Use this article to better understand the principles of Inventory management in Katana. Within we’ll explain stock movements related to sales, making, and purchasing.
Tip: Please refer to the following article to find out more about costing principles in Katana.
With Katana, you can manage both finished product and raw material stock.
Stock movements in Katana are automated in real-time based on your purchasing, making, and selling activities. This means you won’t need to update stock levels manually and can always rely on your inventory levels.
Within Katana, you’ll find the optimal inventory levels for all your products and materials. With this info, you can make accurate manufacturing and purchasing decisions to avoid out-of-stock or excess inventory situations.
Katana’s calculation for optimal stock balance does more than look at your current and safety stock levels, it also examines your open Sales, 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 see a column with the stock levels for all your products and materials on a variant level. You also take a look at the Value in stock and Average cost columns to gain more insight into your inventory.
On this screen you’ll find 5 more columns that provide you with useful 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 and removed when a Sales Order (SO) is delivered. Materials are added when a Purchase Order (PO) is received and removed when a MO 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 that is dedicated to an open SO or MO. Products are committed to an open SO and materials are committed to both open Sales and Manufacturing Orders.
Expected - the amount of stock expected to arrive in the warehouse. Products are expected from an open MO and materials from an open PO.
Reorder point - the product or material inventory level that indicates a need to replenish stock. The number here can be edited directly on the Stock screen. Read more about Reorder points, how to set a Reorder point, and how to determine the appropriate level for a Reorder point.
Missing / Excess – indicates the optimal quantity of an item based on your product manufacturing and material purchasing decisions. The number displayed is based on the equation: In stock - Committed + Expected - Reorder point. If you see a negative value, create a new MO for a product or a PO for a material
Always pay attention to the Missing / Excess column to ensure you always have enough products and materials in your warehouse to satisfy customer demand and meet manufacturing needs. Sort by the Missing / Excess 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 dissipate unnecessary extra costs.
With Katana, you can set Reorder points for all of your products and materials.
If you’re using a Make-to-Stock approach and keeping some products in stock, we suggest setting a Reorder point for each product. As Katana doesn’t have sales forecasting functionality that automatically sets Reorder points, you will need to create and edit each product and variant manually. Using a Make-to-Order approach instead? Go ahead and leave the Reorder points for products at zero.
Learn how to determine the best level for your Reorder points.
For both approaches, we suggest adding Reorder points to materials 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, Reorder points for materials also need to be set manually in Katana.
Instead of only comparing In stock and Reorder point quantities, you should base your product manufacturing and material purchasing decisions on the Missing/Excess quantity from the Inventory tab. The Missing/Excess figure is more accurate as it takes into account your 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 such as – 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.