Background: Transfer orders with a $0 cost (even after enabling the preference: USE ITEM COST AS TRANSFER COST)- this creates realized Gain/loss as opposed to COGS impact.
When we imported TOs (after the import of Purchase Orders and Inventory Adjustments) without Purchase Price and after checking the preference: ‘USE ITEM COST AS TRANSFER COST’, seems to have the wrong posting when processed with Item Fulfillments and Item Receipts.
For Example, the item- INVENTORY: 1C_GLASS_5PK_HNEU at the location- EMEA: 3PL – EMEA: SEK-NL-1437EL-HMN in the Transfer Order – TOHMN0004 has NO STOCK at the mentioned location. Attached are the following screenshots for reference:
The Company enabled the Preference: FULFILL BASED ON COMMITMENT as Allow Uncommitted. So it is possible to create a TO when there is no stock but this will result in Negative Stocks.
As we have given the feature:‘USE ITEM COST AS TRANSFER COST’ as YES (in transaction level) in the TO import, it will bypass any price on the transfer order and go with the purchase price of the stock. In our case, as there are NO History transactions (Purchase Orders/Adjustments), the posting results in ZERO.
For more information, I have tried out various scenarios in SB:
Scenario 1:TO without enabling ‘USE ITEM COST AS TRANSFER COST’ and Transfer Price. The item used has no stock in the source location
Created a TO without enabling ‘USE ITEM COST AS TRANSFER COST’ and Transfer Price. The item used has no stock in the source location
When I try to fulfil the TO, I got an error message:
However, proceeded with fulfilling and it has NO GL impact
After that, I have created an item receipt for it and also it has NO GL impact
In the item record:
Scenario 2:TO without enabling ‘USE ITEM COST AS TRANSFER COST’ and by adding Transfer Price. The item used has no stock in the source location
Created a TO without enabling ‘USE ITEM COST AS TRANSFER COST’ but with Transfer Price. The item used has no stock in the source location
Fulfilment
IF GL Impact reflects the account – 856000 Realized Gain/Loss
Receipt
IR GL Impact
Item record shows the same as the previous scenario.
Scenario 3:TO by enabling ‘USE ITEM COST AS TRANSFER COST’ and without Transfer Price. The item used has no stock in the source location
Created a TO by enabling ‘USE ITEM COST AS TRANSFER COST’ but NO Transfer Price. The item used has no stock in the source location
Fulfilment with NO GL Impact
Receipt with NO GL Impact
Item record shows the same as the previous scenario.
Scenario 4:TO by enabling ‘USE ITEM COST AS TRANSFER COST’ and by adding Transfer Price. The item used has no stock in the source location
Created a TO by enabling ‘USE ITEM COST AS TRANSFER COST’ and with Transfer Price. The item used has no stock in the source location
Fulfilment and NO GL Impact
Receipt and NO GL impact
Item record shows the same as the previous scenario.
Scenario 5:TO by enabling ‘USE ITEM COST AS TRANSFER COST’ and by adding Transfer Price. The item WITH stock in the source location
Created a TO by enabling ‘USE ITEM COST AS TRANSFER COST’ and with Transfer Price. The item used WITH stock in the source location
Fulfilment
IF GL Impact
Receipt
IR GL Impact
Scenario 6:TO by enabling ‘USE ITEM COST AS TRANSFER COST’ but WITHOUT Transfer Price. The item WITH stock in the source location
Created a TO by enabling ‘USE ITEM COST AS TRANSFER COST’ but WITHOUT Transfer Price. The item used WITH stock in the source location
Item Fulfillment
IF GL Impact
Receipt
IR GL Impact
As part of the investigation, it is found the issue with Transfer Order(No Posting) may be caused by a lack of stock in the source location as we have already enabled the ‘USE ITEM COST AS TRANSFER COST’ feature at the transaction level.