Distribution, Manufacturing, and Internet Modules

[SPyle]

There are a couple of other posts that describe how to use standard cost and set vendor price levels to have the PO's use the current value.  You can import to standard cost easily if your items are set to fifo, lifo, serial

[jcl]

Ahhh, the old Average Cost in PO issue.  I feel your pain! 

Clearly the guy/gal at Sage who determined that average cost should be the default cost on a PO has never actually had to buy stuff for a living.  Furthermore, I guess he/she must not have taken any time to speak to someone who does, as they would have found out the following relevant information pretty quickly:  

1.  The person writing the PO cares this much: (0)  about what accounting method the company uses to value it's inventory. 

2.  Unless you have some really cool vendors, none of them are ever going to accept a PO from you with your average cost as the purchase price, unless that average happens to be higher today than what they normally charge you.

3.  Even if standard cost and last cost are both zero, the average cost would likely only be useful in a PO by accident.   It serves no purpose as a default cost. 

4.  The person writing the PO cares this much: (a lot) about the price in the PO coming up as the price that has the highest chance of being what they'll actually pay for the item. 

The hierarchy makes a lot of sense to use on the selling side of things, and when you are trying to add something to inventory through an adjustment type of transaction.  But when you are buying stock items from a vendor, the most relevant cost you can find, outside of a vendor price level record, is what you paid that vendor the last time you bought that item.  Even with a commodity item, it's closer to being correct than average would be. 

Having to setup a vendor price level record for every item in your inventory to get the right cost to come up, just because you are using Average cost as your valuation method, is such a waste of time.  Particularly when you've already input that cost as your Standard Cost, and the software stored it in the Last Cost and Vendor Last Cost fields for you the last time you bought it. 

[SPyle]

jcl,

You make some great points and I agree with most of what you said.  Just to clarify for others/Sage designers, your point on last cost being most accurate worked for us for the past 2 years (recession - no price increases).  I'm a wholesale distributor; I buy a lot of stuff from a lot of vendors.

I use the price levels for two reasons: 

1) When a vendor tells me pricing is going up Feb 5, 2011, last cost becomes irrelevant on 2/5/2011.  I get a file from the vendor, load new pricing on 2/5/11 into standard cost, have vendor price level (by product line) increase standard cost by zero and PO's come out correctly.  (This is almost a weekly occurance - we have over 600 vendors.)

2) We sell a lot of items we don't stock.  We have to price from today's cost, not an average or last cost (some things sell once every 4 or 5 years!)  I used to load standard and last, but there could be a lot of product in-transit on Feb 5th - to continue with the example.  All of those will be inaccurate during the next several weeks as last cost is updated by receipts and invoices arriving aftet the update.  Items with long lead times (6 - 12 weeks) causes us to never be sure if a PO was correct, taking a lot of time to catch, adust inventory, correct sales commissions and most importantly, lose profit.

We have modified our screens so List, Average, and Last don't even appear.  I didn't need the confusion with my team.  Maybe list isn't even around since 4.x -; .  I moved Item, Allocated, and Total to a reference box so salespeople can take inbound shipping into account when they calculate prices for their customers.