Processing scrap inventory

Scrap inventory are those products that are deemed as unavailable to sell. They may be excess material created during a fabrication process, or product that is returned by your customer that cannot be resold. Scrap inventory may also be a warrantied product that is returned as defective. You must establish a process in your warehouse to handle scrap inventory. Product that is returned as scrap should be assigned a Return Type of Scrap. This Return Type is associated with the Return Adjust Reason set up in SA Table Code Value Setup. During invoice processing, if a Scrap return type is found on a return line, then the item is written off and inventory is not updated. The write off updates the GL account defined in SA Table Code Value Setup-Extended Information for the Scrap return reason code. A scrap serial or lot product is costed as if it were a non-serial/lot product. Serial or lot information is not recorded for return lines set up as scrap. If you update a line with a return type of Scrap, then you cannot enter serial or lots. Additionally, any processing for the FIFO layer is blocked for lines with a Scrap return type.

If you are using TWL, then you can prevent scrap return lines on sales orders from being dropped to TWL for processing. Select the option, Do Not Download Scrap Returns, in the SA Administrator Options-Logistics-WL Options. This option is useful if you create a single order for a warrantied product that is returned as defective. The product can be entered on a sales order line to provide the customer with a good replacement, then a return line can be created for the defective part and assigned a Scrap return reason. When the Do Not Download Scrap Returns option is selected, the return line is not received in the TWL warehouse.

This also prevents the creation of backorders for the return sales order lines designated with the Scrap reason code. The Do Not Download Scrap Returns option affects all TWL warehouses and affects these functions:

• Sales Entry Pick Ticket Report

  If the entire sales order is comprised of return lines where the Return Type reason code is set to Scrap, then no header or line records are created.

  If the sales order has a mix of return lines, then header or line records are created only for the return lines where the Return Type reason code is not set to Scrap.

• Sales Order Entry

  If the entire sales order is comprised of return lines where the Return Type reason code is set to Scrap, then a warning message is displayed when you copy or finish the sales order. It indicates that the order cannot be processed in TWL because all lines are scrap returns.