Overview

This document contains information to help you implement Inventory within NorthScope. It also contains tips and best practices to help you maximize the benefits of the software.

Product Lifecycle

Image 1 illustrates a simplistic view of the lifecycle of Raw Material moving through a Plant to become finished production. While this represents what is “physically’ happening, it may not represent effective data collection points, especially without a data collection system.

Image 1: Lifecycle of Raw Material, Work in Process, and Finished Good Items

Item Types

NorthScope supports multiple ‘Item Types’ to help organize your item master. These Item Types behave one of two ways with respect to managing perpetual inventory balances. 

Item Types that are Inventory Tracked

Inventory Tracked items are item codes that maintain a perpetual inventory balance. For example, if you manage inventory balances in a 3^rd party cold storage and wish to provide visibility to the On-Hand and Available balances within NorthScope, the items would be assigned with an Item Type that maintains perpetual balances. NorthScope supports one Item Type for Inventory Tracked Items:

• Sales Inventory – Use this Item Type for items you wish to maintain a perpetual inventory balance. These items may either be Lot Tracked (balances are stored by Item & Lot) or Item Tracked (balances are stored by Item only).

Item Types that are NOT Inventory Tracked

Non-Inventory Tracked items are item codes that are used on transactions but do not maintain a perpetual inventory balance. For example, if you add a FREIGHT charge to a transaction you would use a Freight item code, but it is unlikely you would be maintaining perpetual inventory balances for freight charges. NorthScope supports the following Item Types for items that can be added to transactions, but On-Hand and Available balances are not stored for them:

• Freight - Items codes can be added to transactions for charging customers for freight that display the summarized values of all Freight items in a “Freight” box on a printed invoice rather than showing as a detail line item. This is not currently supported but is being added.
• Charges – Can be used for Miscellaneous items that you may sell or for Item Codes that you do not maintain a perpetual balance for.
• Services - Item codes to distinguish revenue from services.
• Tax – Items codes can be added to transactions for charging customers for sales tax that display the summarized values of all Tax items in a “Tax” box on a printed invoice rather than showing as a detail line item.

Item Categories

While NorthScope can keep perpetual inventory balances for all product categories you define as Inventory Tracked, it is often best to start with only the mandatory categories and add more as you become familiar with software. Without an integrated data collection system, all inventory transactions must be manually entered, so you need to determine if you have the processes and people in place to keep your inventory balanced with manual data entry. There are six Item Categories typically used in Food Companies that include, but are not limited to:

Finished Goods

Finished Goods are items in their final sellable form and account for most of Items that are sold to customers. These Items are most often setup and managed as Sales Inventory (Inventory Tracked) items.

Packaging & Ingredients

Packaging items represent things used to package and label your products. These include, but are not limited to things like boxes, buckets, lids, liners, labels, trays, totes, etc.

For this discussion, Ingredients are things you add to products during production. These are typically purchased from outside vendors and may include things like water, sugar, salt, spices, etc.

Listed below are a few things to consider when deciding whether to set these items up in NorthScope, and if so, determining if they will be setup as Inventory tracked or non-inventory tracked.

1. Do you need to analyze purchases for specific items and/or maintain Vendor specific pricing for these items? If so, having unique item codes will make this possible whereas having a miscellaneous item code will not.
2. Do you need to maintain a perpetual balance of any of these items? If so, having unique item codes, and setting them up as “Sales Inventory” Item Types will be required. If not, you still may want unique items codes but set them up as “Misc. Charges” Item Types.
3. If you need to maintain a perpetual inventory balance, are you able to correctly relieve the correct item codes from inventory and do so in a timely manner?
4. Is it obvious how you would set these items up? You may purchase salt from different vendors and each vendor may have a different size pack.
5. If an ingredient is of high value and only small amounts are consumed for a production batch, are you able to correctly record this? For example, ingredient ABC is $250 for a 10# bag. For most production orders, 5 ounces are consumed at a time. If this item is priced by the Bag and consumed by the ounce, then 1 bag would equal 10 lbs. or 16 oz. If this item were setup to manage both Units & Weight and you consumed 5 oz, you would have 10 bags with a total of 9 lbs., 11 oz.
6. Ingredients that go into food and packaging that directly touches food becomes part of the trackability requirements. A decision needs to be made as to where this information is going to be stored (a production system, NorthScope, paper files, etc.).

Work in Process (WIP)

Work in Process items are “intermediate” product that have had some form of interaction but may not be in a final sellable form, such as:

• 1,000# Totes of 20/40 Halibut
• 1,000# Totes of Sockeye Fillets
• 1,000# Totes of Grade A Red Potatoes
• 25# Cases of 1/8” Freeze-Dried Basil

While these types of codes are physically managed in nearly all food companies, not all companies manage them within their ERP system. These are discussed separately from Packaging and Ingredients because they often have a much higher cost, may be in multiple physical locations, and have expiration dates that must be managed.

Image 2: Product Flow

As raw product is offloaded it is “Graded” (separated by size and/or quality) into 1 of 3 different WIP codes. Each WIP code then becomes the main input for one or more finished good item codes. Assume the truck is unloaded in 45 minutes and each of the 45 WIP Totes were immediately moved to one of 3 different production lines as it was filled. On average, one tote is filled and issued to a production line each minute. As one tote is emptied, the next one is consumed, until they are all gone. If this were recorded manually, the minimum data entry would be:

1. A transaction to record the initial receipt of Raw Material.
2. A production transaction to issue the Raw Material as Production Inputs and WIP code(s) as Production Outputs.
3. A production transaction to issue the WIP code(s) as Production Inputs and one or more Finished Good codes as Production Outputs. This step would need to be repeated for each Production Line.

In this example, there may not be value in recording the change of inventory from Raw Material to WIP as it is only in that state for a few minutes. However, in companies were WIP product is moved to a cooler or freezer where it may sit for some time before being issued to production, having visibility to this would make sense. 

Listed below are a few things to consider when deciding whether to set these items up in NorthScope, and if so, determining if they will be setup as Inventory tracked or non-inventory tracked.

1. Do you need to maintain a perpetual balance of any of these items? If so, having unique item codes, and setting them up as “Sales Inventory” Item Types will be required. If not, you still may want unique items codes but set them up as “Misc. Charges” Item Types.
2. If you need to maintain a perpetual inventory balance, are you able to correctly relieve the correct item codes from inventory and do so in a timely manner? Frozen product often stays in storage for long periods of time whereas fresh product moves in and out much faster. Because of this, it is easier to manage frozen WIP product in companies with only manual data entry. If your company has an automated data collection system that can easily track product movement in a fast-paced environment, and this data can integrate with NorthScope, you may want to track them in NorthScope.

Without integrated data collection, every interaction including initial WIP production and consuming WIP codes as inputs to create Finished Goods must be manually entered or uploaded into NorthScope. While it may be your desire to have everything managed in the system, consideration must be given to amount of manual effort required to do this timely and accurately. In a fast-paced production environment, product may only stay in a WIP form for several minutes and by the time the information is given to a data entry person, the WIP product may have already been used to create Finished

For reasons such as this, we recommend that without integrated data collection for production you start by only tracking inventory balances for Finished Goods and slow moving WIP items. Once you are running smoothly, you can add additional tracking in future phases.

Raw Materials

For this discussion, Raw Materials represent raw ungraded product you buy from Suppliers, Growers or Fishermen (not the ingredients you buy) such as:

• A truckload of strawberries
• A vessel of fresh caught salmon

Until they have been separated by size and/or grade they would be considered as “Raw Materials”.

In many cases, these products are stored in 1,000 totes and typically consumed by weight, not units (i.e., we consumed 600 lbs. from the tote leaving 425lbs remaining, we did not consume 1,291 potatoes leaving behind 823). While these items still may be sold to your customers and/or other similar companies, in most cases they are used as Inputs to create one or more WIP or Finished Good items. When deciding whether to manage these in NorthScope, the following should be considered:

1. Do you have an integrated data collection system that can submit this data to NorthScope?
2. Is knowing the current balances or history of these items necessary to people in sales, accounting, or other areas of your company? If so, and there is not another source to get this, it may make sense to manage this in NorthScope.
3. Is the amount of data entry that would be required to accurately maintain these balances something you can keep up with? This not only includes the initial receipt of Raw Materials, but also the consumption. If so, it may make sense to manage this in NorthScope.

Supplies / Other

These represent other things you may track in inventory such as gloves, knives, aprons, cleaning supplies, etc. Listed below are a few things to consider when deciding whether to set these items up in NorthScope, and if so, determining if they will be setup as Inventory tracked or non-inventory tracked.

1. Do you need to analyze purchases for specific items and/or maintain Vendor specific pricing for these items? If so, having unique item codes will make this possible whereas having a miscellaneous item code will not.
2. Do you need to maintain a perpetual balance of any of these items? If so, having unique item codes, and setting them up as “Sales Inventory” Item Types will be required. If not, you still may want unique items codes but set them up as “Misc. Charges” Item Types.
3. If you need to maintain a perpetual inventory balance, are you able to correctly relieve the correct item codes from inventory and do so in a timely manner?
4. Is it obvious how you would set these items up? You may purchase gloves from different vendors and each vendor may have a different size pack.

Tracking Inventory without integrated data collection for production

Without integrated data collection, every transaction must be manually entered (or uploaded) into NorthScope. While it may be your desire to have everything managed in the system, consideration must be given to amount of manual effort required to do this, and to do it accurately. Attempting to manually keep up with all the data entry may not add any real value. For reasons such as this, we recommend that without integrated data collection for production you START by only tracking inventory balances for Finished Goods and slow moving WIP Items (e.g. Frozen WIP). Once you are running smoothly, you can add additional tracking in future phases.

Tracking Inventory with integrated data collection for Production

With integrated data collection for production you have more options. At a minimum you should be tracking Finished Goods inventory balances in NorthScope. However, with integrated data collection there are a few other factors that must be considered. For instance, if your data collection system only manages product movement but cannot manage back-dated on-hand inventory balances you may want to consider tracking WIP, Raw Materials, Ingredients, and Packaging in NorthScope. However, if these Items are currently managed in your data collection system then it may be best to leave those as they are. 

What makes Items unique?

In some systems, the Item Master is nothing more than a list of product codes that are only used to save users from manually typing descriptions on sales invoices. In NorthScope, the Item Master is the foundation of the entire system. To best capitalize on many of the features in NorthScope, including those you may not implement until a future date, a dedicated effort should be placed on constructing the Item Master. There are several factors to consider when creating your Item Master so simply cloning the Item setup from your current system may not be best choice. NorthScope may have different functionality, you may want to manage aspects of your business differently, and/or you may want to set it up to accommodate growth or expansion. There are several areas within NorthScope that rely on Item ID’s including: Inventory, Sales Order, Pricing, Sales Programs, Costing, Manufacturing, and Sales Analysis so having a well thought out plan may save you from costly rework later. Because of this, you should consider this from several angles.

We recommend a strategy where Items will be unique by sellable form, cost model, bill of material, sales program rules, accounting rules, sales analysis needs, and ability to manage. Let’s look at each of these characteristics in detail.

Pack Size and Form

When thinking through your items, identify all the unique physical ways you currently package your products. For example, if you sell “Grade A Large Eggs” in a ½ Dozen, 1-Dozen, 18-Pack, and 5 Dozen Case, you would be deciding if this needed to be 4 item codes or 1 item code. Some may argue that maintaining 4 times as many item codes would be more long-term work and/or a single item code would work because users could just enter the total quantity of eggs on each transaction. However, there are downsides to this simplified approach including:

• You would need to ensure there was an effective way to communicate to production and/or shipping how to pack the order.
• If Brokers were paid differently for 1-dozen packs vs. a case of 5 dozen, you would need to manage this manually.
• Pricing may be difficult to manage if you gave discounts on larger case quantities.
• Analyzing sales would be more difficult.
• Determining packaging needs would be more difficult.

An Item’s sellable form covers many areas such as:

• Pack size – is it a 30lb case or a 50lb case?
• Is it fresh or frozen?
• If frozen, is it block frozen or IQF?

As you are going through this exercise, you may discover that you have too many options for how you package your product. Companies often find themselves in this situation over time because they may be selling anything “requested” rather than sticking to an intentional list. For example, if you sell Sockeye Salmon Portions, of various portion sizes, packed in a 10# Case your sales may look as follows:

You need to decide if the cost/effort of maintaining all these items is strategic or if simplifying by offering fewer options would be better. The additional labor and management cost of the few orders for 2-3oz or 3-4oz portions may be costing you substantially more per pound in labor than the 2-4 or 3-5 oz.

Cost Model

Assume you have two cases of product that appear “physically” identical. However, the product inside one case took a single trip through the Destemmed and the other case was run through twice because of a customer quality specification. In this example, there would be cost differences between these two cases and if this were a normal part of your business, that should be taken into consideration. If this distinction was financially significant or it aided in sales order and/or inventory operations, you should setup two unique Items. If the item is priced differently and you want to utilize Price Lists, you should setup two unique items. There are many factors that can change the cost of a product and you should discuss these with your project team. Even if you are not currently using a cost model, planning for this now would be wise.

Bill of Materials (BOM’s)

In most instances, basing the Item decision on the cost model may suffice but, in some instances, you may want to consider if the components used to produce an Item justifies separate Item Codes. If you currently maintain “Production Formulas” or plan to in the future, these distinctions must be considered. For example, if you have some flexibility in your process that allows you to substitute a pre-made spice pack for all the individual ingredients then this may not need to be a different code as it is just a different way to produce the same thing. But, if one of your products can only be shipped to certain customers with slip sheets between product layers whereas other customers do not require this, you may need different Item ID’s for each. Even if you determined the cost of these items was nearly identical, it may save you from making production or shipping mistakes by having separate codes.

Brokerage & Promotion Programs

The two most used sales programs in NorthScope are Brokerage and Promotion (On-Invoice) programs. Brokerage programs allow you to accrue for money that will be paid to outside brokers and Promotion programs allow you to decrease the total invoice amount. These programs are configurable based on rules, so they should be considered when deciding on what makes your products unique. For example, if you pay 3% to a broker when they sell the company brand and 5% on premium brands you should create unique Items for each of the brands you sell. We recommend your team review the rules for all your brokerage, commission, and rebate programs before finalizing your Item Master.

Labeling

In some organizations, the “Brand” label that gets put on a box is nothing more than a cosmetic distinction because the BOM and quality specifications may be identical and in others it may require additional Item IDs. Consider the following scenarios:

1. In a make-to-order environment, you sell the exact product to both Costco and Safeway except for you put a Kirkland label on the Costco product and a Signature Select label on the Safeway product. Depending on your production process and equipment, you may consider making these two different Item IDs.
2. In a make-to-stock environment, you produce frozen product and put it into your inventory. When it is picked for shipping, you apply a “Brand” label on each box. Depending on the potential number of permutations, you may or may not want to make these unique items.
3. You have Customers with very specific labeling instructions. Depending on the capability of your production process and the number of Items and Customers, you may or may not want to make these unique items.

Accounting Rules

When Items are sold to customers, NorthScope creates the sales journal entry by taking the ‘Sales Revenue’ account assigned to the sold Item(s) and the ‘Accounts Receivable’ account assigned to the Customer. How the financials are constructed (or need to be constructed) will help determine how you construct your Items. For example, if your chart of accounts has separate GL accounts for Yellow Corn and White Corn then you need to be sure this information is clearly defined in your Items. NorthScope creates the following Journal Line Types from the Item setup:

• Brokerage Expense
• Brokerage Accrual
• Brokerage Write-off
• Freight Expense (sales order delivered freight expense)
• Freight Accrual (sales order delivered freight expense)
• Transfer Expense (delivered freight expense from Transfers)
• Transfer Accrual (delivered freight expense from Transfers)
• Sales / Sales Return

Sales Analysis

Your sales analysis needs will play a major role in determining your Item Master. With NorthScope, you can quickly and easily analyze your sales data by merging information from who and where your products were sold with information on what you sold. We highly recommend your team reviews the ‘must have’ analysis reports as well as the “nice to have” reports and use this information in determining the Item Master. For example, if you need the ability to easily analyze sales of Smoked Salmon Fillets by package weight and ‘Brand’, you need to ensure you have item codes that are unique by these.    

Ability to manage

This area is further explored in the next section, but consideration must be made to what you can reasonably manage. Some companies may want item codes for all WIP product but if your production moves so quickly that by the time you were able to record production of WIP product it has already changed forms several times, it may not be feasible. You need to determine if the benefit from managing the item code outweighs the effort required to effectively manage it.

How to construct your Item ID’s

One of the most common debates with Item’s is how to number them. With NorthScope, we recommend you adopt the following 5 rules:

1. Keep your Item ID’s numeric – it is much easier to type ‘33050’ than ‘3F45W4’. The only caveat to this is you may want to consider using a short prefix for some item categories other than Finished Goods. For example, if you were using a 5- digit Item Code then all your finished good items would be 100% numeric (e.g. 12450) but you could prefix the other item categories to distinguish them. For example, RM- for Raw Materials, WIP- for WIP, etc. This is helpful because WIP and Raw Material descriptions are often similar to finished good descriptions.
2. Keep your Item ID’s the same length – It is easier to process data that is similar.
3. Keep your Item ID’s as short as possible - we recommend keeping these between 4 and 6 digits.
4. Do not start Item ID’s with 0’s – You may want to use Excel to analyze your items and/or sales analysis reports. Excel strips off the 0 so it is difficult to use.
5. Do not use intelligent numbers – See below

Why to avoid intelligent Item ID’s

When companies use a full intelligent numbering system, each digit in the Item ID has meaning. This may seem like a good idea because (theoretically) you could tell everything about your inventory just by looking at item codes. The arguments in favor of this strategy typically center around two issues.

First, there is a belief that this approach provides a great deal of information about the item just by looking at the Item ID. While this may be true, it is only true up to a point. The amount of data you can store in an Item ID is limited to how long you want your Item ID’s to be. NorthScope treats your Item ID’s as license plates not profiles. With a relatively short license plate number on a vehicle, a great deal of information can be retrieved. For instance, registered owner’s name, owner’s address, type of vehicle, registration date, etc. Now, imagine how long your license plate number would need to be to intelligently reflect this data. If you want the ability to slice and dice your data in a wide range of ways, you need the ability to store a great deal of information about your items. A food company may need to identify many attributes about their items such as Category, Size, Grade, Specie/Commodity, Sub-Specie, Case Weight, Form, Variety, Flavor, and Brand. To identify these 10 attributes, you would need an Item ID with a minimum of 10 digits. With this method, you eventually run out of digits. Using the first digit for something like Specie or Grade is great until you have more than 10 of any one characteristic. Some companies address this by using 2 digits but then your users need to memorize up to 100 combinations. If you are using this strategy to identify more than one or two attributes you must either map to all your attributes or live with intelligent numbers that only tell half the story.

Second, there is belief that this approach makes finding Items and sorting product lists more efficient. While this may work if your sort requirements never change, it does not work if you need your item list sorted by the 3^rd and 5^th digits in your item codes. It is also not an ideal way to find items in lookups. This only works if you have every aspect of your numbering system memorized but does not work when you can’t remember if 7 means IQF or Fresh.

Perhaps the biggest downside of using intelligent ID’s is that they don’t leave room for changes in your business. As a result, these numbers lose credibility over time. For example, when the ID’s were first setup every digit represented something unique about the item but now that a new product line has been added the formula no longer works. If you are still convinced that you need intelligent Item ID’s, we suggest a compromise where you set aside the first 1 or 2 digits to indicate what type of item you are using. For example, Fresh codes start at 10000, Frozen codes at 20000, etc. Then let the rest of the digits be sequentially assigned as you add items within these groups.

We strongly encourage you to NOT use full length intelligent Item Codes.

To re-label or not to re-label

If you are changing item IDs for any items, you need to ensure you have a plan for how the conversion will work. A system conversion is a logical time to re-think this, as it gives you a great starting point, but you may still have a considerable amount of inventory that would need to be relabeled. Listed below are some things you want to consider.

Is re-labeling feasible in all locations?

One thing you need to determine is the effort that would be required to re-label all your inventory. If all your inventory is stored in totes, it would be much easier than if it was all in boxes, shrink wrapped on pallets. In some warehouse’s product may be stacked so deep that it would require too much effort to relabel. If you can effectively re-label, you should, but if not, you may not want to bring the items and balances into NorthScope but sell through the inventory in the current system or you may consider loading your new item master file with links to the old item codes and re-label as you ship.

Has any existing inventory been discontinued?

As you re-work your item master, you may decide to discontinue some items that may still be in inventory. Depending on the quantities and how long you think it will take to sell through then you have a few options:

1. Do not bring the items and balances into NorthScope but sell through the inventory in the current system.
2. Do not re-number these items but bring the balances into NorthScope using the old codes and then discontinue them when they are gone.
3. If the product is old, of little value, and/or not be sellable for other reasons, you may consider destroying it.

Deciding on your Lot Tracking Strategy

NorthScope can manage perpetual inventory balances for all your “Sales Inventory” Items, and for each of these types of items, you need to decide how their balances will be managed in NorthScope.

Non-Lot Tracked (Item Tracked)

Non-Lot Tracked items maintain quantity balances by the unique combination of [Item ID]+[Site].  This is a good alternative for companies that need to maintain quantity balances but do not use their ERP system to manage lots. With Item balances, you will still know how much of an Item you have in each of you warehouses and/or cold storages, you just will not have visibility to the individual Lots that make up the balances. Companies that use this method in NorthScope do so because they may have some items that do not require lot tracing, they may have a warehouse management system that already manages lot balances, or they may feel the effort required to manually manage Lots outweighs the benefits they receive.  

An on-screen inquiry of non-lot tracked inventory would look like this:

Lot Tracked

Lot Tracked items store balances in the most detailed level. With Lot Tracked Items you not only know how many cases of an Item you have in your main distribution warehouse, but you know how much of that quantity is from each Lot. Lot balances in NorthScope are unique by the combination of:

• Item ID
• Site – the warehouse where the product is physically located.
• Production Batch ID
• Warehouse Lot
• Owner

Companies that use this method do so because they are required to manage Lots, have strict guidelines on product recalls, manage costs at the lot level, need to manage product aging, or need the ability to audit Lots electronically, not from paper files.  

An on-screen inquiry of lot tracked inventory would look like this (assumes company owned product):

Even if you decide to setup your items as Lot Tracked, you need to decide what “footprint” you want your lots to cover in NorthScope. There are several procedural options for adding this detail to NorthScope.

For each option below, assume the actual Lot Number printed on each product label is the combination of: [Production Year]-[Julian Day]-[Production Facility]-[Production Line]-[Production Shift] and that on 2/3/21, the morning shift (SHIFT 1) produced inventory on the FILLET line at the Kodiak Plant. Based on these factors, the “Lot Number” printed on the box would be “21-034-KOD-FLT-1”.

Listed below are some options for how to track Lots within NorthScope.

Store Lots in NorthScope at the most detail level

With this method, the Lot Number stored in NorthScope would be identical as the Lot Number printed on the product label. The total of all the cases of a single Item ID with the Lot Number 21-034-KOD-FLT-1 would be recorded in NorthScope. The most obvious advantage of doing this is that all your lot data would be in one system. Here are some factors you should consider before adopting this approach:

1. How will this data get into NorthScope? If the data comes in from an integrated data collection system, this will be much easier than if it is handwritten on paper forms that are then turned over to someone to manually enter. Keep in mind, data entry at this level needs to occur anytime quantities are added (Receipts, Production Outputs, Transfer Receipts, Adjustments) or reduced (Production Inputs, Transfers Sent, Adjustments, Sales).
2. Will you always be able to maintain inventory correctly and efficiently at this level? If you have an integrated data collection system this is much easier. With integration, if a box is issued to Production, the scan of that event would send data to NorthScope as a Production Input. However, if you do not have an integrated data collection system, or you have product in a cold storage that is not integrated with your system, all this must be manually managed. In addition, not all Cold Storages store your inventory the same as others do, nor do they all have the same capabilities. You will need to be sure your procedures will work across all warehouses.
3. Are there some items this would be easy to manage and some that would not? In a company that deals primarily with full pallets of the same fixed weight item code from a single lot, this would be much easier than a company that deals with rainbow pallets that contain mixed items, mixed lots, and/or variable weight items. It would be much easier to manually record a transfer receipt of 4,000 cases of Item ABC with Lot #21-034-KOD-FLT-1 into a cold storage than it would if the same 4,000 cases were a blend of multiple item codes and lots.

Store Lots in NorthScope by Day + Plant

With this method, the Lot Number stored in NorthScope would be different that the Lot Number printed on the product label. A case with a Lot Number of 21-034-KOD-FLT-1 printed on the label would be recorded in NorthScope as 21-034-KOD. The biggest advantage to doing this is that there would be much less data in NorthScope, and this would be far easier to maintain with manual data entry. The disadvantage is that full lot tracing must be done outside the system. Here are some factors you should consider before adopting this approach:

1. Without a data collection system, this method may be required if you operate multiple lines and shifts and track production statistics at this level. This method would also make lot allocation on transactions from cold storages much simpler, as there would be fewer unique Lots in the system.
2. If you use this method, your recall footprint will be bigger and could include everything you produced in a day, whereas the previous method could be limited to only things produced that day on a single line or shift. You need to determine if recalling everything from an entire day if there is a recall is less costly than the effort to maintain this in detail every day for every item.
3. Do you have adequate procedures, outside of NorthScope, for lot recall? If you have a production system that manages this data well, you may rely on it for Lot Tracing.
4. Will you be able to maintain inventory correctly and efficiently at this level? You need to ensure that all your product, no matter where it is located, can be managed at this level. In a company that deals primarily with full pallets of the same item code from a single lot, this would be much easier than a company that deals with rainbow pallets that contain mixed items, rainbow pallets that contain mixed lots, and/or variable weight items.

Store Lots in NorthScope at far less detail

If managing Lots by Day is still not possible, you could manage them more globally (e.g., by Month or Season). A company that applies costing by “month” may decide to simplify even further and make the NorthScope Lot unique by [Production Year-Month]- [Production Facility] (e.g. 20-04-KOD). In this scenario, all items produced in the same month at the same plant would all go into the same Lot. The biggest advantage of this approach is there is far less data entry and it creates far less unique lots. The biggest disadvantage is that full lot tracing must be done outside the system and the potential recall footprint could be much larger. There are some things you need to consider before adopting this approach including:

1. Without a data collection system, this method may be required if you operate multiple lines and shifts. It also makes lot allocation on transactions from cold storages much simpler.
2. If you use this method then your recall footprint might be everything you produced in a month, whereas the previous method could be limited to only things produced that day. It may be that recalling everything from a month is less costly than the effort to maintain this by day.
3. Do you have adequate procedures, outside of NorthScope, for lot recall?

Tips for deciding how to setup Lots

In the figure below, there are 9 cases from 5 production batches meaning there are 5 unique inventory lots represented. If an order were placed for 3 cases, you would need to ensure the correct Lots were allocated so that your perpetual inventory balances remained accurate. The person picking the order would need to accurately record which Lots they took, and you would need to correctly allocate the same Lots to the order. A mistake on this simple order could be the difference in failed product recall.

In a company with a low volume of orders containing one or two unique items, that has easy communication with the warehouse, this will be much easier to maintain than it would in a company doing more than 50 orders a day containing an average of 10 unique items that are shipping from multiple cold storages.

If you are unsure as to which method your company can adequately manage, it is recommended that you start with less complexity. It is much easier and better to add more detail later than it is to realize you cannot accurately manage inventory in detail once your inventory is out of balance in the system.

You also need to review the capabilities of your cold storages and determine what makes the most sense. It does not make sense to store Lots within NorthScope in full detail if they are combined when they get to a cold storage. The decision on how to manage lots comes down to both your requirements and your ability to manage them.

1. What do you need in NorthScope vs what can be managed outside?
2. What data needs to be stored within your Lots?
3. Are you able to allocate (record what was shipped) accurately?

NorthScope does not store perpetual balances for Item Types of Misc., Services, or Tax.

Fixed Weight or Variable Weight

Another consideration is whether to utilize the Variable Weight capabilities in NorthScope. Variable weight items are used to track actual weights for items that are not always produced into the same weight. For example, on a pallet containing 100 x 5lb boxes of frozen blueberries, each box always weighs 5 pounds. So, if there is a sales order that calls for shipping 10 boxes, it would not matter which 10 you shipped because the total would always be 50 pounds. However, in a tote of whole turkeys, each turkey will be a different weight. If a customer orders 5 turkeys, and the price is by the pound, it matters which 5 your pick.

Because of the possibility for weight variances, some variable weight items are packed (and priced) by the weight. This is very common in meat and seafood. In Seafood, a case may contain 4 fish that each weight between 12 and 14 pounds. If all 4 fish weighed 12 lbs. the case would weigh 48.00 lbs. but if they each weighed 14 lbs., the case would weigh 56 lbs. If this item was priced at $7.50 / lbs., the Case would sell for anything from $360 to $420. While this example illustrates the need for tracking Variable Weight items, there are considerations for doing this. Your decision to use the Variable Weight capabilities within NorthScope needs to be made once you have correctly assessed your capabilities.

Ensure The gains outweigh the costs of managing

There are additional internal costs associated with managing variable weight items as doing this requires additional steps throughout the process. For example, the box labels need to know the exact weight of the “food” contained in each box. This means each box must be individually weighed, and then a label printed and applied to the correct box. The production totals must be correctly tallied as they cannot be calculated simply multiplying the number of cases by a single weight factor.  In the example of the case of fish, a $60 per case variance is significant and if you compounded this over many cases and many items, this would be a significant amount. However, not all items have the potential for this much variability, so you need to ensure the gains justify the costs.

Ensure You can Effectively allocate Inventory at this Level

The easiest step in managing variable weight items is recording the initial production, but for companies that sell in less than pallet quantities, the hardest part comes later. In the figure below, there are 9 Variable Weight cases in inventory each weighing between 10.00 and 10.25 lbs.

If an order was placed for 3 cases, you would need to ensure the correct weight was allocated to it so that billing and perpetual inventory balances were accurate. The person picking the order would need to accurately record which cases they took to give you the correct total weight and you would need to correctly allocate the same amounts against the order. A mistake on this simple order could be the difference between 30.06 lbs. and 30.63 lbs.

In a company with a low volume of orders containing one or two unique items, that has easy communication with the warehouse, this will be much easier to maintain than it would in a company doing more than 50 orders a day containing an average of 10 unique items that are shipping from multiple cold storages.

 Understanding Key Item Properties