RE: Negative Inventory

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what are the reasons for negative inventories and the solution

terryarod Rookie Asked on November 8, 2020 in Inventory.
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Negative inventories are a consequence of moving out more inventory than you have brought in. Look at your inventory movements and the sequence in which they are occurring. When I say Inventory movements it’s not just all transactions so you need to understand which of you transaction are impacting stock.

Sales Order – No

Item Fulfilment – Yes

Invoice No & Yes, depending

Assembly Yes  etc

So you will be looking for things like, Work Orders without Assemblies. Closed SOs that were shipped, Returns that have arrived back and not processed. Item receipts from vendors that were received in full but were short.

The worst thing (in my experience) is to resolve Negative Inventory by doing a Inventory Adjustment.  When you do this you don’t address the underlying process problem and your negative inventory woes will continue.

One thing you can do is monitor negative inventory daily and get the feedback on what is happening to cause it.

One enhancement I always install on client Item records is a sublist of stock impacting transactions with a running inventory balance.

 

CG

Beginner Answered on November 8, 2020.
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