Field Operations Enterprises often have inventory spread across wide geographical areas, in remote warehouses, on service vehicles and even in the process of being installed. An accurate depiction of what you have (and where it) is becomes vital to accurate financials. One of the key areas to manage is Inventory Valuation. Whether your valuation method is FIFO, LIFO, FEFO, Average, Weighted or even serialized cost, the system must value your inventory according to your business environment and needs. The process must be simple and accurate to provide insight to continue optimizing profits in a global economy fraught with competitiveness.
Accurate inventory valuation obviously affects your income statements (it is normally the largest component of Cost of Goods Sold) and balance sheets (Current Assets, Working Capital and financial ratios). Luckily, it doesn’t have to be hard – here’s an example of process flows for end of period Inventory valuation in Microsoft Dynamics 365 for Operations / Microsoft Dynamics AX.