Identify types of inventory journals
In Supply Chain Management, inventory journals are used to post physical transactions. Supply Chain Management provides various types of inventory transactions, including issue, receipt, movement, and inventory reconciliation.
The primary inventory transaction types include:
Movement
Adjustment
Transfer
Bill of material
Counting
Tag counting
Inventory journal names
To create an inventory journal, first you need to configure Inventory journal names on the Inventory management > Setup > Journal names > Inventory page.
In the Journal type field, you can define the type of journal you want to process. You also need to select the number sequence for the voucher and select the logic for changing the voucher number.
You can define the rules for inventory reservation in the journal name. There are three rules: manual, automatic, and explosion. Reservation isn't applicable for journal type tag counting and inventory ownership change.
You can activate workflows for your journal by switching the Approval workflow slider to Yes.
Working with journals
A journal can be accessed by only one user at a time. If several users must access journals at the same time to create journal lines, those users must select journals that aren't currently being used to prevent information from being overwritten. In situations where multiple departments use the same journal type, it's helpful to create multiple journal names (for example, one per department). It can also be helpful to divide journals so that each posting routine is entered in its own unique inventory journal. For posting routines that are associated with inventory transactions, create one journal for periodic inventory adjustments and another for inventory counting.
Movement journal
In a movement journal, you can add costs to the items when you add inventory in the journal. If you want to add the extra cost to the item, you need to manually allocate it to a particular general ledger account. This allocation can be done by specifying an offset account during the journal creation.
To create a movement journal, navigate to the Inventory management > Journal entries > Items > Movement page. You can create a new journal by selecting the New button.
When you post the journal, the inventory of the item increases in the respective site and warehouse. A cost amount is added to the inventory cost, which creates a ledger transaction against the offset account selected.
Inventory adjustment journal
Sometimes your inventory may have quantity gains or losses. To update the Inventory status accordingly, you can use the inventory adjustment journal. In the inventory adjustment journal, you can add cost to the items when you add inventory in this journal. The extra cost is automatically posted to a specific general ledger account, based on the setup of the item group posting profile. Once you post the inventory adjustment journal, the inventory values change, and ledger transactions are created.
To create an inventory adjustment journal, navigate to the Inventory management > Journal entries > Items > Inventory adjustment page. You can create a new journal by selecting the New button.
When you post the journal, the inventory of the item increases in the respective site and warehouse and a cost amount is added to the inventory cost, which creates a ledger transaction against the ledger account defined for Inventory expenditure profit or Inventory expenditure loss on the Inventory tab under Inventory management > Setup > Posting > Posting page.
Transfer journal
Transfer journal is used to transfer the items between storage or tracking dimensions without associating any cost implications. For example, you can transfer your inventory from one batch number to another. You can also transfer your inventory from one warehouse to another. During the transfer, the in-transit location of the item isn't considered in the transfer journal. If you need to track that, you need to use a transfer order.
To create a transfer journal, navigate to the Inventory management > Journal entries > Items > Transfer page. You can create a new journal by selecting the New button.
When you post the journal the inventory of the item increases in one warehouse, and the same quantity decreases in the other. Inventory cost is posted in ledger transactions against the ledger account defined for Inventory issue, Inventory receipt, Inter-unit payable, and Inter-unit receivable account configures on the Inventory tab under Inventory management > Setup > Posting > Posting page.
Bills of material
You may have a simple production process in your organization for which you don't require use of the Production module. However, you need to maintain the raw material inventory and issue the inventory based on the active bill of material (BOM) defined. For that, you can use the Reported as finished feature on the Product information management > Products > Released products page. The Report as finished button is located in the action pane Engineer > Process. You can also run this process from the Inventory management > Journal entries > Items > Bills of materials page. You can create a new journal by selecting the New button.
In the Action Pane of the journal, select Functions > Reported as finished.
The Reported as finished dialog appears. You need to select the finished good and the quantity that you want to report as finished. You also need to enter the BOM you want to use to produce the item.
When you select the OK button in the bottom of the dialog, the BOM journal is created with the finished good and the raw materials in the journal lines. Raw material lines are based on the selected BOM. For the finished good, quantity is shown as positive. For raw materials, the Quantity field value is negative because these items are consumed.
To disassemble a finished good, you can enter a negative value in the Finished good quantity field and a positive value in the Raw material quantity field.
Counting journal
You can correct the current on-hand inventory by using the counting journals. It's a regular practice in warehouses to periodically check inventory counts to avoid discrepancies between the physical on-hand and system’s on-hand quantity. In case there's a difference, you need to adjust the stock quantity by creating the counting journal.
To create a counting journal, navigate to the Inventory management > Journal entries > Items counting > Counting page. You can create a new journal by selecting the New button.
You can select Worker in the journal line to define who is going to do the stock counting for a specific product in a specific warehouse. The journal in the preceding screenshot shows a discrepancy between the on-hand quantity and the physical after quantity counting. When you post the journal, the stock of the item is adjusted as the physically counted quantity in the respective site and warehouse.
You can associate counting policies by using counting groups. You can define counting groups under Inventory management > Setup > Inventory > Counting group. The counting groups can be associated to products in the Manage inventory FastTab of the Released product page. You can create a counting journal for all items under the same counting group by selecting the Create lines > Items in the action pane of the Counting journal page.
You can filter out all items that aren't counted since a specific date and create a counting journal for all those items together by selecting Create line > On-hand in the action pane of the Counting journal page.
Tag counting
You may need to assign a numbered tag after counting a lot. You can use the tag counting journal for that. The tag contains a tag number, item number, and item quantity. Each item number should have a unique set of tags with its own number sequence to ensure tags are used only once and all tags are used. The tags can have three status values:
Used: When you count the item number
Voided: When the item number is voided
Missing: When the item number is missing