Purchase To Pay - New Item Creation

Item Opening in any Organization is very important phase because if proper structure and process is not followed then a single item can have multiple name and multiple location of storage and different rate and different value. Matching of such items can not be easy always.

Demerits of Wrong Item Name and Code opening.

1- Recourse Miss Usage- 

Same Item Can have multiple Storage Location

2- Loss To Company- 

Item exists in Store with XYZ name but the user          department calls the Item with ABC Name. So in          Emergency case already available item will be indent or purchased again.

   

3- Costing –

Same item with different name and rate will effect the                  organization costing.

   4- Quality - 

        Same Item with different name and purchased from                          different Supplier will have different quality                                      parameters.

   5- User confusion-

        A old user may be familiar to the name of item but a new                   joined user will not able to distinguish the products.

   6- Taxes Losses-

        U supplier may sell the item in X taxation's and V                              supplier  may sell the item in Y taxation's. So it will be 

        loss to company and comes in category of fraud in   b                        Government.

Merits of Single Item Name In Organization.

   1- Zero Recourse Miss Usage- 

        In Emergency condition, Item can be track in various                        location of organization

   2- Zero Loss to Company- 

        Item have the Common name with Standard and all user                  will be familiar with that, Because Standard is followed                    in Name Creation So new user will also be familiar with                  that.

   3- Costing -

           Single item Costing will be always easy

   4- Quality - 

       Standard parameter is defined for item So quality                             compromises is not possible at the time of purchase.

   5- User confusion-

       Standard is followed so confusion to user will be Zero.

   6- Taxes Losses-

        Standard is followed so no taxes issues will occur. 

Types of Items in Organization with respect to Purchase and Store.

1- Consumables/ Salable Items.

2- Service Item

3- Asset Item.

Consumables/ Salable Items.

Those which effect our Stock directly.

Those items which can be used once only are called Consumables Items. 

Those items which is sold is called salable Items.

 

Consumables Items are various type such as:-

   1- Raw Material

   2- Electrical Machinery

   3- Mechanical Machinery

   4- Office 

   5- Computer

   6- Cleaning

Theses are some categories even the users or respected organization can distribute the items into various subgroup according to usage to specify the location and consumption of item and make costing of the item easier.

   Example- Raw Material 

        Definition - All those material on which by doing some                     mac hing or performing some process a new Item is produced is called RAW Material.

   
   Now If i am working in Organization where Finish Good is           produced from 5 Separate Semi-Finish Good then fro these 5 different Semi- Finish Goods we have different RAW Material So we can separate our RAW Material on the basis of process or naming of machining or something else.
  Advantage of doing this will be help to analysis the costing of different process and optimization of Utilization.

Service Items- 

Those items which do not have physical existence but have cost effect on company.

   Like:- Employee Salary, 

              Machine Repairing Service, 

              Software Services.

              Third Party Audit Service.

Asset Items:-  

Those Items which have its Value in market and increases or decreases its cost with time. 

     Like:- Land of Company,

                Machines.

Item Master Creation Process

Now the Important part of this topic is what are the points which should be in consideration before creating the item master of any organization.

Item Master of any Organization may change according to work and process. But some important points should be consideration.

Primary (Mandatory)

   1- Item Code 

   2- Item Name (Standard Process)  

   3- Unit of Measurement

   4- Type of Item(Con, Service, Asset)

   5- Tax

Secondary

   1- Group of Item 

   2- Local Name of Item

   3- Secondary Measurement Unit.

   4- Unit Price

   5- Storage Location/Usage Location

                               

Tertiary

   1- Weight

   2- Minimum Stock Availability

   3- Maximum Stock  Availability

   4- Supplier Part No/ Customer Part No/ Machine Name

   5- Costing Center

   6- Peak usage Month / quarter