Managing Commodity Items

Overview

In this document, we will cover how to create, manage, purchase, and sell commodity items. Commodity items are used when you purchase the exact item from several different vendors but sell it as the same item, i.e. wire, or pvc under no specific brand. We will discuss the recommended best practices, however, specific commodity item settings may be unique based on your business.

Commodity Settings

In this section, we will delve into the global settings for commodity items. These settings are set at both the Site and Warehouse level within the Administrator settings. Your purchasing settings at both the admin and item manager level will also play a role in how commodity items appear at the purchasing level so it's best to familiarize yourself with those settings as well.

Admin Site & Warehouse Settings

To get started from your top menu go to Admin > Administrator > Sites tab > Commodity Settings subtab.

• Under the Buying Cost Override you will need to choose between the following options:

  • Commodity Item’s Buying Cost - This will use the commodity’s item cost set up at the time of creation to populate on both an order and PO.

    • This option is best used if you plan on using FIFO, Last paid Cost, or Average cost as in system generated costs as you purchase and sell the material.

  • Reference Item’s Buying Cost - This will use the reference item’s buying cost to populate on both an order and PO.

    • This option is best if you consistently update your reference items ’ costs via manually or through a data provider and use true cost when purchasing the item.

• Next, you will have the option to choose additional attributes to appear on your PO spreadsheet when entering a generic commodity item, these details will come from your reference part numbers.

NOTE: By default, we have not chosen any of these options for you, however, if you use vendor data sheets when using our inventory imports attributes such as weight, package quantities, and UNSPSC may be included within the data.

This completes the Admin Sites settings for Commodity Items. If you wish to keep the same settings at the warehouse level there is no need to do anything further. However, if you wish to make changes to these settings at the warehouse level go to Admin > Administrator > Warehouses tab > Commodity Settings subtab and follow the same steps above.

Reference Part Numbers

Before we can create a Commodity Item you’ll need to make sure all your individual part numbers that will be used as reference part numbers have been created in SE. These reference items are added the exact same way as normal inventory items either manually or through an import. These items will need to be marked “not stocked” at the item level within the item manager, as well as any ROP & ROQ’s.

By marking these “reference items” as not “stocked” you will not run the risk of them appearing in the Critical Purchasing screen by mistake.

NOTE: If these items are already available in your system currently you will need to stock adjust all the individual items and place the quantity on hand under the generic commodity item.

• You can create an Inventory Adjustment Reason Pick List from the Admin Section under Pick Lists

  

Creating Commodity Items

In Savance Enterprise a Commodity Item is a Generic Part Number that has multiple reference part numbers (normal inventory items) associated with it. This allows you to sell, order, return all under the generic part, without having you to manage multiple part numbers for the same item. The below section will cover how to create and edit Commodity Items.

Creating a new Commodity Generic MFG

Since commodity items are just a generic part numbers and not tied to any specific MFG, you can create Generic Commodity manufacturer’s, i.e. Commodity, or WIRE

• Go to Purchasing > Manage Manufacturers

  

• Next if you want to associate your vendors now you can do that here, just select +Add under Default Associated Vendor and add as many vendors here.

  

Creating a new Commodity Item

After the settings have been configured you will need to create your commodity items. To get started from your top menu select Inventory > Inventory Manager and select Item Manager > New

• Using the Inventory Creation Wizard the Inventory Type will be Inventory > Hit Next

• From the drop-down menu, the Inventory Type select Commodity.

• Hit Next > Now create your generic part number/name along with a description that will be used for this item.

• UPC - leave blank and one will auto-generate for you.

• Hit Next > Under the Settings Tab enter any characteristics of the item you wish to include, i.e. package quantities, weight, COO, if not getting that information already from a reference item.

• For the Asset Account select > Inventory

• On the Selling Tab if you want to override cost settings for the individual item you can here:

• On the Purchasing Tab, if you want to override cost settings for the individual item you can here:

  

• On the Update During Import Tab hit > Next

• On the Commodity Settings Tab, you can edit the global admin settings for your overrides and attributes or let this item *inherit* these settings

• Hit Next > This next screen is where you will add and remove reference part numbers for this Commodity item.

• Select ‘Add’

• The Inventory Lookup module will appear allowing you to search for your reference part numbers.

• Once you’ve highlighted your selection, double-click or hit OK to add the item to your Commodity Reference Parts List. Continue this process until all your reference items have been added. If you need to remove an item from your list, just highlight the line and select ‘Remove’

• Next if you prefer to use the Default Sales Pricing of a specific reference item you can select that here. Just highlight the item and select “ Set as Default Sales Pricing Item”

  

• This will now use the reference part numbers pricing profile instead of using a pricing profile you would need to create for the generic Commodity part number.

• Hit Next > Add/Override your Cost/Price of the item.

• Hit Next > Add your warehouse locations if applicable.

  • Under the Pricing & Cost tab is where you will override the item-level pricing at the warehouse level if you need to.

  • Under the Classification Tab, enter any attributes that may apply, i.e. Category Code, Velocity Code, etc. NOTE: Based on your Commodity Admin Site Settings this information will be visible in purchasing based on the Reference Part Number you’ve selected.

  • Under the Settings Tab, you can view your selling settings.

• Hit Next > Add any classification attributes for this item. NOTE: Based on your Commodity Admin Site Settings this information will be visible in the purchasing spreadsheet based on the Reference Part Number you’ve selected.

• Hit Next > You will skip item groups as they don’t apply to commodity items.

• Hit Next > Add all additional product information, i.e. long description, custom description, and images.

NOTE: Alias, Substitution, and Complementary Part Numbers do not apply to Commodity Items.

• Hit Next > Finally add any special notes you wish to appear when viewing this item’s information.

• Once completed select > ‘Finish’ and your new item will appear in the Inventory Lookup module.

NOTE: It is recommended once the item has been generated open to view the part information, and select the Warehouse Tab. You will need to do a User override to enter Reorder Qty and a Reorder Point for this item since the Reference Part Number ordering points are no longer valid. After a few months you can switch to using the System generated suggestions.

Editing Commodity Item

In the event, you need to add, remove or just edit your commodity item’s information you will handle this like any other item edit.

• Go to Inventory > Inventory Manager > Item Manager enter or search for the Commodity Part Number. NOTE: We do allow you to search by Inventory Type > Commodity

• Once you’ve selected your item double-click or select ‘Ok’

• In the Item Manager, you can now make edits to your Commodity items through the Inventory, Warehouse, Product Info, Commodity, & Valuations tabs.

• If you need to add, or remove a reference part number go to the Commodity Tab

• From here you can select ‘Add’ to select new reference part numbers or highlight from the existing list and remove the part number.

• Once you’ve made your edit select close and ‘Save’

Modifying Existing Items with a Normal Inventory Type into a Commodity

• A user must remove the item, whose inventory type is being changed from Normal to a Commodity, on all RFQs. In other words, no RFQs can exist containing the new Commodity item that will be created.

• A user will need to Inventory Adjust the Reference part numbers to a 0 quantity. No reference part number can contain an on hand value

• With the item removed from all RFQs and the Reference Numbers "Zeroed Out", the Inventory Type can now be changed from Normal to Commodity

• Once the Reference item have been added/linked the on hand quantities for the Reference items can be added to the commodity item

Purchasing a Commodity Item

Whether by a Standalone PO or through Critical Purchasing the next section will cover how to create POs using Commodity items and Reference Part Numbers.

Commodity Items Cost

Based on your Commodity Admin settings when creating a PO the cost of the items will either reflect the Commodity Item’s buying Cost or the Reference Item's buying cost. We again recommend that your settings are set to use the Commodity Items Buying cost, and at the item level use the last buying cost. However, if you’ve set to use the Reference Part Number Buying Cost, the cost of the item will update based on your reference part number selection.

Standalone PO

To create a standalone PO from the top menu go to Order > New > RFQ/PO select the Vendor you are ordering from and the commodity item in the Part Number column.
If you have reference part numbers associated with the vendor selected in the header and a commodity item is entered, by default the first Reference Part Number for that vendor will appear in the Reference Part Number column automatically, which you can change.

• Next, while your mouse is on the Part Number, open your OS Bar/In Basket to view the right-hand menu.

• Find the ‘Reference Items’ Menu and click to view the details.

NOTE: You must click on the Part Number or highlight the line details row in order to view the Reference Part Items listed. Once you click off the line the details will disappear from this view.

• From this menu, you will choose the part number you want to ‘Set As Reference’ on the RFQ.

• Once you’ve made your selection the Reference Part Number will appear in the Reference Part column on the spreadsheet.

• Once the Reference Part Number is selected your columns will update to reflect the Reference Part Number’s UPC, Classifications, and Attributes, also the cost will update if using the reference items buying cost.

• Once your RFQ is completed select ‘Convert’ the reference part number will appear on the PO for the Vendor.

NOTE: If you select a Reference Part Number that is not under the Vendor you’ve selected you will receive a warning. You can however bypass this warning and still convert the RFQ if you choose.

• If you did choose to bypass the warning and converted the RFQ, you will get the following message. This is suggesting that you add the Vendor as an option default to the Manufacturer.

  

• When the PO is created, your Commodity item is not shown, but replaced with the reference part number for that vendor.

Critical Purchasing

Purchasing Commodity Items through Critical Purchasing is very similar to normal inventory items. Just like creating a Standalone we will create an RFQ and choose a reference part number for your commodity item to be used at the Vendor level.

• To get started go to > Purchasing > Create Critical Purchase Order.

• Once you’ve found a request for a commodity item select the items and ‘Generate RFQ’

• Next, while your mouse is on the Part Number, open your OS Bar/In Basket to view the right-hand menu.

• Find the ‘Reference Items’ Menu and click to view the details.

NOTE: You must click on the Part Number or highlight the line details row to view the Reference Part Items listed. Once you click off the line the details will disappear from this view.

• From this menu, you will choose the part number you want to ‘Set As Reference’ on the RFQ.

• Once you’ve made your selection the Reference Part Number will appear in the Reference Part column on the spreadsheet.

• Once the Reference Part Number is selected your columns will update to reflect the Reference Part Number’s UPC, Classifications, and Attributes, also the cost will update if using the reference items buying cost.

• Verify that everything in your RFQ is correct and ‘Covert’ the reference part number will now appear on the PO for the Vendor.

Kitting with Commodity Items

Commodity items in conjunction with standard items can be included as part of a kit. The process to create, manage, and sell these kits is no different. Commodity items can be a part of the two types of Kits that are available within the software.

Standard Kit

A standard kit allows you to sell a collection of inventory items under one part number. When entered in a sales order, the availability of a standard kit is predicated on the availability of its component parts. A kit becomes available to sell when all of the component parts are available. Customers however will only see the Kit Part number on any customer-facing documents.

Phantom Kit

A phantom kit allows you to set up a kit that when entered onto the sales order, each component part will be displayed instead of the kit part number. The phantom kit is simply used as a shorthand way to enter multiple items onto a sales order at the same time.

During the creation of a Kit simply just choose the commodity generic item number vs. the normal inventory item.

During the Purchasing process, the commodity will appear as a normal backorder to be purchased and fulfill any backordered kits.

Receiving Commodity Items

It is important when receiving commodity items from different vendors/manufacturers that when they are received under the Reference Part Number they are put away into stock under the commodity item number’s location.

Manually Receiving Items

When a PO is received you will need to receive the commodity material and put it away in a location.

• Go to Inventory > Warehouse Manager > Receivers

• Locate the PO order

• Open the Receiver

• There is now a column showing the Reference Part Number so receiving can reference the part number received from the vendor, but actually put it away in the commodity location which will print on the Put Away Report.

• If this PO was for a back order, you would mark it as received and click OK on the Hold For Back Orders screen during receiving.

Selling Commodity Items

When selling commodity items the process is simple for both you and the customer. Since it is all about the material, the details that are needed for a vendor are not needed for the customer.

• To place an order for a commodity item go to Order > New > Quote/Order.

• Enter your customer’s information

• Enter/Search for the generic commodity item

• Enter quantity

• Verify that your Price/Cost is correct

• Once the order is completed select ‘Convert’

Returning Commodity Items

There are two types of returns, Return Merchandise Authorization (RMA), and Return To Vendor (RTV). In this next section we will cover how to handle both scenarios.

Customer Returns (RMA)

In the event, you need to return a commodity item for a customer you can handle this transaction in two different ways. 1 - Process the RMA from an Order. 2 - Do a standalone RMA.

Process the RMA from an Order

To process a return from an order you will need to locate the original order. Select ‘Open’ and using the object browser you can search for the order.

• Once you are viewing the order go to the History tab and select Return Order/Item

• The return request screen will appear.

• Edit the quantities and line details (if applicable) of what you are returning for the customer.

• Once completed ‘Covert’ the return and refund/credit the customer accordingly.

Standalone RMA

To process a standalone RMA from the top menu go to Order > New > RMA.

• Enter the customer’s information in the header

• Enter the quantity and commodity part number into the line detail.

• Next, enter the Status and choose a bin location to place the returned item.

• Once all the return details have been entered ‘Convert’ the return and refund/credit the customer accordingly.

Vendor Returns (RTV)

In the event, you need to return a commodity item to a vendor you can handle this transaction in two different ways. 1 - Process the RTV from a PO. 2 - Do a standalone RTV.

Process the RTV from a PO

To process a return from a PO you will need to locate the original PO. Select ‘Open’ and using the object browser you can search for the PO.

• Once you are viewing the order go to the History tab and select Return Order/Item

• The return request screen will appear.

• Edit the quantities and line details (if applicable) of what you are returning to the vendor.

• Next, you will need to choose the correct Reference Part Number as the Vendor will need their part information to process the return.

• Open the OS Bar/‘In Basket’ side menu and choose the Reference Items tab

• Set the correct Reference Part Number. NOTE: If you entered the Vendor’s information first the first Reference Part Number available for that vendor will auto-populate in the Reference Part column.

• Once you’ve completed the RTV details select ‘Convert’ now the reference part number will appear on the paperwork back to the Vendor.

Standalone RTV

To process a standalone RTV from the top menu go to Order > New > Vendor Return/RTV.

• Enter the Vendor’s information in the header

• Enter the quantity and commodity part number into the line detail.

• Next, you will need to choose the correct Reference Part Number as the Vendor will need their part information to process the return.

• Open the OS Bar/‘In Basket’ side menu and choose the Reference Items tab

• Set the correct Reference Part Number. NOTE: If you entered the Vendor’s information first the first Reference Part Number available for that vendor will auto-populate in the Reference Part column.

• Once you’ve completed the RTV details select ‘Convert’. Now the reference part number will appear on the paperwork back to the Vendor.

Paying Commodity Vendors

Entering Bills

When it is time to enter an Invoice from a Vendor you will start by going to Accounting > Accounts Payable > Enter Bills. Just like entering any normal invoice, enter the PO and search.

• When the PO appears, use the +/- to expand the PO’s details.

• You’ll notice in the details that not only does the commodity item number appear, there is also a column for the reference part number that was used to place the PO.

• Once you’ve verified all information details are correct select ‘Create Bill’

Paying Bills

• When it is time to pay an Invoice from a Vendor you will start by going to Accounting > Accounts Payable > Pay Bills.

• While in the Pay Bills Screen you can select to view the Bill details by selecting the bill number link.

• In the Edit bill screen you can view the bill details. Using the +/- you can expand the details of the PO

• Once you’ve made your bill selection to be paid select ‘Pay Bills’

• Here will show the PO number, the commodity item number and the reference part number used to place an order for.

Additional Things to Note with Commodity Items

When you are dealing with Commodity Items there are several other areas you also need to consider to make the selling and purchasing processes smoother for commodity items.

Templates

By default we have changed the following print documents to show both the commodity item and Reference Part Numbers details for your convenience.

• PutAwayReport/Receiver

• RFQ/PO

• RFQ/PO (no prices)

• Vendor Return/RTV

• RTV PT Shipper

• RTV Shipper Drivers Copy

• RTV Shipper Label

PO Spreadsheet View/Column

Since you have to choose a reference part number at the time of a RFQ/PO we have added an extra column to view within the spreadsheet view. You may want to adjust your view to see the Reference Part column.

• Go to > Settings > Spreadsheet Admin

  

• Select Order Type RFQ/PO

• Highlight the Reference Part column and using the arrows move the column closer to the part number column for easier access.

  

• Once you’ve made your changes select ‘Save As’ and make that your current configuration.

• Now in a new PO your column will be easier to view and access.

Warehouse Locations

It is best when dealing with commodity items that you assign both your reference part numbers and commodity item in the same location. The reference part numbers will not have a Warehouse Record, so everything from receiving, picking, etc. will all be at the commodity item level and location.

ReOrder Quantities and ReOrder Points

As mentioned during the commodity item creation, it is best to set reorder quantities and points in the beginning and then over time you can let the system make these suggestions for you. These values are not necessary at the Reference Part number level.

Reviewing Item History

When in a quote you can look at the item history of both your commodity item and reference part numbers. The values shown whether you’ve selected a commodity item to view and or any of the reference part numbers to view the History and Summary will combine all values.