| The product endpoint and associated methods support 3 modes for the management of products and associated stock (inventory). |
| 1 |
No stock management |
You are selling your time or just don't need to manage stock. |
| 2 |
Stock management with no held financial value |
Product stock (inventory) is just expensed as it is consumed and supplied – eg manufacturing on-demand and or ordering from a supplier as required. |
| 3 |
Stock management with full financial value management |
Stock value is held on the financial balance sheet (ledger of assets and liabilities). |
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You can of course create hybrid scenarios based on products/product categories.
This getting started guide focuses on the most sophisticated method, option 3.
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| STOCK MANAGEMENT WITH FINANCIAL VALUE MANAGEMENT (OPTION 3) |
| As stock is purchased its value is recorded on the balance sheet against the nominated stock value asset account; this is commonly referred to as the "Perpetual" method. |
| EXAMPLE OF BUYING STOCK AT DIFFERENT VALUES (CLICK TO ENLARGE) |
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| HOW IT WORKS |
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One of the greatest issues in stock management is the purchasing of product stock (inventory) at different cost prices and then having to account for it at a later date - and keeping it in balance with the other financial transactions created during the purchasing of the stock.
mydigitalstructure deals with this by keeping a real-time "effective cost" price on the product, based on stock adjustments - so as stock is purchased (with current cost price) and sold, the cost value of the remaining stock is recalculated.
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| KEY METHODS |
| PRODUCT_MANAGE |
| Creates a general journal on the stock value account if "stockinitialunits" is greater than 0 - this is only used once when creating the product, then PRODUCT_STOCK_MANAGE is used. |
| PRODUCT_STOCK_MANAGE |
| Creates a general journal on the stock value account based on the cost price and adjusts the products effective cost price. |
| PRODUCT_SUPPLIER_ORDER_RECEIVAL_ITEM_COMPLETE |
| Similar to PRODUCT_STOCK_MANAGE, it updates stock account with a general journal based on the cost price and adjusts the products effective cost price. |
| PRODUCT_ORDER_DELIVERY_ITEM_COMPLETE |
| Decreases stock account value with a general journal using the products effective cost price and adjusts the products effective cost price. |
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| FACTORS TO CONSIDER WHEN DESIGNING YOUR STOCK MANAGEMENT SYSTEM |
| When is stock value recorded? |
A. At time of ordering from supplier
B. When stock is received |
| What value is used when decreasing stock value |
Current average cost price on the product, which is constantly being adjusted to represent the true cost of the stock, making sure it stays in balance with the other general ledger accounts ie creditors etc. |
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