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Exclude 0 Transactions from weighted Purchase Costs calculation

  • 31 August 2022
  • 6 replies
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Userlevel 4
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Hey guys,

 

we have Purchase Parts that one Site in Company A mainly purchases from another site in Company B and resells it to customers. Unfortunately we have 2 different processes here:

  • Purchase the product for the actual price from internal supplier
  • Purchase a higher level product for direct or transit delivery to end customer where the full price is on that product, but the same parts as point 1 get added as additional customer order lines (and thus purchase order lines on site A) with price 0.

Basically we have a mix for the same parts of Purchase Order lines with the actual price and purchase order lines with price 0. When calculating the average purchase price for these parts the calculated price is now wrong. 

It’s hard to change the process in this area. Does anyone have a bright idea how we could get “correct” calculated costs in company A w/o manipulating the database after (which we want to avoid)? Like exclude certain PO lines from the calculation?

Any ideas would be appreciated.

 

Cheers,

 

Johannes

 

 

 

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Best answer by cperdue 1 September 2022, 14:40

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6 replies

Userlevel 6
Badge +14

I am curious why there are zero cost purchase orders.

 

The purchase price from a supplier can be higher so I understand the discrepancy.   Is either company using the last and average purchase fields on the inventory cost tab for analysis and/or part cost calculations?   

Userlevel 4
Badge +7

Hey Christy,

 

it’s a requirement i have encountered at quite a few customers and i have yet to see a good solution for it. It goes under the name  “Shipment Relevant Parts”. Details differ from customer to customer, but usually you sell an end product and either you have to add parts belonging to this (but already included in the total price, could be anything from screws to spare parts.) in the shipment or the complete product gets assembled at the customer and you need to send pieces (but sell only one product). 

In this case the product is configured, meaning the content will change based on configuration, so you cannot use package parts either. Pricing is done on characteristics in the CTO part.

We need to be able to separately pick and pack these parts in the Shipment Warehouse, declare them separately to customs and so on… 

All of these points leads to creating additional customer order lines as ”Add-ons” for the product purely for logistic and document purposes. 

 

All Sites have set the calculation method of purchase parts to “weighted average” if that is what you are asking.  I looked at the calculation method for the average pricing and it seems it would be quite easy to customize it to exclude transactions with 0 price from that method (the one that updates average purchase price in Inventory part), but i guess that would not solve our issue on stock value...

Userlevel 6
Badge +14

I have seen several ways of accomplishing what you are asking.   It would be helpful to be able to calculate the average/last cost by groups.

 

I would suggest somehow distinguishing the ‘exception’ parts, using a standard cost on those exception parts and implement a business process that excludes internally sourced product costs/lines.   PO lines by part, by supplier or supplier type with regular standard cost updates.

Userlevel 4
Badge +7

Hey Christy,

 

not sure i understood you correctly, but we order the parts from internal suppliers (same Supplier, Same Parts), but with 2 different processes. If they are spare parts they have a price, if they are SRPs (Shipment Relevant Parts) they have a 0 price.  Might be a dumb question as i am not very good in costing, but what exactly do you mean by  “implement a business process that excludes internally sourced product costs/lines”?

 

Regards,

 

Johannes

Userlevel 6
Badge +14

I believe the disconnect in our discussion is price v cost.   The part costs the same either way (as a charged item v an uncharged item).   The price would be the difference item.

 

Does that make more sense?

Userlevel 4
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Yeeess… standard costs. Sorry my bad. Thanks for your suggestions, i will look into it.

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