Project Inventory

Procurement of material is an important aspect of managing projects. It is essential that the project has control over the project-procured material in inventory. In addition, it is necessary to keep track of the costs charged to the project for procured material, either to be able to invoice a customer (external projects) or to capitalize the correct cost (internal projects).

Project Inventory is an integral part of managing project procurement. A project "owns" its project inventory, ensuring that material acquired to this project cannot be issued to fulfill other demands, either from another project or from non-project related demands. This "project pegging" makes it possible to distinguish between what is project material and what is standard material. All planning tools in IFS Applications take this distinction into account. 
Distinguishing between project material and standard material in inventory has two main objectives:

• The key quantities presented and used by the system, like available quantity, must display the correct quantities depending on the current context.
  e.g.:   
  - Only standard inventory is included in the quantities (this is the case for Order Proposal, MRP, etc.)
  - Only project inventory for a specific project is included in the quantities (this is the case when running availability check for a customer order line connected to a project).
• To see if a supply or demand is either planned against standard or project inventory.

For example if MRP is used for planning of standard material, it is important that the value for quantity available used in the calculations only includes standard material. If the project material is included there is a risk that insufficient supplies will be created from MRP.

Project inventory is always used when projects procure and use material, in the sense that a project-pegged supply order can never receive to standard inventory, only project inventory. Project-pegged demands can usually be configured to use either standard or project inventory.

Figure 1. Project Inventory


When managing project material procurement, it is necessary to specify if each supply and demand is project inventory related or standard inventory related. As shown in the above figure, supplies and demands can be connected to project activities. In other cases, demands and supplies are not directly connected to a project activity but the project activity connection is instead derived from a structure. For example when a shop order is explicitly connected to a project activity the shop order material lines are indirectly connected through this shop order. A project activity connected supply can only be received into the project inventory, whereas it is possible to issue material from either standard or the project inventory to meet a project activity connected demand.

Supplies

A supply that is directly connected to a project activity will be received into project inventory. Project-connected supplies are either created from project-connected demands or via manual activity connections. In comparison, a supply that is not connected to a project activity will be received into standard inventory.

Supply objects related to project inventory are:

• Purchase Requisition Lines
• Purchase Order Lines
• Shop Orders
• DOP Headers

Demands

A project-connected demand is either planned against standard inventory or project inventory. For example a customer order for an inventory part may have supply code Inventory Order or Project Inventory. Inventory Order means that the material will be issued from standard inventory and Project Inventory means that the material will be issued from project inventory. It is allowed to issue material that has been acquired via another activity than the one to which the demand object is connected, but the activity must be within the same project. The cost of issuing from standard inventory is imposed on the project. In comparison, no further costs are added to the project when issuing from the project inventory since the project has already taken the cost when the material was received into the project inventory. Project-connected demands are either created from project-connected supplies or via manual activity connections.

Demand objects related to project inventory are:

• Material Requisition Lines
• Customer Order Lines
• Shop Order Material Lines
• Work Order Material Requisitions
• MPL (Material Procurement List)
• Miscellaneous Demands
  

Project Transfers

In some cases, it is necessary to transfer material between standard inventory and project inventory. This could be when you plan to supply a demand from project inventory but not all quantity is available in project inventory. It may also be necessary to transfer material from one project inventory to another when the material is "owned" by another project and has to be transferred to the "demand project".

Example of Supplies and Demands

The figure below illustrates the flexibility of the project inventory concept. The picture includes two projects, project A and project B. It is possible to supply the project demands either from the project inventory or from the standard inventory.

Figure 2. Receive to Project Inventory and Issue from Standard/Project Inventory