Dynamics F/SCM Customer Experience (CRM) Dynamics GP Dynamics Business Central (NAV) Dynamics SL Power Platform Fabric Copilot

[Liz McQuiston]

Not sure of the best way to handle this situation, want to run it by all of you that may have come across this issue before.

We currently produce several FIFO products from raw steel coil and our sale price is based on the raw steel contract rate negotiated at the beginning of the year.

One of our customers used to produce these same products on their own but have decided to stop doing so and we are assuming their steel contract at a much lower cost.  As such we want to produce the product using their steel contract and sell the item to them at a reduced sale price.  Basically this inventory would be produced and sold exclusively to this one customer.

Based on my knowledge of the system I see creating a new raw material part, a new BOM using the new raw material, and several new finished parts to track the inventory and sale price of these products.  All of these items would be set to inactive once the steel contract runs out.

Does this make the most sense or is there another better way to handle this in the system?

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Liz McQuiston
Corporate Controller
Superior Walls of America
New Holland PA
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[Ian Ray]

I’ve tried something similar with variants and think I can remember most of the issues.

I tried creating a raw item variant, a finished item variant, and assigning the finished item variant a difference price for different customer price groups.

The problem I ran into is the production BOM for the variant finished item doesn’t automatically pull in the variant for the purchased item. That is, a variant code has to be filled in for the consumed item variant each time because the production order pulls in the production BOM for the non-variant item by default. One way around this is selecting an alternate BOM, but that proves just as much trouble as remembering to assign the variant to something one normally does not.

Another complication is the unit cost will display as the average value of all variants currently in inventory. Yet another complication is sales history will look wrong if variants are not pulled into a report.

Thus, I would say your idea of making new items is less complicated in the long run. You could always plan to delete these items later as NAV allows this if there are no ledger entries in the current fiscal year.

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Ian Ray
Cypress Grove
Arcata CA
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[Ron Ketterling]

If you setup a separate  location and have inventory costing set up by location, you should be able to segregate the cost for the low cost steel. Additionally, if you use lot tracking for the heat numbers, you can get a specific cost for the steel used. There might be one other setting on inventory setup having to do with costing.

We are using lots with a couple of clients to get specific costing and it is working well for them.

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Ron Ketterling
President
Business Automation Specialists of MN, Inc.
Minneapolis MN
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[Ken Sebahar]

There are a lot of variables to consider with this, but if these Items (RM and FG) are all lot-tracked, then the cost of the RM should flow through to the finished goods produced on the Prod. Order.  So your cost/profit should accurately on these sales. So you could use the same Item Nos., but identifying/tracking/allocating these Items by Lot may be difficult from a picking/whse. management perspective.
Another option that would allow you to use the same Item Nos. would be to track all of the activities for these Items through a different Location Code.  NAV manages inventory/FIFO layers via Location Code so the correct costs could get applied to these.  Downside is that using a different Location Code would probably make inventory/warehouse management more difficult.
Seems like if this is a one-time short-term thing and not too difficult to create the new Items, that is probably the simplest solution.

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Ken Sebahar
Vice President – Operations
Solution Systems, Inc.
Rolling Meadows IL
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