Inventory Shortages - How to Process

For AcctVantage ERP 2021, the Auto-PO process is relabeled Inventory Shortages to better illustrate the use of this feature. Inventory Shortages can provide shortage reports/exports, process POs and generate internal Work Orders.

First, a description of how Inventory Shortages works and then we'll get to the "how-to" part of the article...

  • New Feature for AV 2021: The Inventory Shortages window can now be used to create Work Orders!
  • New Feature for AV 2020: The Inventory Shortages window can now be exported. See here for more details. This can be a handy tool for analyzing future purchases in your favorite spreadsheet application!

How AcctVantage determines if a shortage exists:

If you've set up a Product for inclusion in Inventory Shortages using the steps found here, then AcctVantage will evaluate each Product's current inventory situation.

  • AV compares the Minimum Stock Level to the Quantity Available plus the Quantity on outstanding Purchase Orders for the indicated Warehouse minus those Purchase Orders already associated with Backorders. If the Minimum Stock Level is greater than the sum of this calculation, then the Product is included in Inventory Shortages.

That description of the calculation can get confusing, so let's look at a couple examples assuming the Minimum Stock Level = 5:

  • Qty Available = 3 and there is no other activity for the Product. The Product DOES qualify for Inventory Shortages because the Qty Available is less than the Minimum Stock Level (3 < 5).
  • Qty Available = 7 and there is no other activity for the Product. The Product DOES NOT qualify for Inventory Shortages  because the Qty Available is greater than the Minimum Stock Level (7 > 5).
  • Qty Available = 3 and there are 10 units on open Purchase Orders. The Product DOES NOT qualify for Inventory Shortages  because the Qty Available + Qty On PO is greater than the Minimum Stock Level [(3 + 10) > 5].
  • Qty Available = 3 and there are 10 units on open Purchase Orders, all 10 of which are linked to Back Orders. The Product DOES qualify for Inventory Shortages  because the Qty Available + Qty On PO - PO for Backorders is less than the Minimum Stock Level [(3 + 10 - 10) < 5].

1. Run the Inventory Shortages Process

Navigate to Purchasing ➤ Inventory Shortages.

  1. You should first Select a Warehouse. Inventory Shortages is run on a per Product per Warehouse basis. You can not run Inventory Shortages for multiple Warehouses in a single process.
  2. Next, you will select the Data Source(s) from which AV will consider items to be included in the shortage report. (See the definitions below.)
  3. Click OK to proceed.

Data Source(s):

  • Backorders: AV will search for Backordered items to be included in Inventory Shortages. Open Backorders will be included on the Inventory Shortages process unless they already have a Purchase Order associated with the Backorder record via an earlier Inventory Shortages process or a Sales Order <--> Purchase Order link.
  • Sales Document Line Items: AV will search for items from Non-Posted Sales Orders where the Order Qty is greater than the Shipped Qty and the Backorder Qty is 0. These items will be included in the Auto PO process. This applies to Non-Posted Orders in the Committed, Picked or Packed status. In other words, Inventory Shortages considers partially filled Orders that have not been marked for Backorder.
  • Product Reorder Qty: AV will search for items that qualify for Inventory Shortages based on Product record settings.

- OR -

  • MRP Action Items: AV will consider items to include in Inventory Shortages based on MRP Action Items. The Action Item must be in the Pending, Increase or Work Order status to be picked up for Auto-PO. To change the status of an MRP Action Item, double-click it.  For discussion of the MRP functions, review this lesson
Inventory Shortages - Data Source

2. The Inventory Shortages Window

  1. Place an X (by clicking in the field) in either the New PO/WO or Add to PO column for each line item that you want to create a new PO for.
  2. Place an X in the Print PO column if you want to print the Purchase Order for each of the selected items.
  3. You can change the Order Quantity or Vendor Name if you want to purchase a different quantity or issue the PO to a different Vendor.
    • Vendor Name is not relevant for Work Order Action Items.
  4. Select whether to Create 1 PO per Product OR 1 PO per Vendor.
  5. Optionally, click the Export button to export the data in this window to a file that can be opened in Excel.

There are some differences in the columns of the Inventory Shortages window depending on which Data Source(s) you selected in the previous step. See these next two screenshots to see the differences.

2.1. Data Source: Backorders, Sales Document Line Items, Product Reorder Qty

  • New PO: An X in this column denotes that a new Purchase Order will be created.
  • Add to PO: An X in this column denotes that these items will be added to an existing Purchase Order. In order for this to work you must have an Open Purchase Order for the specified Vendor. By default, this field will be checked if there is a relevant PO to add the new items to.
  • Add PO ID: The PO ID of the Open Purchase Order for the listed Vendor will populate this column when an X is in the Add to PO column.
  • Print PO: An X in this column denotes that a Purchase Order form will be printed when Inventory Shortages is Processed.
  • Source: This is the transaction that caused Inventory Shortages to include the item for consideration. It is based on the Data Source from the previous step.
  • Request Quantity: The quantity that processing is requesting to create a PO for. This is based on settings from the Product record.
  • Order Quantity: The actual quantity that the PO will be created for. This is a user modifiable field.
  • Vendor Name: The Vendor that the PO will be issued to. This is a user modifiable field.
Inventory Shortages - BO, SO, Product reorder Data Sources

2.2. Data Source: MRP Action Items

  • New PO/WO: An X in this column denotes that a new Purchase Order or Work Order (assembly products only) will be created.
  • Add to PO: An X in this column denotes that these items will be added to an existing Purchase Order. In order for this to work you must have an Open Purchase Order for the listed Vendor. By default, this field will be checked if there is a relevant PO to add the new items to.
  • Add PO ID: The PO ID of the Open Purchase Order for the listed Vendor will populate this column when an X is in the Add to PO column.
  • Print PO: An X in this column denotes that a Purchase Order form will be printed when Auto PO is Processed.
  • Required Date: The date of the MRP forecast.
  • MRP Action: This is the reason that caused Inventory Shortages to include the item for consideration.
  • Request Quantity: The quantity that processing is requesting to create a PO/WO for. This is based on settings from the Product record.
  • Order Quantity: The actual quantity that the PO/WO will be created for. This is a user modifiable field.
  • Vendor Name: The Vendor that the PO will be issued to. This is a user modifiable field. Work Order lines do not require a Vendor Name.
Inventory Shortages - MRP Data Source

3. Confirm the PO/WO's to process

After you click the Process button you will be presented with this confirmation dialog. Click Yes if you want to process the PO's and WO's that you've selected.

Confirm the PO's to process

4. Inventory Shortage Actions

You will see this list of Inventory Shortages Actions after you confirm that you want to process the shortages.

  • Action: Add means that these items were added to an existing PO.
  • Action: Create means that a brand new PO was created.
  • Source: BO means that this PO was created from existing Backordered items.
  • Source: MRP Action Item means this PO/WO was the  result  of the MRP process

Note: After running Inventory Shortages, the system will create Open Purchase Orders and Work Orders. You can still modify these transactions if necessary.

Auto PO Actions