FIFO Inventory Valuation with IFS Cloud 25R1

Hi ​@ORFJAN ,

 We’ve seen similar discussions around FIFO in IFS Applications 10 / IFS Cloud, especially in Distribution-only setups, so your observations are valid 

 1. Intra-company Transfers (STD → FIFO)

What you described is standard IFS behavior:

• Receiving FIFO site uses:
   sending site’s inventory value (STD cost)
• Freight charges on internal PO are not included in FIFO bucket

Why?

IFS avoids:

• Artificial profit/loss within same company

 So FIFO layer is created using transfer value, not actual landed cost

Real-world impact:

• FIFO costing may not reflect true landed cost
• Especially relevant if freight is significant

 Most customers accept this
 Some handle freight separately (manual adjustments or cost add-ons)

 2. Cancel Internal Receipts (FIFO)

Yes — this is a known limitation/design behavior:

• Once FIFO bucket is created:
   Cancellation is restricted

Why?

• FIFO creates cost layers
• Cancelling would:
  • Break cost history
  • Impact downstream issues

Workaround:

• Use:
  • Return transactions
  • Corrective adjustments

 Not as clean as cancel, but safer for costing integrity

 3. Recalculation of FIFO Buckets

You are absolutely right:

 There is no standard support to recalculate FIFO history

Why?

• FIFO is transaction-sequence dependent
• Recalculation would require:
  • Replaying entire inventory history
  • Revaluating all issues

 Extremely complex and risky

In real life:

 This is a challenge, but manageable if:

• Processes are controlled
• Errors are minimized

 Practical Experience from Live Customers

For Distribution-only environments:

 FIFO works well when:

• High price volatility items
• Need accurate cost of goods sold
• Strict inventory control

 Common Pain Points

1. Internal transfers valuation (as you noted)
2. Limited correction flexibility
3. No easy “undo” for mistakes
4. Operational discipline required

 How Customers Handle It

 1. Strong Process Control

• Restrict who can:
  • Receive
  • Adjust inventory
• Validate transactions before posting

 2. Use Adjustments Instead of Reversal

• Inventory adjustment
• Cost adjustment

 Instead of trying to “fix history”

 3. Separate Freight Handling

• Add cost via:
  • Landed cost functionality (if available)
  • Manual adjustments

4. Training & Awareness

• Users must understand:
  • FIFO is not forgiving
  • Mistakes propagate forward

 Recommendation

For your case (Distribution only):

 FIFO is viable, but:

• Accept limitations upfront
• Define:
  • Clear correction procedures
  • Transfer cost policy
• Test:
  • High-volume scenarios
  • Error recovery scenarios