~openerp-community/openobject-doc/ksa-openobject-doc-6.0

.. i18n: .. index::
.. i18n:    single: stock; double-entry
..

.. index::
   single: stock; double-entry

.. i18n: Understanding double-entry stock management
.. i18n: ===========================================
..

Understanding double-entry stock management
===========================================

.. i18n: To illustrate this concept of stock management, see how stock moves are generated by the following
.. i18n: operations:
..

To illustrate this concept of stock management, see how stock moves are generated by the following
operations:

.. i18n: * Receiving products from a supplier,
.. i18n: 
.. i18n: * Delivery to a customer,
.. i18n: 
.. i18n: * Inventory operation for lost materials,
.. i18n: 
.. i18n: * Manufacturing.
..

* Receiving products from a supplier,

* Delivery to a customer,

* Inventory operation for lost materials,

* Manufacturing.

.. i18n: .. index::
.. i18n:    single: module; stock
..

.. index::
   single: module; stock

.. i18n: The structure of stock locations is shown by the figure :ref:`fig-stloctree`. Stocks are assumed to be totally
.. i18n: empty and no operation is in progress nor planned.
..

The structure of stock locations is shown by the figure :ref:`fig-stloctree`. Stocks are assumed to be totally
empty and no operation is in progress nor planned.

.. i18n: If you order '30 bicycles' from a supplier, OpenERP will then do the following operations after the
.. i18n: receipt of the products:
..

If you order '30 bicycles' from a supplier, OpenERP will then do the following operations after the
receipt of the products:

.. i18n: .. table:: Stock Move operation from Suppliers to Stock
.. i18n: 
.. i18n:    ================================================== =============
.. i18n:    Location                                           Products
.. i18n:    ================================================== =============
.. i18n:    Partner Locations > Suppliers > Suppliers          -30 bicycles
.. i18n:    Physical Locations > Tiny SPRL > Stock             +30 bicycles
.. i18n:    ================================================== =============
..

.. table:: Stock Move operation from Suppliers to Stock

   ================================================== =============
   Location                                           Products
   ================================================== =============
   Partner Locations > Suppliers > Suppliers          -30 bicycles
   Physical Locations > Tiny SPRL > Stock             +30 bicycles
   ================================================== =============

.. i18n: If you deliver 2 bicycles to a European customer you will get the following transactions for the
.. i18n: delivery:
..

If you deliver 2 bicycles to a European customer you will get the following transactions for the
delivery:

.. i18n: .. table:: Stock Move operation from Stock to European Customers
.. i18n: 
.. i18n:    ================================================== =============
.. i18n:    Location                                           Products
.. i18n:    ================================================== =============
.. i18n:    Physical Locations > Tiny SPRL > Stock             -2 bicycles
.. i18n:    Partner Locations > Customers > European Customers +2 bicycles
.. i18n:    ================================================== =============
..

.. table:: Stock Move operation from Stock to European Customers

   ================================================== =============
   Location                                           Products
   ================================================== =============
   Physical Locations > Tiny SPRL > Stock             -2 bicycles
   Partner Locations > Customers > European Customers +2 bicycles
   ================================================== =============

.. i18n: When the two operations are complete you'll then get the following stock in each location:
..

When the two operations are complete you'll then get the following stock in each location:

.. i18n: .. table:: Resulting stock situation
.. i18n: 
.. i18n:    ================================================== =============
.. i18n:    Location                                           Products
.. i18n:    ================================================== =============
.. i18n:    Partner Locations > Suppliers > Suppliers          -30 bicycles
.. i18n:    Physical Locations > Tiny SPRL > Stock             +28 bicycles
.. i18n:    Partner Locations > Customers > European Customers +2 bicycles
.. i18n:    ================================================== =============
..

.. table:: Resulting stock situation

   ================================================== =============
   Location                                           Products
   ================================================== =============
   Partner Locations > Suppliers > Suppliers          -30 bicycles
   Physical Locations > Tiny SPRL > Stock             +28 bicycles
   Partner Locations > Customers > European Customers +2 bicycles
   ================================================== =============

.. i18n: So you can see that the sum of the stocks of a product in all the locations in OpenERP is always
.. i18n: zero. In accounting you'd say that the sum of the debits is equal to the sum of the credits.
..

So you can see that the sum of the stocks of a product in all the locations in OpenERP is always
zero. In accounting you'd say that the sum of the debits is equal to the sum of the credits.

.. i18n: Partner locations (customers and suppliers) aren't located under your company in the hierarchical
.. i18n: structure, so their contents are not considered as part of your own stock. So if you look just at
.. i18n: the physical locations inside your own company those two bicycles are no longer in your company.
.. i18n: They're not in your own physical stock but it's still very useful to see them in your customer's
.. i18n: stock because that helps when you carry out detailed stock management analysis.
..

Partner locations (customers and suppliers) aren't located under your company in the hierarchical
structure, so their contents are not considered as part of your own stock. So if you look just at
the physical locations inside your own company those two bicycles are no longer in your company.
They're not in your own physical stock but it's still very useful to see them in your customer's
stock because that helps when you carry out detailed stock management analysis.

.. i18n: .. note:: Accounts
.. i18n: 
.. i18n:      In managing stock, a gap between the data in the software and real quantities in stock is
.. i18n:      difficult to avoid.
.. i18n:      Double-entry stock management gives twice as many opportunities to find an error.
.. i18n:      If you forget two items of stock this error will automatically be reflected in the
.. i18n:      counterpart's location.
..

.. note:: Accounts

     In managing stock, a gap between the data in the software and real quantities in stock is
     difficult to avoid.
     Double-entry stock management gives twice as many opportunities to find an error.
     If you forget two items of stock this error will automatically be reflected in the
     counterpart's location.

.. i18n: You can make a comparison with accounting, where you'll easily find an error because you can look
.. i18n: for an anomaly in an account or in the counterparts: if there's not enough in a bank account then that's
.. i18n: probably because someone's forgotten to enter a customer's invoice payment. You always know that the
.. i18n: sum of debits must equal the sum of the credits in both accounting and OpenERP's stock management.
..

You can make a comparison with accounting, where you'll easily find an error because you can look
for an anomaly in an account or in the counterparts: if there's not enough in a bank account then that's
probably because someone's forgotten to enter a customer's invoice payment. You always know that the
sum of debits must equal the sum of the credits in both accounting and OpenERP's stock management.

.. i18n: In accounting, all documents lead to accounting entries that form the basis of management
.. i18n: accounting. If you create invoices or code in statements of account, for example, the results of the
.. i18n: operations are accounting entries on accounts. And it's the same for stock management in OpenERP.
.. i18n: All stock operations are carried out as simple stock moves. Whether you pack items, or manufacture
.. i18n: them, or carry out a stock inventory operation, stock moves are carried out every time.
..

In accounting, all documents lead to accounting entries that form the basis of management
accounting. If you create invoices or code in statements of account, for example, the results of the
operations are accounting entries on accounts. And it's the same for stock management in OpenERP.
All stock operations are carried out as simple stock moves. Whether you pack items, or manufacture
them, or carry out a stock inventory operation, stock moves are carried out every time.

.. i18n: You've seen a fairly simple example of goods receipt and product delivery, but some operations are
.. i18n: less obvious – a stock inventory operation, for example. An inventory operation is carried out
.. i18n: when you compare the stock shown in software with real stock numbers counted in the stores.
..

You've seen a fairly simple example of goods receipt and product delivery, but some operations are
less obvious – a stock inventory operation, for example. An inventory operation is carried out
when you compare the stock shown in software with real stock numbers counted in the stores.

.. i18n: .. index::
.. i18n:    single: stock; inventory operation
.. i18n:    single: stock; stock check
..

.. index::
   single: stock; inventory operation
   single: stock; stock check

.. i18n: In OpenERP, with its double-entry stock management, you'd use stock moves for this inventory
.. i18n: operation. That helps you manage your stock traceability. If there are 26 Bicycles in real stock but
.. i18n: OpenERP shows 28 in the system. You then have to reduce the number in OpenERP to 26. This
.. i18n: reduction of 2 units is considered as a loss or destruction of products and the correction is
.. i18n: carried out as in the following operation:
..

In OpenERP, with its double-entry stock management, you'd use stock moves for this inventory
operation. That helps you manage your stock traceability. If there are 26 Bicycles in real stock but
OpenERP shows 28 in the system. You then have to reduce the number in OpenERP to 26. This
reduction of 2 units is considered as a loss or destruction of products and the correction is
carried out as in the following operation:

.. i18n: .. table:: Inventory operation to adjust stock
.. i18n: 
.. i18n:    ================================================== =============
.. i18n:    Location                                           Products
.. i18n:    ================================================== =============
.. i18n:    Physical Locations > Tiny SPRL > Stock             -2 bicycles
.. i18n:    Virtual Locations > Inventory Loss                 +2 bicycles
.. i18n:    ================================================== =============
..

.. table:: Inventory operation to adjust stock

   ================================================== =============
   Location                                           Products
   ================================================== =============
   Physical Locations > Tiny SPRL > Stock             -2 bicycles
   Virtual Locations > Inventory Loss                 +2 bicycles
   ================================================== =============

.. i18n: The product stock under consideration then becomes:
..

The product stock under consideration then becomes:

.. i18n: .. table:: Real and counterpart stocks when operations are completed
.. i18n: 
.. i18n:    ================================================== =============
.. i18n:    Location                                           Products
.. i18n:    ================================================== =============
.. i18n:    Partner Locations > Suppliers > Suppliers          -30 bicycles
.. i18n:    Physical Locations > Tiny SPRL > Stock             +26 bicycles
.. i18n:    Partner Locations > Customers > European Customers +2 bicycles
.. i18n:    Virtual Locations > Inventory Loss                 +2 bicycles
.. i18n:    ================================================== =============
..

.. table:: Real and counterpart stocks when operations are completed

   ================================================== =============
   Location                                           Products
   ================================================== =============
   Partner Locations > Suppliers > Suppliers          -30 bicycles
   Physical Locations > Tiny SPRL > Stock             +26 bicycles
   Partner Locations > Customers > European Customers +2 bicycles
   Virtual Locations > Inventory Loss                 +2 bicycles
   ================================================== =============

.. i18n: This example shows one of the great advantages of this approach in terms of performance analysis.
.. i18n: After a few months, you can just make a stock valuation of the location ``Virtual Locations >
.. i18n: Inventory Loss`` to give you the value of the company's stock losses in the given period.
..

This example shows one of the great advantages of this approach in terms of performance analysis.
After a few months, you can just make a stock valuation of the location ``Virtual Locations >
Inventory Loss`` to give you the value of the company's stock losses in the given period.

.. i18n: Now see how the following manufacturing operation is structured in OpenERP. To make a bicycle you
.. i18n: need two wheels and a frame. This means that there should be a reduction of two wheels and a frame
.. i18n: from real stock and the addition of a bicycle there. The consumption / production is formalized by
.. i18n: moving products out of and into physical stock. The stock operations for this are as follows:
..

Now see how the following manufacturing operation is structured in OpenERP. To make a bicycle you
need two wheels and a frame. This means that there should be a reduction of two wheels and a frame
from real stock and the addition of a bicycle there. The consumption / production is formalized by
moving products out of and into physical stock. The stock operations for this are as follows:

.. i18n: .. table:: Stock situation resulting from manufacture
.. i18n: 
.. i18n:    ====================================== ========== ================================
.. i18n:    Location                               Products   Step
.. i18n:    ====================================== ========== ================================
.. i18n:    Virtual Locations > Default Production +2 Wheels  Consumption of raw materials
.. i18n:    Physical Locations > Tiny SPRL > Stock -2 Wheels  Consumption of raw materials
.. i18n:    Virtual Locations > Default Production +1 Frame   Consumption of raw materials
.. i18n:    Physical Locations > Tiny SPRL > Stock -1 Frame   Consumption of raw materials
.. i18n:    Virtual Locations > Default Production -1 Bicycle Manufacture of finished products
.. i18n:    Physical Locations > Tiny SPRL > Stock +1 Bicycle Manufacture of finished products
.. i18n:    ====================================== ========== ================================
..

.. table:: Stock situation resulting from manufacture

   ====================================== ========== ================================
   Location                               Products   Step
   ====================================== ========== ================================
   Virtual Locations > Default Production +2 Wheels  Consumption of raw materials
   Physical Locations > Tiny SPRL > Stock -2 Wheels  Consumption of raw materials
   Virtual Locations > Default Production +1 Frame   Consumption of raw materials
   Physical Locations > Tiny SPRL > Stock -1 Frame   Consumption of raw materials
   Virtual Locations > Default Production -1 Bicycle Manufacture of finished products
   Physical Locations > Tiny SPRL > Stock +1 Bicycle Manufacture of finished products
   ====================================== ========== ================================

.. i18n: So you've now got the outcome you need from the consumption of raw materials and the manufacture of
.. i18n: finished products.
..

So you've now got the outcome you need from the consumption of raw materials and the manufacture of
finished products.

.. i18n: .. note::  Assessing created value
.. i18n: 
.. i18n:     You might already have noticed a useful effect of this approach:
.. i18n:     if you do a stock valuation in the ``Default Production`` location you get
.. i18n:     a statement of value created by your company (as a negative amount).
.. i18n:     Stock valuation in any given location is calculated by multiplying quantities of products in
.. i18n:     stock by their cost.
.. i18n:     In this case the raw material value is deducted from the finished product value.
..

.. note::  Assessing created value

    You might already have noticed a useful effect of this approach:
    if you do a stock valuation in the ``Default Production`` location you get
    a statement of value created by your company (as a negative amount).
    Stock valuation in any given location is calculated by multiplying quantities of products in
    stock by their cost.
    In this case the raw material value is deducted from the finished product value.

.. i18n: .. Copyright © Open Object Press. All rights reserved.
..

.. Copyright © Open Object Press. All rights reserved.

.. i18n: .. You may take electronic copy of this publication and distribute it if you don't
.. i18n: .. change the content. You can also print a copy to be read by yourself only.
..

.. You may take electronic copy of this publication and distribute it if you don't
.. change the content. You can also print a copy to be read by yourself only.

.. i18n: .. We have contracts with different publishers in different countries to sell and
.. i18n: .. distribute paper or electronic based versions of this book (translated or not)
.. i18n: .. in bookstores. This helps to distribute and promote the OpenERP product. It
.. i18n: .. also helps us to create incentives to pay contributors and authors using author
.. i18n: .. rights of these sales.
..

.. We have contracts with different publishers in different countries to sell and
.. distribute paper or electronic based versions of this book (translated or not)
.. in bookstores. This helps to distribute and promote the OpenERP product. It
.. also helps us to create incentives to pay contributors and authors using author
.. rights of these sales.

.. i18n: .. Due to this, grants to translate, modify or sell this book are strictly
.. i18n: .. forbidden, unless Tiny SPRL (representing Open Object Press) gives you a
.. i18n: .. written authorisation for this.
..

.. Due to this, grants to translate, modify or sell this book are strictly
.. forbidden, unless Tiny SPRL (representing Open Object Press) gives you a
.. written authorisation for this.

.. i18n: .. Many of the designations used by manufacturers and suppliers to distinguish their
.. i18n: .. products are claimed as trademarks. Where those designations appear in this book,
.. i18n: .. and Open Object Press was aware of a trademark claim, the designations have been
.. i18n: .. printed in initial capitals.
..

.. Many of the designations used by manufacturers and suppliers to distinguish their
.. products are claimed as trademarks. Where those designations appear in this book,
.. and Open Object Press was aware of a trademark claim, the designations have been
.. printed in initial capitals.

.. i18n: .. While every precaution has been taken in the preparation of this book, the publisher
.. i18n: .. and the authors assume no responsibility for errors or omissions, or for damages
.. i18n: .. resulting from the use of the information contained herein.
..

.. While every precaution has been taken in the preparation of this book, the publisher
.. and the authors assume no responsibility for errors or omissions, or for damages
.. resulting from the use of the information contained herein.

.. i18n: .. Published by Open Object Press, Grand Rosière, Belgium
..

.. Published by Open Object Press, Grand Rosière, Belgium