Purchase order inventory transactions and active change management
I often receive questions regarding the validity of issuance inventory transactions for purchase orders. The transactions status of these inventory transactions are often misinterpreted because of Active change management.
In the below examples we’ll review the inventory transactions for a stocked FIFO product on two different purchase orders. One with Active change management turned on, and the other with it turned off.
Active change management is a Procurement and sourcing parameter that controls the enforcement of purchase order workflows. With Active change management enabled purchase orders will require workflow approval before the order can be confirmed.
The parameters also manipulates the behavior of inventory transactions. The purchase order below is in an open order status and Active change management is disabled. When a stocked FIFO product is added to the purchase order the receipt inventory transactions are created immediately after the line is saved. To check this click the Inventory > Transactions button. Notice the transaction is created and it has a receipt status of Ordered.
On the same line, if the delivery amount is cancelled using the Update line > Delivery remainder > Cancel quantity button
The inventory transactions will be immediately removed to reflect the change in expected inventory.
If the same situations occur when Active change management is enabled the results will different. The purchase order below is identical to the purchase order as above, but Active change management is enabled. When I add the FIFO product to the order the inventory transactions are not created.
The transactions are missing because the order is contingent on the workflow approval. For the transactions to be created the purchase order must be submitted and approved through workflow and the document status must be updated accordingly.
Once the document status of the purchase order has changed from Draft to Approved, the inventory transactions are created.
Active change management also affects the cancellation of expected inventory. Unlike the example above when the delivery remainder quantity is cancelled (Update line > Delivery remainder > Cancel quantity) the inventory transactions are not removed.
(Note: to cancel the quantity after the document has been approved the request change button will need to be clicked. Purchase order ribbon > Request change)
See below the inventory transactions after the delivery remainder has been cancelled.
The reason the inventory transactions are not removed is the change is pending approval from the purchase order workflow. For the transactions to be deleted, the purchase order must be resubmitted and approved by workflow after the delivery remainder is cancelled.
Again, this functionality is implemented to ensure the inventory transactions are in line with the approval status of the purchase order.