Negative inventory

A warehouse has negative inventory for an item if the issued quantity is larger than the quantity in inventory. Consequently, the inventory levels of the item are below zero. Allowing negative inventory ensures that the logistic processes are not interrupted by (administrative) shortages detected by LN. You can enable negative inventory for one or more items across all warehouses, or for items by warehouse. You can allow unlimited negative inventory or allow negative inventory up to the on-order quantity to be received.

Example

A sales order for 10 pcs is created. The current inventory is 0, but an open purchase order for 5 pcs is present.

If unlimited negative inventory is allowed, and outbound advice for 10 pcs is created, this results in a negative inventory of 10 after shipping. After the purchase order is received, the inventory level is increased to - 5.

If negative inventory is not allowed beyond the expected on-order quantity, the maximum outbound advice quantity allowed is 5 pcs.

If inventory on order is received in the warehouse, that is, after the receipt is confirmed in the Warehouse Receipt (whinh3512m000) session, the received quantity is subtracted from the negative inventory quantity. If the received quantity is equal to or more than the negative inventory quantity, LN deletes the negative inventory record and the financial negative inventory consumption record.

Negative inventory not allowed

Lot items

When negative inventory is issued, LN creates lot tracking records without an order origin. These records are the first to be updated when lot receipts are created.

For low volume lots, you can only generate negative outbound advice if:

The lot is specified as a specific lot in the Lot field on the outbound order line.
The Create Outbound Advice Despite Inventory Shortage check box is selected in the Generate Outbound Advice (whinh4201m000) session or the Process Outbound Advice (whinh4200m000) session.

Note: If these conditions do not apply, you can still manually create negative outbound advice for low volume lots in the Outbound Advice (whinh4525m000) session.

Inventory valuation

An item's inventory valuation method cannot be identified before the receipt of the item. Therefore, all negative inventory transactions are valued against Standard Cost.

Backflushing

In case of backflushing, LN can also generate negative inventory records. LN generates negative inventory for an outbound order line for which backflushing is applicable if, in addition to the above mentioned conditions, all of the following applies:

The item is delivered but the receipt is not yet registered.
The item is picked from the warehouse based on a backflush order.
The orders or operations are reported completed in Job Shop Control.

Integrations with Manufacturing and Order Management

To determine the Quantity to Deliver in Manufacturing and the available stock in Order Management, LN checks the settings of the Allow Negative Inventory and Create Outbound Advice Despite Inventory Shortage fields in the Item Data by Warehouse (whwmd2510m000) session.