Manage inventory of promotional materials

 

Updated: November 1, 2016

Applies To: Dynamics Marketing

System_CAPS_importantImportant

Microsoft Dynamics Marketing is scheduled to be retired on May 15, 2018. After that date the service will no longer be available. Please plan accordingly. For details, see the blog post Microsoft Dynamics Marketing service will be discontinued, and learn what’s coming next.

Marketing organizations often spend large amounts of money on promotional items and collateral materials that are used for long periods of time and for multiple events, campaigns and programs. This creates 2 'requirements':

  • A need to split the costs into the appropriate fiscal year/budget period/event/campaign/job.

  • A need to track the quantity of these items used in each campaign.

If you have a few campaigns/jobs/events and a few items it is easy enough to split Expenses; however when there are many campaigns/jobs/events and a many items tracking all of the information can be extremely time consuming.

To work with inventory, you must have Edit/View Bookings privileges. More information: Work with user accounts and staff contacts.

Users buy items (forms, brochures, envelopes, paper, pens, mugs, etc.) and use them in their marketing projects or sell them to clients. Inventory management consists of two sets of functions:

  1. Keeping track of the cost of items purchased and keeping track of the monetary value of the inventory.

  2. Keeping track of the quantity of items purchased, used, sold and remaining.

  3. In Microsoft Dynamics Marketing components are the items that are inventoried. Dynamics Marketing uses components and items/services to provide inventory functions.

  • When a company purchases items for inventory they spend cash (an asset) and get inventory (also an asset). The value of the inventory is initially equal to the amount of cash used to purchase it.

  • When a company 'uses' items in inventory in a campaign/event/program, the items are moved from inventory. The value of inventory is decreased and the cost of the inventory is incurred as an expense.

  • When a company sells an item from inventory they (ideally) sell it for a price that is higher than its cost and make a profit. The revenue from the sale is accrued and the value of inventory is decreased and the cost of the inventory is incurred as an expense (usually COGS).

Action

Transaction

Cash

Inventory
Value

Cost of Goods Sold/Expense

Revenue

Inventory
Quantity

Start

$500

0

0

0

0

1. Order for 100 widgets. Cost= $2 each

Purchase Order

0

0

0

0

0

2. Receive 100 widgets ordered. Cost= $2 each

Expense

($200)

$200

0

0

100

3. Use 10 widgets in a Job. Cost= $2

Inventory Use

0

($20)

$20

0

-10

3. Get Client Order for 10 widgets to a Client. Price= $5 each

Sales Order

0

0

0

0

0

3. Sell 10 widgets to a Client. Price= $5 each

Invoice

$50

($20)

$20

$50

-10

End

$350

$160

$20

$50

80

To manage inventory Dynamics Marketing provides several different transactions:

  • Users must be able to purchase items/components and then add the cost to the value of the inventory. Users can use Dynamics Marketing's Purchase Orders to place orders and expenses to receive the items into inventory.

  • Users must be able to use items/components in a project. The 'Inventory Use' transaction deducts the quantity used from inventory and adds the cost of the items/components to the project.

  • Users must be able to sell inventoried items/components. Users can use the Sales Order transaction inDynamics Marketing to track client orders and then use invoices to bill clients.  

  • From time to time a ‘physical’ inventory count must be performed. If there are discrepancies adjustment transactions must be made to update the quantity and or value of the inventory.

Typically where there is inventory there is shipping, receiving and a warehouse. Traditional inventory management systems do not add items to inventory until they are received and do not take items out of inventory until they are shipped. Marketers rarely have their own warehouses for collateral materials and promotional items and therefore cannot rely on the traditional shipping and receiving functions as loci for posting inventory transactions and tracking when items are received or shipped. Dynamics Marketing is designed to 'post' inventory-related transactions automatically when the transactions are entered; once a transaction is created Dynamics Marketing automatically updates the inventory count and 'posts' the transaction immediately. Transactions can be edited until the inventory has been committed (by being used or sold or when an adjustment) or the transaction has been paid.

Dynamics Marketing supports the two most commonly used inventory valuation methods:

  • Weighted Average Cost

  • First in, First out (FIFO)

Dynamics Marketing automatically calculates the value of the items in inventory using the method you selected and uses the value of the items to calculate the Cost of Goods Sold when inventoried items are used or invoiced. More information: Prepare invoices for clients for items, services and media

  1. Choose the Advanced Inventory Check Box on the Site page. More information: Administer your site

  2. Turn on Bookings privileges for all users who will be using inventory. More information: Work with user accounts and staff contacts.

  3. Set up inventory items and add/purchase inventory.

Dynamics Marketing enables you to track the costs of inventory items that you use. In Dynamics Marketing the transactions to track inventory usage are called Inventory Use transactions.

Inventory Use transactions automatically post to the general ledger:

  • The cost of the inventory is credited from the inventory account using the valuation method specified for the item.

  • The cost of the inventory is debited to the expense account specified in the Inventory Use transaction.

When an Inventory Use is entered or edited and then saved Dynamics Marketing updates the inventory count and value automatically, using the valuation method specified in the item. Inventory Use transactions are identified with the Inventory icon. More information: Track costs of items, media, and services purchased from vendors 

  1. On the Expenses dashboard or an Expenses tab,

  2. Choose the New Inventory Use button.

    Dynamics Marketing opens the new Inventory Use page.

  3. Enter the information.

To view inventory items, go to Budgeting > Settings > Items/Services.

  1. On the View Items page, choose the New button New button.

  2. If you select Inventory Item (existing component), Dynamics Marketing displays a Type-ahead field to enable you to select an existing component.

  3. Select a component.

    Dynamics Marketing displays the New Inventory Item page. The name of the inventory item will be set to match the name of the component you selected.

    System_CAPS_noteNote

    Once you save the inventory item, you will be able to change its name.

  4. If you select Inventory Item (New Component), Dynamics Marketing displays a field to enable you to specify the item name.

  5. Enter the item name.

    Dynamics Marketing displays the New Inventory Item page.

  6. Enter the information as follows:

  7. Choose Submit or Save.

Field

Description

Active

Choose the check box to indicate that the item is active.

Item

Enter the name of the item. If you selected Inventory Item (Existing Component), the name will be set to the name of the component you selected.

System_CAPS_noteNote

Once you save the inventory item, you will be able to change its name.

Available

Displays the quantity available in inventory.

Type

Select a type from the pull-down menu. Item/service types are used to categorize items and services.

Method

Select the inventory valuation you want to use.

Dynamics Marketing supports two inventory valuation methods:

  • Weighted average cost: Dynamics Marketing updates the weighted average cost of the items in inventory each time items are added to inventory.

  • First In First Out: Dynamics Marketing tracks the value of every item added to inventory. Dynamics Marketing 'uses' inventory on a first in, first out basis and calculates the appropriate cost.

System_CAPS_noteNote

Once an inventory valuation method has been selected it cannot be changed unless the Available Quantity is zero.

Default Vendor

Specify the name of the default vendor to purchase the item from.

COGS Account

Select a Cost of Goods Sold General Ledger Account from the pull-down menu.

Revenue Account

Select the General Ledger Account from the pull-down menu to use for invoicing. Typically, a Revenue account is used.

Expense Account

Select the General Ledger Account from the pull-down menu to use for expenses and inventory uses.

Inventory Account

Select the General Ledger Account from the pull-down menu to use to track the value of the inventory of this item.

Description

Enter a description of the item.

Default

Choose the check box to indicate that the item/service is the default. Only one item/service can be the default item. The default item/service is used when expenses are invoiced. More information: Prepare invoices for clients for items, services and media

Time Slip

Choose the check box to indicate that the item/service is a time slip item service. Only services can be selected on time slips.

Taxable

Choose the check box to indicate that the item/service is taxable.

Created by

Select a contact.

To add a price (what you charge clients) or a cost (what you pay vendors when you purchase the item) to an item:

  1. Enter the information into the Price grid.

  2. Choose the New button New button to add additional blank rows to the item's Price and Cost grid.

  3. Choose Submit.

Field

Description

Contact

Select a contact if the price is contact-specific.

Price

Enter the price to charge for the item.

Cost

Enter the vendor's cost for the item.

System_CAPS_noteNote

Dynamics Marketing will calculate the COGS using the inventory valuation method specified when inventory use or invoice transactions are processed. The cost entered here is used when inventory is ordered or expensed.

Currency

Select a currency.

The Inventory Analysis tab displays information about inventory transactions. It tabulates inventory purchases, uses and sales and is used to track inventory trends.

System_CAPS_noteNote

The Inventory Analysis tab is only displayed for inventoried items.

Inventory use line items appear on inventory use transactions.

  1. Go to Budgeting > Payments > Expenses.

    Dynamics Marketing displays all the expenses and inventory uses in the system.

  2. Choose the Inventory Use you want to work with.

    The item grid displays all the items included in the inventory Use

  1. Choose the New button   New button.

  2. Enter the information as follows:

    Field

    Description

    ID

    Dynamics Marketing assigns a unique line item ID to every item.

    Item

    Select an item from the pull-down menu.

    Description

    Enter a description for the item.

    Account

    Select a general ledger account from the pull-down menu.

    More information: Chart of accounts

    Taxable

    Check the box if the item is taxable. Taxes will be added at the rate specified on the Inventory Use's header.

    Date

    Enter the item date. The item date is used in budgeting as the accrual date.

    Quantity

    Enter the quantity of the item.

    Unit Cost

    Dynamics Marketing supplies the Unit Cost which is calculated using the Inventory Valuation Method specified for the item.

    Total

    Dynamics Marketing will calculate the total using the following formula:

    Total Cost = Quantity X Unit Cost

    Details

    The Details section enables you to specify additional information about the invoice item.

    Company

    Select a company/client from the pull-down menu.

    Division

    Select a division from the pull-down menu.

    Department

    Select the department the item is for from the pull-down menu.

    Program

    Select the program the item is for from the pull-down menu.

    Campaign

    Select the campaign the item is for from the pull-down menu.

    Event

    Select the event the item is for from the pull-down menu.

    Job

    Select the job the item is for from the pull-down menu.

    Task

    Select the task the item is for from the pull-down menu.

    Request

    Select the Request the item is for from the pull-down menu.

  3. Choose Save.

  1. Choose the appropriate tab.

  2. Type the name of the advertisement, brand, channel, component, location, market and/or product/service in the selector field.

  3. Select the advertisement, brand, channel, component, location, market and/or product/service and choose the Add button.

  4. Enter the allocation percent. The allocation percent enables you to pro-rate an item to each brand. For example if the total price of an item was $100 and you allocate 50% of the price to Brand 1, Dynamics Marketing will allocate $50 of revenue to Brand 1.

  5. Choose Save to save your changes and keep viewing the page or choose Submit to save your changes and return to the previous page.  

Inventory adjustments enable users to modify the inventory value and available inventory.

Use inventory adjustments to update items to reflect changes due to 'internal' factors (results from a physical inventory or changes in the market value of items), rather than 'external' factors (use of components/items in campaigns, sale of items to clients, or returns to vendors). While inventory adjustments affect the general ledger, the financial changes are not processed through Accounts Payable or Receivable.

System_CAPS_importantImportant

Inventory adjustments cannot be reversed. If you need to 'undo' an inventory adjustment, create another inventory adjustment that is the 'reverse' of the incorrect one.

It's very important to use the appropriate transaction to adjust available inventory and cost.

The adjustments are made when the quantity of available inventory changes. The adjustments are made at the cost calculated by the Valuation Method selected for the item.

These adjustments are made when the quantity shown on the expense (the quantity 'received' into inventory) was incorrect. The adjustments should be made at the cost at which the item was received.

Dynamics Marketing adds the items at zero cost since they didn't 'cost' anything:

  • If the Weighted Average Cost method is used the weighted average cost of the item will decrease.

  • If the FIFO method is used a zero cost batch will be added to the inventory count; when items in this batch are used they will be at zero cost.

When adjustments decrease the quantity in inventory, the inventory value must be adjusted as well to reflect the 'loss'.

  • If the Weighted Average Cost method is used, an adjustment will be posted to the general ledger equal to the quantity x the weighted average cost.

  • If the FIFO method is being used, Dynamics Marketing will create an adjustment using the FIFO value of the items removed from inventory.

These adjustments are made when the Unit Cost shown on the expense item was incorrect. The adjustments should be made at the cost at which the item was received.

Go to the expense and edit the unit cost of the expense item. You can update the unit cost as long as the batch associated with the expense item hasn't been used. If it has been used, enter a cost adjustment.

Once an expense has been paid it can no longer be changed. You can void the payment and update the unit cost as long as the batch associated with the expense item hasn't been used. If it has been used, enter a cost adjustment. More information:  Track costs of items, media, and services purchased from vendors

Dynamics Marketing processes unit cost adjustments the same way, regardless of what Inventory Valuation method is being used:

  • All items in inventory are removed from inventory. The total value of the inventory of the item is removed from the Inventory General Ledger account using the appropriate valuation method and an offsetting amount is added to the Inventory Adjustment General Ledger account.

  • A new batch of items is added back to inventory using the new unit cost specified on the adjustment. The total value of the inventory of the item is added to the Inventory General Ledger account using the appropriate valuation method and an offsetting amount is removed from the Inventory Adjustment General Ledger account.

Example: There are 1,000 mugs in inventory with a value of $3,000. The cost of mugs has been significantly decreased and new mugs can be purchased for $1 each.  

  • Inventory is reduced by $3,000.  ($3,000) is added to the Inventory Adjustment account.

  • 1,000 mugs are added into inventory with a unit cost of $1, totaling $1,000. $1,000 is added to the Inventory Adjustment account.

The end result is 1,000 mugs in Inventory with a unit cost of $1 and a total value of $1,000 and a ($2,000) inventory adjustment expense.

To view inventory adjustments, go to Budgeting > Reconciliation > Inventory Adjustments.

  1. Choose the Add button New button on the Inventory Adjustment page.

  2. Enter the information as follows:

  3. Choose Submit.

Field

Description

Type

Select the adjustment type. Choose Quantity to adjust the available inventory; choose Unit Cost to adjust the inventory value.

Item

Select the item/component you want to adjust.

New Unit Cost

Enter the new unit cost.

Adjustment Quantity

Enter the adjustment quantity. For example, to reduce the available inventory by 3 units, enter 3.

Adjustment Account

Select the adjustment account to use.

Date

Enter the date the adjustment should be posted to the general ledger.

Created By

Specify the name of the person who made the adjustment.

Inventory Account

The inventory account associated with the item is displayed. It cannot be changed.

Available Quantity

The quantity of the item that is available is displayed. It cannot be changed.

Description

Enter a description of the adjustment.

System_CAPS_importantImportant
  • If the quantity and value of an item must be adjusted, process two adjustments; one for the quantity and one for the change in value.

  • Inventory adjustments cannot be reversed. If you need to 'undo' an inventory adjustment, create another inventory adjustment that is the 'reverse' of the incorrect one.

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