Item Category and Product Group Code in Microsoft Dynamics NAV

I saw a question the other day on a Dynamics NAV Forum asking, “What is the Product Group Code on the Item Card used for?”

If we look at an Item Card in Dynamics NAV, we see the field for Product Group Code and, above it, a field for Item Category Code.

Figure 1 – Item Card, showing the Item Category Code and Product Group Code

Before we can explain how the Product Group Code is used, we need to explain how the Item Category Code is used.

The Item Category Code on the item is used to classify the item for filtering and reporting. It is also used to set defaults for Costing Method, General Product Posting Group, and Inventory Posting Group.

When a user enters a new item, and enters an Item Category Code, the system will insert the defaults.

Figure 2 – View of Item Category Code options

The Product Group Code is a subset of the Item Category Code and is also used for classifying items for filtering and reporting.

Figure 3 – View of Product Group Code options

Now if someone asks you where you set up the Warehouse Class Code for an item, it is set up in the Product Group Code.

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.

Things to Consider when Setting UP Base Unit of Measure for Item in Microsoft Dynamics NAV

Microsoft Dynamics NAV is very flexible when it comes to setting up Units of Measure for items. But careful consideration should be used before setting up the Base Unit of Measure. Once the Base Unit of Measure is established and there are transactions recorded for the item, the Base Unit of Measure cannot be changed.

When looking at the Quantity on Hand, we see that it is displayed in the Base Unit of Measure. Also, all costing is done in the Base Unit of Measure.

If we look at a Dynamics NAV Item Card, we can see that there three places to enter Units of Measure: Base Unit of Measure, Sales Unit of Measure, and Purchase Unit of Measure. The Sales and Purchase Units of Measure are “defaults” when entering Sales and Purchase Orders and can be changed on the item card.

Figure 1 – There are three places to enter Units of Measure on the Dynamics NAV Item Card: Base Unit of Measure, Sales Unit of Measure, and Purchase Unit of Measure

When we setting up the Base Unit of Measure, we get drop downs to the Unit of Measure Table. The Units of Measure can be whatever you want them to be and there is no list of standard units of measure in Dynamics NAV. You can create units of measure to meet your needs.

Figure 2 - Drop downs to the Unit of Measure Table allow the user to define the Units of Measure as needed

Once the Base Unit of Measure is set up, you can set up alternate units of measure with a conversion factor (Qty. per Unit of Measure). This factor is always related to the Base Unit of Measure whose Qty. per Unit of Measure is always 1.

Figure 3 – Configure alternate units of measure with a conversion factor related to the Base Unit of Measure with Qty. per Unit of Measure of 1

To avoid having decimal quantities of items on hand, always set the Base Unit of Measure to be the smallest unit that the item can be represented. In my example above, EACH would be the smallest and would be set to the Base Unit of Measure.

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.

The Inventory to General Ledger Reconciliation Report in Microsoft Dynamics NAV

The Inventory to G/L reconciliation effort in some companies can be challenging.  The Inventory to G/L Reconciliation Report in Dynamics NAV makes the effort quite easy (or should I say a lot less difficult).

The Report runs through the Dynamics NAV Value Entry Table to calculate the inventory value and to calculate the amounts of Received Not Invoiced and Shipped Not Invoiced.  The report also determines if the amounts in the Value Entry Table have been posted to the General Ledger.

If we look at the sample report below we find the following columns and totals:

• Inventory Valuation
  • This is the Total Value of the Inventory
    • Excludes Production WIP
    • Includes Invoiced Inventory
    • Includes Received but not Invoiced Inventory
  • This Amount should tie to the Inventory Account plus the Interim Inventory Account
• Received Not Invoiced
  • This is the Value to the Inventory that has been Received but not invoiced
    • This can include Purchased Items
    • This can include Production Output on Production Orders that have not been ‘Finished’
  • This Amount should tie to the Interim Inventory Account
  • This Amount should also tie to the Received but not invoiced A/P Accrual Account
• Shipped Not Invoiced
  • This is the Value of the Inventory that has been shipped but not Invoiced
  • This should tie to the Interim COGS Account
• Total Expected Cost
  • This is the Sum of Received not Invoiced and Shipped not invoiced
• Received Not Invoiced Posted to G/L
• Shipped Not Invoice Posted to G/L
• Expected Cost Posted to G/L
• Expected Cost to be Posted
  • If there is an amount here, then you need to run the batch job ‘Post Inventory to G/L’
• Pending Adjustment
• Invoiced Value
• Invoiced Value Posted to G/L
• Invoiced Value to be Posted
  • If there is an amount here, then you need to run the batch job ‘Post Inventory to G/L’

Figure 1 – Example Inventory to G/L Reconciliation Report in Dynamics NAV

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

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

When Purchases and Direct Cost Applied Accounts Don’t Net to Zero in Microsoft Dynamics NAV

In an earlier blog, Purchases and Direct Cost Applied Accounts in Microsoft Dynamics NAV, I explained that these two account balances should always net to zero.

I received a call from a client saying that, in their system, the accounts did not net to zero and wondered why.

In another of my Blogs, Exact Cost Reversing in Microsoft Dynamics NAV 2013, I explained the how the ‘Exact Cost Reversing’ feature worked.

The likely cause of Purchases and Direct Cost Applied Accounts not netting to zero is that there have been Purchase Returns that have been made at a different cost than the original purchase.

So, to prevent that non-netting to zero for these accounts, select ‘Exact Cost Reversing’ in the Purchases and Payables Setup.

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

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

Circular Reference in Microsoft Dynamics NAV Production Bill of Materials

A client called the other day and said that they were getting an error, “Max Levels in BOM Structure on 50 is too high”, when trying to ‘Certify a Dynamics NAV Production BOM’.

Figure 1 – Error displayed when certifying a production BOM

This is caused by what is known as a circular reference or an item used on itself. When running MRP, the system will be caught in a loop if there is a requirement for Item 1000 that is supplied by Item 1000.

To prevent a circular reference, the certification process checks to see if there is a circular reference and won’t allow the BOM to be Certified if such a reference exists. In this case the problem is easy to see and fix.

Figure 2 – Identifying a circular reference in the BOM

It is a bit more difficult if the circular reference is caused by the item being entered on a lower level subassembly. In this case, I entered Item 1000 on the 1100 Production BOM.

Figure 3 – Circular reference caused when an item is entered in a lower level subassembly

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

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

Understanding the “Order” Reordering Policy in Microsoft Dynamics NAV

We are given the following choices for Item Reordering Policy in Dynamics NAV. The choice affects how the Planning Worksheet (MRP) plans for replenishment of the item.

• Blank
• Fixed Order Quantity
• Maximum Quantity
• Order
• Lot-for-Lot

Figure 1 – List of choices defining how the Planning Worksheet (MRP) plans for replenishment of an item

If we choose ‘Order’, the system will plan one replenishment order for each of the Sales Order Demands in the system for that Item.

If we look at the Dynamics NAV Help for the Reordering Policy Order:

Generates an order for each requirement and does not use the planning period. An automatic reservation between the requirement and the corresponding replenishment order proposal is created.

You need to be fully aware that when using the Order Reordering Policy, the Planning Worksheet doesn’t take into consideration any existing inventory. This means that even though you have enough inventory to cover the sales demand, the system will recommend ordering more.

My advice is to be very careful and fully understand how the Reordering Policy ‘Order’ works before you select it.

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

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

Negative Consumption to Account for By-Product Production in Microsoft Dynamics NAV

It is quite common in Process Manufacturing for a By-Product to be produced at the same time the primary product is produced.

A good way to handle that in Dynamics NAV is to set up an item for the By-Product and give it a costing method of Standard. Set the Standard Cost of the item at its value.

Figure 1 – Set up an item for the By-Product and give it a costing method of Standard. Set the Standard Cost of the item at its value.

Then put the item on the Prime item’s Bill-of Material with a negative quantity.

Now when I create a Production Order and look at the component list, I can see that my By-Product is listed with a quantity of negative one.

Figure 2 – Put the item on the Prime item’s Bill-of Material with a negative quantity

In the Production Journal, I can change the quantity to the actual amount of By-Product Produced.

Figure 3 – Changing the quantity of the amount of By-Product produced in the Production Journal

When I look at the item card information for the By-Product, I see that the By-Product has been added to stock.

Read about the advantages of Microsoft Dynamics NAV for manufacturing.

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

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

Why do all new Microsoft Dynamics NAV Production Orders have an Ending Date of 12/31/XX?

Around the middle of January every year, I can count on getting questions on why all of the new Dynamics NAV Production Orders that are created have an Ending date of 12/31/XX.

The answer is quite straightforward: The Work/Machine Center Calendars need to be calculated for the upcoming year.

Figure 1 – Remember to update the Work/Machine Center Calendars for the upcoming year

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

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

Avoid a Common Mistake when Posting a Positive Adjustment in Microsoft Dynamics NAV

When posting a positive adjustment in Microsoft Dynamics NAV, be careful to select Entry Type ‘Positive Adjustment,’ not ‘Purchase’

When you want to post a Positive Inventory Adjustment in Dynamics NAV, you use the Item Journal.

When I am trying to reconcile the Purchases Account, I find that users are not careful to pick the Entry Type of ‘Positive Adjustment’ and instead pick ‘Purchases.’ This is not hard to do as they both begin with ‘P’ and the Purchase option shows up first.

See my earlier blog on Purchases and Direct Cost Applied Accounts in Microsoft Dynamics NAV.

Figure 1 – A screenshot of the pull-down menu with Entry Types. Notice that “Purchase” is the first option.

I set up an example where I am attempting to post two positive adjustments for the same item number. I selected Entry Type Purchase on one line and Entry Type Positive Adjustment on another line.

Figure 2 – A screenshot showing a posting going to a Purchase Account rather than a Positive Adjustment

Even though in the real world my intent probably was to do two Positive Adjustments, I can see that the General Ledger posting went to two different account numbers.

Figure 3 – A screenshot showing a reconciliation issue due to the previous error posting to the Purchases Account

If you are having trouble reconciling the Purchases Account, this might be the cause. If it happens frequently, then I would suggest you ask your NAV Partner to remove the ‘Purchase’ Option from the Item Journal.

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

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

Saving a Microsoft Dynamics NAV Report in HTML and Opening in Excel

I know that most of you would like to be able to save a Dynamics NAV report in HTML and then open it in Excel.  A client of mine showed me this trick to make it work.

First view the report in ‘Print/Preview’ mode:

Figure 1: A screenshot of a Microsoft Dynamics NAV report in “Print/Preview” mode

Figure 2: Saving the report as an HTML file

Figure 3: Report saved as an HTML file

Then open the HTML file with Excel.

Figure 4: Opening the report HTML file

When it is opened in Excel, the report isn’t very useful.

Figure 5: Opening the HTML report in Excel - it isn't very useful at this point

Now save the Excel file again as .CSV file.

Figure 6: Saving the HTML file from Excel as a .CSV file

Then open the .CSV file with Excel, and it is ready to use.

Figure 7: Opening the .CSV file in Excel

Figure 8: The new .CSV file with the report in Excel, ready to use

You can then sort to get column and report headings together and delete them.

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

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

PPV is not reversed when issuing a Purchase Return Credit Memo in Dynamics NAV

I received a question the other day from a client who said that they received a ‘Standard Cost’ item, and when invoiced, it created Purchase Price Variance. The item was later returned and a Purchase Credit Memo was issued and posted, but the PPV was not reversed.

I have set up the following example to illustrate:

Figure 1 – Screenshot showing an example of a standard cost item of $2.00

I created and posted a purchase order with the cost of $3.00. This resulted in a Purchase Price Variance of $1.00:

Figure 2 – Screenshot of a posted purchase order with the cost of $3.00, resulting in a Purchase Price Variance of $1.00

I then created and posted a Purchase Credit Memo, which created the following General Ledger entries:

Figure 3 – Screenshot of General Ledger entries created after posting a Purchase Credit Memo

You can see that the Purchase Price Variance has not been reversed and that it has left the Purchases Account and Direct Cost Applied Accounts with a different balance.

Please see my previous Blog on Exact Cost Reversing.

I again created a posted a Purchase Order to get the same Purchase Price Variance of $1.00.

Figure 4 – Screenshot of a posted a Purchase Order, resulting in the same Purchase Price Variance of $1.00

To reverse the Purchase Price Variance in a Purchase Credit Memo, you must select the ‘Applies to Item Ledger Entry’ that created the original Purchase Price Variance.

Figure 5 – Select the ‘Applies to Item Ledger Entry’ to reverse the Purchase Price Variance in a Purchase Credit Memo

Now when the Credit Memo is posted, the Purchase Price Variance is reversed.

Figure 6 – Screenshot showing that the PPV is reversed when the Credit Memo is posted

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

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

Reversing the Output of a Dynamics NAV Released Production Order

I am asked from time to time how to reverse the output of a Dynamics NAV-released Production Order. The need to do this probably was caused by a mistake made when posting the original output.

To illustrate, I created a Dynamics NAV-released Production Order:

Figure 1 – Screenshot of a NAV-released Production Order

Then, using the Dynamics NAV Production Journal or Output Journal, I posted the output of a quantity of 1 to Inventory:

Figure 2 – Screenshot showing a quantity of 1 posted to Inventory

To reverse the output, I use the Dynamics NAV Output Journal.

I enter the Released Production Order number, the Item Number, the Last Operation Number in the Routing, and the quantity as a negative number:

Figure 3 – Screenshot reversing the output using the Output Journal

Then I must select the ‘Applies to Entry’ that was created when I posted the original output:

Figure 4 – Screenshot showing that ‘Applies to Entry’ was selected after being created when the original output was posted

After posting the Output Journal and looking at the Item Ledger Entries for this Dynamics NAV Released Production Order, I see that the original output has been reversed.

Figure 5 – Screenshot showing that the original output has been reversed in the Item Ledger Entries

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

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

Tooling Amortization in Microsoft Dynamics NAV

Manufacturing companies will often build or purchase production tooling.  In most cases the manufacturing company would like to amortize the cost of the tooling by adding the cost to the items produced.

There is no direct way to do this in Dynamics NAV, but I have accomplished this using Dynamics NAV Item Numbers and Bills of Material.

The scenario:

The manufacturing company in this scenario purchased tooling for 10,000 and would like to add $4.00 to the cost of production for the item(s) produced using the tooling.

I created an item number for TOOLING with a Standard Cost of $2.00.

Figure 1: Screenshot of an Item Number created for Tooling at a Standard Cost of $2.00.

The costing method is Standard and uses the newly created Inventory Posting Group of ‘TOOLING’ and the newly created General Product Posting Group of ‘TOOLING’.

Now I set up the Inventory Posting Group and General Posting Setup with the Inventory Account equal to ‘Tooling Amortization’ and the Inventory Adjustment Account also equal to ‘Tooling Amortization’.

Figure 2: Screenshots of an Inventory Posting Group and General Posting Setup with the Inventory Account equal to ‘Tooling Amortization’ and the Inventory Adjustment Account equal to ‘Tooling Amortization’.

Now I do a Positive Inventory Adjustment to add 10,000 of the TOOLING item to stock.

Figure 3: Screenshot of a Positive Inventory Adjustment with 10,000 of the TOOLING item added to stock.

The net General Ledger effect of this transaction is 0.00 because the Inventory Account and the Inventory Adjustment are the same Account.

I add the item to the Production BOM of the produced item.

Figure 4: Screenshot of the item added to the Production BOM of the produced item.

Now when the TOOLING item is consumed in the production process, the Debit goes to WIP Inventory and the Credit goes to Tooling Amortization.

Figure 5: Screenshot showing the Debit in WIP Inventory.

When the total quantity of TOOLING is consumed, then the user will need to remove the TOOLING item from the Production Bill of Material.

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

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

Connecting GL Entries to Value Entries in Microsoft Dynamics NAV

When trying to figure out what caused a posting to the Dynamics NAV General Ledger, there is a handy tool in Dynamics NAV you can use.

If you are in the Dynamics NAV General Ledger Entries and want to know what Value Entry/Item Ledger Entry caused the posting, you could ‘Navigate’ or use the available shortcut directly to the Value entry.

Figure 1: Screenshot showing the ‘Value Entries’ option on the General Ledger Entries screen.

When you select ‘Value Entries’, the system takes you to the Value Entry that created the General Ledger Posting you have selected.

Figure 2: Screenshot showing the Value Entries displayed after selecting ‘Value Entries’ on the General Ledger screen.

Now, if you would like to see the Associated Item Ledger Entry, select ‘Advanced Look Up’ from the Item Ledger Entry No., and the system will take you to the Associated Entry.

Figure 3: Screenshot showing an Item Ledger Entry Number on the Value Entries screen.

Figure 4: Screenshot showing the Associated Entries when you select the Item Ledger Entry from the Valued Entries screen.

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

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

Using search engines to find Information about Microsoft Dynamics NAV

Lately, when I am trying to find information about Microsoft Dynamics NAV features, I usually go to my favorite search engine. In this case, I entered ‘Dynamics NAV Lot Size,’ and these are some of the results:

Not surprisingly, in addition to others, I found a couple of references to Blogs that I have published.

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

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

General Ledger Postings for Microsoft Dynamics NAV Subcontracting

In an earlier blog, I explained the setup for Microsoft Dynamics NAV Subcontracting, and now I will explain the General Ledger Postings for a Sub Contract Production Order.

Quick Start Guide for Setting up Microsoft Dynamics NAV Subcontracting

I have set up a Work Center called SUBCONTRACT that points to the SUBCONT General Product Posting Group.

Figure 1: A screenshot showing a Work Center called SUBCONTRACT, with a General Posting Group called SUBCONT.

Then, in the General Posting Setup, I set the Purch. Account to 53160 (Sub Cont Purchases) and the Direct Cost Applied Account to 53165 (SC Purchases to WIP).

I purposefully used different accounts from the usual Purchases and Direct Cost Applied Accounts so I could track subcontract purchases separately in the General Ledger.

Figure 2: A screenshot showing a general posting setup with a Purchase Account of 53160 and a Direct Cost Applied Account of 53165.

I then went through the process to create a Released Production Order and a Subcontract Purchase Order.

When I Received the Subcontract Purchase Order, the system did not create any General Ledger Entries, but when I Invoiced the Purchase Receipt, the system created the following General Ledger Entries:

Figure 3: Screenshots showing General Ledger Entries reflecting the invoiced Purchase Receipt.

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

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