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Dynamics NAV’s flexibility and some creative thinking can address unique business processes without the need to customize

The other day, a client presented me with a scenario that took some thinking on to how to set it up in Dynamics NAV without requiring a customization.

ArcherPoint How-To Blog: Step-by-step instructions on how to perform specific tasks in Microsoft Dynamics NAV

The client, who is running Microsoft Dynamics NAV 2009 R2 with the Role Tailored Client, sells wooden stakes.  A vendor supplies green (not dry) stakes, which the client then sorts, dries, shapes, treats, and bundles for shipment.

The challenge he presented is in the purchasing and receiving process. The green stakes are stocked in NAV as ‘each,’ but the purchase unit of measure is 1,000 ‘Board Feet.’  There are approximately 3,000 stakes per 1,000 board feet. 

When the delivery of the green stakes is made, the vendor expects an 80 percent cash on delivery payment. The stakes are then sorted to determine which are of good quality and which are of 2nd quality. The client makes the final payment to the vendor for the good quality stakes only. The client is able to keep the 2nd quality stakes and use them for other purposes; these are put into inventory with a zero value. 

Here is the solution I came up with to manage this process within Dynamics NAV without requiring a customization:

  1. We created the following 3 items in NAV with associated costing methods:
    • Green Stake - FIFO Cost
    • Good Quality Stake -FIFO Cost
    • 2nd Quality Stake - Standard Cost = 0.00
  2. We create a purchase order for 1,000 board feet of Green Stakes.
  3. We receive the purchase order for 1,000 board feet that will put 3,000 Green Stakes into inventory.
  4. We make a prepayment for 800 board feet.
  5. We create a NAV Released Production Order for 3,000 to output Good Quality Stakes.
  6. The workers do the sorting and report the quantity of Good and 2nd Quality Stakes.
  7. Using the NAV Consumption Journal, we consume all 3,000 Green Stakes to the production order.
  8. Using the NAV Output Journal, we output as many Good Quality Stakes that were counted. This will bring all of the cost to the Good Quality Stakes.
  9. We calculate the total price to pay and ‘invoice’ the receipt for the entire 1,000 board feet.
  10. We create an item journal entry to put the 2nd Quality Stakes into inventory at zero value.
  11. We apply the prepayment to the invoice.
  12. At a later date, we pay the balance of the cost to the Green Stake vendor.

As you can see, with a bit of creativity and the flexibility of Dynamics NAV, many business process challenges can be addressed without resorting to a customization.  This particular solution could be used in similar situations where the purchase prices are in part determined by the quality of the goods received.

If you’re challenged with unique business processes, talk to ArcherPoint today. If you have a creative solution to share, we welcome you to leave a comment.

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I think this can lead to incorrect valuation. Let's say a good quality stake costs $1.  The purchase order is written for 3000 green stakes. What unit cost they will write on it? Most likely $1 because they don't know how many will be good quality yet. Assume only 1500 of them is good quality.  What happens? You consume 3000 green stakes and output 1500 good quality stakes. How much will be the unit cost of good stakes? $2. That is not correct.
My solution would be way simpler. Either do not book in green stakes at all or if they need stockkeeping then just an item journal book in 3000 at 0 cost. Then do the work, report the numbers. The book a purchase invoice (or order and receipt and invoice) for X number of good stakes at $1 each, Y number of 2nd quality stakes at 0 cost. And remove the 0 value green stake inventory with a negative adjustment.


Thank you for your comment Miklos,


Because we do not know how many good stakes there are, the purchase invoice is posted after the production order is output.  We only pay for the good quality stakes which will be $1500.  

Which will then make the unit cost for the 3,000 green stakes = $.50


When the production is output for 1500 good quality stakes they will be valued at $1.00 each



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