy to Lot-For-Lot, the system then opens up fields for ‘Lot Accumulation Period’, ‘Rescheduling Period’ and ‘Order Modifiers’.  

    For MRP planning, setting the Reordering Policy to Lot-for-Lot opens different replenishment fields

    Figure 4 – For MRP planning, setting the Reordering Policy to Lot-for-Lot opens different replenishment fields

    The demand for MRP will come from a combination of Sales Orders and a Production Forecast.

    View of Production Forecast

    Figure 5 – View of Production Forecast

    Now, when I calculate a plan from the Dynamics NAV Planning Worksheet, it will recommend reorder quantities and the Delivery due Date.

    View of the Dynamics NAV Planning Worksheet shows recommended reorder quantities and the Delivery due Date

    Figure 6 – View of the Dynamics NAV Planning Worksheet shows recommended reorder quantities and the Delivery due Date

    In addition to recommending the quantities and due date for the produced item, the system will propagate the demand for the lower level components that MRP will subsequently plan for.

    Please refer to my earlier blog on Low Level Codes.

    View of Low Level planning components

    Figure 7 – The system will propagate also show the demand for the lower level components that MRP will subsequently plan for

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    How Average Cost is Calculated in Microsoft Dynamics NAV

    I often get questions on how Dynamics NAV calculates Average Cost. I have created a simple example below to illustrate.

    I copied this explanation from a white paper entitled, “Dynamics NAV 5.0 Inventory Costing.”

    The explanation of how to calculate Average Cost was explained as follows:

    1. Determines the cost of the item at the beginning of the average cost period.
    2. Adds the sum of the receipt costs that were posted during the average cost period. These include purchases, positive adjustments, outputs, and revaluations.
    3. Subtracts the sum of the costs of outbound transactions that were fixed applied to receipts in the average cost period. These might include purchase returns and negative outputs.
    4. Divides by the total inventory quantity as of the end of the average cost period, not including those inventory decreases that are being valued.

    The program then applies this average cost to the inventory decreases for the item (or item, location, and variant) with posting dates in the average cost period. If there are any inventory increases that were fixed applied to inventory decreases in the period, the program forwards this average cost to these entries as well.

    Date Entry Type Quantity Unit Cost Total Cost
    10/7/2013 Positive Inventory Adjustment 10 10.00 100.00
    10/7/2013 Purchase Receipt 20 15.00 300.00
    10/7/2013 Sales Shipment -15 13.33 200.00
    10/7/2013 Closing Entry 15 13.33 200.00

    For October 7, there was zero on hand at the beginning of the day. The positive inventory adjustment for ten and the purchase receipt (increase) gives a total quantity of 30 and a total cost of 400.00. The average cost of the receipts was 13.33 (400.00 / 30). This cost of 13.33 was applied to the Sales Shipment (decrease) and was the average cost balance at the end of the day.

    Date Entry Type Quantity Unit Cost Total Cost
    10/8/2013 Opening Entry 15 13.33 200.00
    10/8/2013 Purchase Receipt 30 10.00 300.00
    10/8/2013 Sales Shipment -10 11.11 -111.11
    10/8/2013 Closing Entry 35 11.11 388.89

    For October 8, the opening balance of inventory was fifteen at the average cost carried over from the previous day. There was a Purchase Receipt (increase) for thirty at a unit cost of 10.00 and a total cost of 300.00. The total value of the increases was 500.00 for a total quantity of forty-five, giving an average cost of 11.11. The cost of 11.11 was applied to the Sales Shipment (decrease) and was the average cost of the remaining inventory at the end of the day.

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    Unexpected Manufacturing WIP Balances in Microsoft Dynamics NAV

    I frequently encounter clients with an unexpected Manufacturing WIP Balance. In some cases, the WIP balance is below zero. In the screen shot below, we can see that the WIP account has a negative balance, which in the real world we know cannot be true.

    WIP account shows a negative balance, reflecting an error

    Figure 1 – WIP account shows a negative balance, reflecting an error

    When we enter transactions in Dynamics NAV to record the consumption of component parts, we get the following G/L entries:

    Dr WIP (Balance Sheet) for the Actual Cost of the Components

    Cr Component Inventory (Balance Sheet) for the Cost of the Components

    When we enter transactions in Dynamics NAV to record Labor and Overhead, we get the following G/L entries:

    Dr WIP (Balance Sheet) for Labor applied at a set rate

    Cr Applied Labor (Income Statement) for Labor applied at a set rate

    Dr WIP (Balance Sheet) for Overhead applied at a set rate

    Cr Applied Labor (Income Statement) for Overhead applied at a set rate

    When we enter transactions into Dynamics NAV to record the Output of Finished Items, we get the following G/L entries:

    Dr Finished Inventory (Balance Sheet) for the Expected Amount (which is the unit cost from the item card)

    Cr WIP (Balance Sheet) for the Expected Amount (which is the unit cost from the item card)

    The problem shows up when the Expected Cost is different than the accumulated WIP Balance created by the Consumption and Labor entries.

    It is vital that the users change the Released Production Order Statuses to ‘Finished’ in a timely manner. The WIP Balances are not ‘trued up’ until the Production Orders are changed to the Finished Status.

    After the ‘True Up’, we end up with the following G/L Entries:

    Dr Finished Inventory (Balance Sheet) for the difference between Expected and Actual Cost

    Cr WIP (Balance Sheet) for the difference between Expected and Actual Cost

    Changing the Released Production Order Statuses to ‘Finished’ is important to avoid negative WIP values

    Figure 2 – Changing the Released Production Order Statuses to ‘Finished’ is important to avoid negative WIP values

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    How to Block a Location in Microsoft Dynamics NAV

    I have seen some questions on the various Dynamics NAV Forums about how to ‘Block’ a location in Dynamics NAV. Unfortunately there isn’t a current method to do so, so I offer this work-around. It is not the perfect solution, but it works. NOTE: This work-around is to not create (or remove) the Inventory Posting Setup for this location.

    I created a location called ‘TEST.’

    Create a new Location

    Figure 1 – Create a new Location

    I created a Purchase Order and then tried to receive it into the TEST Location and got the following error:

    Error displayed when trying to receive a Purchase Order into the new Location

    Figure 2 – Error displayed when trying to receive a Purchase Order into the new Location

    Make sure to run Adjust Cost/Post Cost before you delete the posting setup.

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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    New Feature in Microsoft Dynamics NAV 2013: Item Availability by Event

    There is a nice new feature in Dynamics NAV 2013: ‘Item Availability by Event’.

    From an Item Card or the Item List you can select ‘Item Availability by Event’.

    Select Item Availability by Event from the Item Card or Item List

    Figure 1 – Select Item Availability by Event from the Item Card or Item List

    When the form opens, you see a collapsed view of the Item Availability in chronological sequence.

    View of the Item Availability in chronological sequence

    Figure 2 – View of the Item Availability in chronological sequence

    At this point you can elect to ‘Expand All’ to see the detail, again in chronological sequence.

    Choose Expand All to view the item details in chronological sequence

    Figure 3 – Choose Expand All to view the item details in chronological sequence

    And then at this point you can elect to include lines from the Dynamics NAV Planning Worksheet.

    From this screen, you can include lines from the Dynamics NAV Planning Worksheet

    Figure 4 – From this screen, you can include lines from the Dynamics NAV Planning Worksheet

    I see this feature as an invaluable tool for planners.

    If you would like more information on this topic or another Dynamics NAV topic, please contact ArcherPoint.

    For more information on this or any other Dynamics NAV costing topic, please contact ArcherPoint.

    Read more blogs by Bob Bergman for practical advice on using Microsoft Dynamics NAV.


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