Manufacturing and Distribution Inventory

Inventory is handled differently depending on whether it is stored in a manufacturing warehouse or a distribution warehouse.  Inventory can be classified in up to four balance types, depending on how the inventory is used in the system.  (Balance types are defined within Inventory Control.)  For each balance type, you define whether the inventory in that type is available for planning (through the Order Planning flag) and/or available for distribution (through the Distribution flag).  If the balance type is available for planning, it is referred to as "manufacturing inventory."  If it is available for distribution, it is referred to as "distribution inventory."  If both flags are Yes, the inventory is both manufacturing and distribution inventory.

Whenever you enter a sales order into MAC-PAC, you must specify where the inventory will come from to fill that order.  The Relief Code is used to specify whether the order will be filled from manufacturing inventory (M) or distribution inventory (D).  You also specify which warehouse will be used to source the order.

The following rules apply to how inventory is stored in manufacturing and distribution warehouses:

·     Distribution inventory within a distribution warehouse (relief code D) is intended to be sold directly to customers.

-     When you use this inventory to source a customer order, Order Processing checks to see if the inventory is available.  It reserves the available inventory so it is not used to fill another order, then places any remaining items on backorder.  Inventory can be reserved at a specific lot.

-     You can decide if this inventory should be considered available by the Master Scheduling and Requirements Planning modules.  This option is specified on the Plant/Warehouse Description File using the Available for Planning flag.  If the option is yes, then the inventory is used to offset any requirements.  If the option is no, the planning modules will ignore this inventory.

-     Sales orders sourced from this inventory are never added to the requirements considered by the planning modules. 

If you decide to make the inventory in a distribution warehouse available for planning, you must make sure that you update demand forecasts regularly so that they accurately reflect actual sales activity for the inventory. 

·     Distribution inventory at a manufacturing warehouse (relief code D) is also intended to be sold directly to clients.  Inventory is stored in a distribution balance if the Distribution flag on the balance type is Y.

-     When you use this inventory to source a customer order, Order Processing checks to see if the inventory is available.  It reserves the available inventory so it is not used to fill another order, then places any remaining items on backorder.  Inventory can be reserved at a specific lot.

-     You can decide if this inventory should be considered available by the planning modules.  This is specified using the Order Planning flag on the balance type.  Recall that the Order Planning flag must be the same for all distribution inventory--either the flag must be Y for all distribution balance types or it must be N for all of the balance types.

-     You can decide if sales orders sourced from this inventory are considered as demand in the planning modules using the Sales Order Planning flag.  This option is specified for each warehouse on the Plant/Warehouse Description File. 

·     Manufacturing inventory at a manufacturing warehouse (relief code M) is intended to be used in the manufacturing process.  However, you can sell inventory from a manufacturing balance to a customer.  Inventory is stored in a manufacturing balance if the Order Planning flag on the balance type is Y.

-     Inventory reservation and backorder processing is not allowed.  Instead, inventory is allocated to meet customer orders, and goods will be manufactured as necessary to meet demand.

-     This inventory is always considered by the planning modules as available to meet requirements.

-     Sales orders sourced from this inventory are always considered as demand in the planning modules.

Note 1: Inventory balances that are available for both planning and distribution can be used with relief code D or relief code M.

Note 2: It is possible to store manufacturing-only inventory at a distribution warehouse.  This inventory will appear on stock status reports within MAC-PAC.  However, it cannot be used to fill customer orders or for manufacturing.

The following tables show the relationship between relief code, balance type, and warehouse type.

For more information about relief codes and balance types, refer to the Key Concepts section of the Inventory Control User Manual.