R&R Era 2213 Monthly Analysis

[petepuma01]

On the R&R Era 2213 Monthly Analysis report, under the Adds/Deletes/Adjusts section, there is a field called 'negative balance adjustments'.

What does this field really tell me and how does it help me improve my operation?

I realize that it shows something any time the QOH crosses zero (either going negative or correcting a negative to zero or more).

But what does this tell me, especially given the fact that negative on hands can be legitimate in the case of the pre-paid special orders (SP transaction code in 2525).

I suppose if I have a really high number of negative balance adjustments, it would indicate that I may have some inventory control problems. Anything more than that?

Do the consultants use this when evaluating a parts operation?

Do parts managers find it useful?

Thanks

[buckanderson]

Hey Pete: Your a little off track in your understanding of these numbers. A simple QOH less than 0 does not get tracked here. Only adjustments posted to part numbers that are negative on-hand are tracked. These adjustments can be in the form of a Plus or a Validation of the QOH in posting manual transactions. Pre-paid Special orders do take the QOH to a minus but when the proper order is receipted it is not considered an "adjustment". Hope this clears up the numbers.

An adjustment rate expressed as a % (Calculated by dividing the number of adjustment pieces by the total pieces in inventory) over 1% is a red flag showing there is a lack of knowledge in proper ordering in the department or darker things are going on in the department.

[petepuma01]

Buck

Thanks for the feedback. From what you said, it seems that the number of pieces is the key and not the number of parts involved. The closer I am to 0 on the number of pieces, the cleaner I am.

However, I need to disagree with what you have said regarding what is considered a negative adjustment.

From your message :

"Pre-paid Special orders do take the QOH to a minus but when the proper order is receipted it is not considered an "adjustment". Hope this clears up the numbers. "

I assume you do agree with me that when the pre-paid order is made, a negative balance adjustment is recorded. However, once the part is receipted, a negative balance adjustment WILL be recorded as well. This will happen whether the part is going from negative to negative, negative to 0 or negative to positive.

Assuming the part is going from negative to 0, I will agree that the number of 'pieces' and the dollar value will wash out to 0-- is this what you mean by an adjustment will not be recorded? However, the number of parts will be incremented by 1 so an adjustment was still recorded. Even with the wash out, an adjustment is recorded since the pieces and dollar amount went from some figure to 0.

(I verified this on a system and it is working as I have described.)

[RBickley]

Pete,

I have to question your definition of adjustment. What Buck says sounds cut and dried to me.

An SP transaction is a sale, not an adjustment. Sure your inventory will show a negative on hand. This will show up in the report under negative on hand.

Once the part is recieved and posted, another transaction is recorded as a receipt,
not an adjustment.

My understanding of a negative balance adjustment is:
The computer shows three and you have two. You go back to your computer and post one out/or you validate on hand. The more part numbers adjusted, the higher the piece count. The bigger the discrepency the higher the part count.

Nevermind the consultants, this is definately a red flag for you to see. Negative balance adjustments are a result of posting errors or employee theft. And either are costing you (and the dealer) money.

Negative balance adjustments can cause negative on hands, but a part that never goes negative can show a negative balance adjustment.

[petepuma01]

RBickley

I agree that an SP is a sale- however, if the QOH is 0 at the time the sale is made, the QOH does go to negative and it is reported under the negative balance adjustment section.

The adjustement that you descrive-- computer says 3 but you actually have 2 and you adjust/validate-- this will be reported under the 'minus adjustment' line, not the negative balance adjustment section.

See my first post for a definition on when negative balance adjustments occur-- a QOH that is positive going to another positive is not such an adjustment.