This article aims to help you better understand the principles of Inventory management in Katana by explaining stock movements related to sales, making, and purchasing.
Tip for costing principles
Tip for costing principles
Check out understanding moving average cost to better comprehend costing principles in Katana.
Using Katana, you can manage both finished products and raw material stock.
Stock movements in Katana are automated in real-time based on purchasing, making, and selling activities. This means you don't need to update stock levels manually to rely on your inventory levels.
Within Katana, you’ll find the optimal inventory levels for all your products and materials. Using this information, you can make accurate manufacturing and purchasing decisions to avoid out-of-stock or excess inventory situations.
Katana’s calculation for optimal stock balance looks beyond your current and safety stock levels. It also examines your open sales, purchasing, outsourced purchasing, and manufacturing orders that have reserved items or will add future stock items.
The Inventory list
Access your Inventory tab from the Stock screen to find a column containing the stock levels for all your products and materials on a variant level. You can also look at the Value in stock and Average cost columns to gain more insight into your inventory.
This screen also contains 5 more columns with helpful stock quantity info:
In stock - the amount of stock you currently have on hand. Products are added to stock when a manufacturing order (MO) is completed or an outsourced purchase order (OPO) is received. Products are removed when a sales order (SO) is delivered. Materials are added when a purchase order (PO) is received and removed when an MO or OPO (with materials included in the Product recipes / BOMs) is completed. In stock levels can also be changed through a Stock adjustment.
Committed - the amount of stock dedicated to an open SO, MO or OPO. Products are committed to an open SO, and materials are committed to open Sales, Manufacturing, and Outsourced purchase orders.
Expected - the amount of stock expected to arrive in the warehouse. Products are expected from an open MO or OPO, and materials from an open PO.
Safety stock level - the product or material inventory level that indicates when to replenish stock. This number can be edited directly on the Stock screen. Learn more about safety stock levels, how to set a safety stock level, and how to determine the appropriate level for safety stock.
Calculated stock – indicates the optimal quantity of an item based on your product manufacturing and material purchasing decisions. The number shown is based on the following equation [In stock - Committed + Expected - safety stock level]. If the value reaches zero, you may want to create a MO or OPO for a product or a PO for a material.
Always pay attention to the Calculated stock column to ensure you have enough products and materials in your warehouse to satisfy customer demand and meet manufacturing needs. Sort by the Calculated stock column to quickly see which items have the lowest stock levels (according to the optimal level calculation).
Try to avoid keeping too much surplus inventory to avoid unnecessary extra costs.
Safety stock level
Inside Katana, you can set the safety stock level for all of your products and materials.
We suggest setting a safety stock level for each product if you’re using a Make-to-Stock approach and keeping some products in stock. As Katana doesn’t have a sales forecasting functionality that automatically sets safety stock levels, you'll need to manually create and edit each product and variant. If you're using a Make-to-Order approach, leave the safety stock level for products at zero.
Learn how to determine the best level for your safety stock.
We suggest adding a safety stock level to materials for both approaches to satisfy manufacturing needs. For safety, most businesses will keep some stock levels for materials even when products are solely Make-to-Order. Just like products, safety stock levels for materials need to be set manually.
Instead of only comparing In stock and safety stock level quantities, you should base your product manufacturing and material purchasing decisions on the Calculated stock quantity from the Inventory tab. The Calculated stock figure is more accurate as it takes into account open sales, manufacturing, and purchase orders - following your current sales and manufacturing plan.
Detailed Inventory Info
Click on the In stock, Committed, and Expected quantities to see more info about your inventory. For example, the last 365 days of stock movements (making it easy to track the reasons behind Average cost changes), orders related to specific quantities, and other relevant info.
Clicking on the In stock quantity for an item opens up a historical stock movement report with quantities and costs related to each change over the last 365 days. It makes it easy to track the reasons for changes to Average cost or the quantity for each item.
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