Solution for centralized inventory and intercompany transactions

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Client has three GP company databases (all brother-sister companies). They have a proprietary sales application used by all companies. They would like to make GP the inventory master, so we are in process of implementing Inventory (including POP and SOP). They would like to maintain a centralized inventory and have all inventory purchases made in one of the GP companies. That company would be the only one using POP and have Inventory items (and inventory setup). All companies “share” a warehouse and all sale items are fulfilled from that warehouse for all companies.

They plan on using eConnect (or Web Service) to import SOP invoices into all three companies. Even if we use non-inventoried items in the other two companies (which would match the item numbers in the company maintaining the centralized inventory), then I still don’t know how we would account for the COGS entries for items sold in those two companies (absent some third-party product) and then reduce the inventory in the centralized company with the appropriate intercompany due to/due from entry.

I’ve investigated some third-party products (including Nolan POP to SOP), but none appear to deliver exactly what our client needs. I would think that our client’s setup and requirements wouldn’t be that uncommon, but I’m struggling to find the best solution (out-of-the-box GP or otherwise).

Does anyone have experience with this scenario and have any suggestions (including third-party product suggestions)?

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Mahmoud Saadi 32,738 on at

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RE: Solution for centralized inventory and intercompany transactions

I have previously experienced the same situation in a manufacturing company, which is is functioning as follows;

Manufacturing Company which primarily has manufacturing module, raw materials and finished goods.

Distribution Company which receives "goods" from the manufacturing company and handle the sales and distribution function. (This GP Company is integrated with the Sales System used by all salesmen)

Head Office Company which primarily has the HR module, manage to provide administrative and labor services for other companies in return on a "certain" profit rate.

The design was quite complicated with several drawbacks, especially when it comes to Data Entry, and Consolidated Financial Statements among the three GP Companies.

As for your case, I will highly recommend consolidating the three companies under one GP company as the Cons highly exceeds the Pros of this design. Otherwise, in case you have a situation in which such a consolidation decision is not considered, then I might recommend the following design;

Since all three companies have "Sales" function, then you need to have the same (Items- Master files) defined among the three companies.

Company (A), the one with the centralized inventory, shall have two customers, to which it will "virtually" sell items with a "standard price", which is the "unit cost", to eliminate unearned revenues among GP Companies.

Company (B) and (C) will both have a defined vendor (Company A), on which a blanket PO will include all the items. Both companies will receive the items from this vendor with the same original unit cost.

Each company has two main accounts (inter company accounts), due to and due from sister company. Those current accounts must close to zero at the end of each quarter (after the monthly closing procedures)

The previous suggestions are made to make use of the out-of the box functionality by Dynamics GP, without the need of Third Party products. Further enhancements can be made by other third party products, such as Nolan POP to SOP.
Richard Whaley 25,195 on at

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RE: Solution for centralized inventory and intercompany transactions

Yes, IF you need to consolidate all of the tables in the 3 companies, you are correct. What about maintaining the separate db's for history and create a new one with more GL accounts, a consolidation of customers and vendors (with addresses and national account relations) and start new.
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sandipdjadhav 18,297 on at

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RE: Solution for centralized inventory and intercompany transactions

Create one company as Headquaters – Say ‘Main Company’. In HQ create 3 different Warehouse –as Company-

Create PO and Received in ‘Main’ company. Let Other 3 company make Adjustment Entry to their respective warehosue to increase their Inventory.

Once other 3 company is creating SOP Transaction then at end of day- get all SOP Transaction by individual company and then passed decrease transaction entry adjustment into Main Company.

Now question is: How about Vendor Payment? Do you want to pay by each company? – Then just create Invoice and pay if you don’t want to track inventory in each company-

Let me know your views.

Thanks

Sandip
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RE: Solution for centralized inventory and intercompany transactions

Thanks for the response Richard. Unfortunately, the three companies have been running in GP for many years and collapsing them into one company (albeit solving the centralized inventory issue) would add considerable work in GP re-implementation and financial reports.
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Richard Whaley 25,195 on at

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RE: Solution for centralized inventory and intercompany transactions

If the three companies have identical ownership, why not set up one company with three divisions. Separate financial statements can be maintained and the inventory can be purchased by one and simply sold by the others.

Otherwise, you are going to have a complex system of PO receipts to one then sales and receipts to another across the due to/due from