Inventory Shortages - How to Process

Inventory Shortages is used to create Purchase Orders or Work Orders for items that have a current shortage.  

How the system determines if a shortage exists

The method of calculating Inventory Shortages depends on the selected Data Source(s). See details below.

Backorders

The system will include products from open BOs that are not already associated with a PO.

To create an open BO, the sales order must be saved in Committed status and the line item must have a BO Qty > 0.

Sales Document Line Items

The system will include products from non-posted sales orders where the Order Qty > Ship Qty and the BO Qty = 0.

This applies to Non-Posted Orders in the Committed, Picked or Packed status.

Product Reorder Qty

The system compares the Minimum Stock Level to the Quantity Available PLUS the quantity on outstanding POs for the indicated Warehouse MINUS any POs already associated with backorders. If the Minimum Stock Level is greater than the sum of this calculation, the product will be included in Inventory Shortages.

If the above description is confusing, take a look at the examples below. In these examples, assume 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].

MRP Action Items

The system will consider items to include in Inventory Shortages based on MRP Action Items.

MRP action items must have a status of Pending, Increase or Work Order to be included in Inventory Shortages. To change the status of an MRP Action Item, double-click it.  

1. Run the Inventory Shortages Process

  1. Navigate to Purchasing ➤ Inventory Shortages.
  2. Select the Warehouse.
  3. Select the Data Source(s).
    • POs can be created via all four data sources.
    • WOs can be created via MRP Action Items only.
  4. Optional: Select a Vendor. If no Vendor is selected, the process will run for all Vendors.
  5. Click OK to proceed.
Inventory Shortages - Data Source

2. The Inventory Shortages window

  1. Click to place an X 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. Click to 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 and 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

After running Inventory Shortages, the system will automatically create POs and WOs. You can still modify these transactions if necessary.

Auto PO Actions