Glossary
Post-Deduct Inventory Transaction Processing
Tags: Glossary
A method of inventory bookkeeping where the book (computer) inventory of components is reduced after issuance. When compared to a real-time process, this approach has the disadvantage of a built-in differential between the book record and what is physically in stock. Consumption can be based on recorded actual use or calculated using the finished quantity received times the standard BOM quantity (backflush).
What is Post-Deduct Inventory Transaction Processing?
Post-Deduct Inventory Transaction Processing
Post-Deduct Inventory Transaction Processing is a method used in logistics to keep track of inventory levels in a computerized system. In this approach, the book inventory of components is reduced after they are issued. This means that the inventory record is updated after the components have been taken out of stock.
One advantage of using Post-Deduct Inventory Transaction Processing is that it allows for efficient bookkeeping and record-keeping. By updating the inventory record after the components have been issued, it ensures that the system always reflects the most accurate and up-to-date inventory levels. This can be particularly useful in large-scale logistics operations where there are frequent transactions and movements of inventory.
However, there is a disadvantage to using this approach. Since the inventory record is updated after the components have been issued, there can be a time lag between the physical stock and the book record. This means that there may be a difference between what is recorded in the system and what is actually available in stock. This can lead to discrepancies and potential errors in inventory management.
There are two methods commonly used to determine the consumption of components in Post-Deduct Inventory Transaction Processing. The first method is based on recorded actual use, where the system tracks the actual quantity of components used in production or other processes. The second method is based on a calculation using the finished quantity received and the standard Bill of Materials (BOM) quantity. This method is known as backflushing.
Backflushing is a process where the system calculates the consumption of components based on the finished quantity received and the standard BOM quantity. This method is often used in situations where it is not practical or feasible to track the actual use of components. By using backflushing, the system can automatically update the inventory record without the need for manual input.
In conclusion, Post-Deduct Inventory Transaction Processing is a method of inventory bookkeeping that updates the inventory record after components have been issued. While this approach offers efficient record-keeping, it also introduces a time lag between the physical stock and the book record. The consumption of components can be determined through recorded actual use or by using backflushing. Understanding and implementing this method can greatly improve inventory management in logistics operations.