Purchasing management isn’t the most developed aspect of QuickBooks, but for an inventory-centric business it can be a key issue. How do you know what items you need to purchase, and how many of each? Let’s take a quick look at some options that you have, including a new product that was introduced at the 2012 Sleeter Accounting Solutions Conference, MISys Easy Purchasing. I’m really excited about this product!
Update: Unfortunately, MISys Easy Purchasing was discontinued due to lack of sales
QuickBooks, by itself, is a very simple inventory management system. Planning features are fairly limited, but there are some tools that you can use when you are trying to decide on what you need to purchase. One of my favorite reports is the Inventory Stock Status by Item report, particularly if you enable the Available Inventory feature (as I discuss in my article on QuickBooks Available Inventory). Here’s a sample of that report:
This report shows you the reorder point for items (or build point for inventory assemblies), the quantity you have on hand currently as well as the quantity on open purchase orders, and the demand for those items (sales orders, pending builds). The Order column has a check mark to show which items QuickBooks is suggesting that you need to purchase (or build).
The report that I’m showing above comes from Enterprise V13, but this basic report has been available in QuickBooks Pro, Premier and Enterprise for many years. There are some improvements that show up in the 2013 program – I’ve described these new features in my article on QuickBooks 2013 Inventory Improvements, along with some changes that were released in QuickBooks 2013 R3.
This is a helpful report, but it doesn’t tell you what quantity to purchase, and it doesn’t provide you with information on the components you need to build any assemblies (unless you have pending builds for those assemblies). It is a start – but I have to do some math. Take the “Case” item for example – I have 20 on hand, but my reorder point is 30 so I need 10 more. However, I have one on an open sales order, and 2 needed for some pending builds, so I actually need 13. Wait – I have 2 on open purchase orders, so I need 11. The report shows you the basic values, but you have to do the math yourself. If you have a lot of parts this can be tedious. Also, this can be misleading! The “Available” columns says 17 available, which implies that I don’t need to order any more? Well, I guess that depends on how you look at the “reorder point”.
We can get into a lot of arguments over this. I tend to look at the “reorder point” as more of a “minimum stock level”. Those are slightly different terms – a reorder point is a point that indicates it is time to order items, while a minimum stock level is a quantity that you always want to have around. A more comprehensive inventory system would have BOTH of these values. Also, a more advanced planning system is going to look at more than these static numbers – it will look at values like a “lead time” (the number of days it takes to acquire an item), the due dates for the sales orders and pending builds, the delivery dates of the purchase orders, and much more. However, we have to work with what we have, and QuickBooks doesn’t do all of that.
QuickBooks Create Auto PO’s
Going beyond this report, if you have QuickBooks Enterprise V13 you can use the new Create Auto PO’s feature (via the button at the top of the Inventory Stock Status by Item report). If you click that button you get a screen that picks out the items that should be purchased (or built).
This is a helpful feature, you can easily create purchase orders for each of these items just by selecting them and clicking the Create PO’s button. One of my complaints about this feature, however, is that the program doesn’t give you clear information on exactly HOW MANY you should be purchasing (you have to do that calculation, still), and it doesn’t provide information on components of assembly items that you may need. This is a step in the right direction, though!
Using Add-on Programs to Assist
There are several different add-on tools that you can purchase that will work with QuickBooks to provide additional help with determining what you need to purchase. These can range from low cost utilities up to major inventory planning systems.
On the simple end, one example would be CCRQBOM (note, this is a product the my company produces). This is a low cost utility that is focused on the issue of knowing what components you need to purchase to be able to build the assembly items that you require. For example, if you look at the inventory stock status by item report above you will see that we need to build 45 Camera SR32 assemblies to bring your inventory up to the build point level – a build point of 50, minus the 8 we have on hand, plus the 3 that are required for open sales orders. If you tell CCRQBOM that you need 45 of those assemblies it will tell you that you need to purchase these quantities of the components of that assembly (see the shortage column). This is very useful information that QuickBooks isn’t providing to you. The items listed in the screen below are what you need to purchase to manufacture those 45 assemblies.
On the other end of the spectrum are more complicated inventory planning systems, such as ACCTivate! and the MISys Manufacturing software systems. These are more comprehensive (and more expensive) systems that control your entire inventory management process. I’ll be reviewing these products in upcoming articles. Both of these products have excellent track records and provide comprehensive analysis of your inventory needs (ACCTivate! is usually used in distribution environments, MISys in manufacturing environments).
The point here is that there are many excellent add-on products available that can provide you with much more detailed information on your purchasing needs than what you can find in QuickBooks by itself.
Introducing MISys Easy Purchasing
MISys Inc. is a software developer that has been involved in the manufacturing software industry for over 25 years. Their MISys Manufacturing software system, which I mentioned above, is one of the leading inventory management add-on products for QuickBooks and Sage accounting products.
Many businesses don’t need the full power of a full manufacturing software system, however. What if you just want to get a handle on purchasing? What if you are not a manufacturer? The folks at MISys recognize that many businesses need help with purchasing, but they aren’t ready to step into a major inventory management system (which involves a significant amount of effort to implement and use correctly). To fill this need they have developed a low cost add-on product for QuickBooks that focuses just on generating purchase orders, MISys Easy Purchasing for QuickBooks.
This product will look at your open sales orders (in the desktop version of QuickBooks), as well as reorder point information in your item list, and determine how many items you need to purchase to be able to fulfill those sales orders. This is NOT a full blown MRP or ERP planning system. It works just with the data that already exists in your QuickBooks database. It also can include the component items for any assembly items that you are working with.
Let’s take a quick look at what it can do (please note, this is not a full tutorial for this product).
MISys Easy Purchasing is a desktop application, although it requires an Internet connection. You will create an account online, and each time you want to use it you will log in to the product on your desktop (not in a browser window).
The program lets you work with any number of QuickBooks company files, which you can select from the dropdown list in the Settings/Preferences window. There are a small number of preferences that you can set here. Note that if you have Enterprise with Advanced Inventory (using the multiple locations feature) you have additional options.
Here is that same Inventory Stock Status by Item report that we looked at earlier. Note that the On Sales Order value comes from open sales orders in my file.
Let’s see what MISys Easy Purchasing is going to do with this information. Note that there are several options that you can select which may affect the results, you need to determine what options are the best fit for your business.
The first step is to create a “requirements” list – a calculation of the items to purchase and the quantity of each that we need. Select a date range for the sales orders (I’m using a very wide range due to the test data that I’m working with). I want the system to bring my inventory levels up to the reorder point, and I want it to recommend the component items that I need to purchase to be able to build any assembly items. Note that if you don’t want to use the reorder point as a minimum stocking level, you have the option to turn that off.
Click the Scan Sales Orders button and the program pulls the data it needs from your QuickBooks desktop product. Here’s the report that MISys Easy Purchasing shows, listing the items that it thinks you should purchase.
Do these numbers make sense? Yes, as far as purchased items. Not quite as far as inventory assembly items. Let’s take a look at that same “Case” item I talked about above. A reorder point of 30, plus one on sales order, minus 20 on hand and 2 on open PO’s, for 9.
All of this works well, but there are a few issues that I see when you look at inventory assembly items, and the multiple location feature:
- The inventory stock status by item report also lists that there are some items required to fulfill pending builds (this shows in the “for assemblies” column). This doesn’t appear to be taken into account. That is why my original calculation was to order 11 “Case” items instead of the 9 recommended here.
- Inventory part items have a “reorder point” which is used in the calculation properly. In QuickBooks, an inventory assembly item doesn’t have a reorder point, it has a “build point”. This is a similar concept, but it is stored in a separate place in the database. It looks like the current release of the program is not recognizing that, so component items of assemblies aren’t included in the requirements list (which we didn’t have from QuickBooks by itself anyways). At this point it appears that the program is treating inventory assembly items as having a zero build point. In another test that I ran, where I had sales orders for the assembly item in excess of the quantity on hand, the program did explode the assembly BOM and added the component parts to the list correctly, which is a BIG advantage over how Auto PO’s work in QuickBooks.
- With QuickBooks Enterprise 12 and 13 we have the Advanced Inventory option, which allows us to specify “sites” or multiple locations. My initial tests show that there are a few problems with how MISys Easy Purchasing is dealing with this feature in purchase orders. It is possible that this issue is due to problems on Intuit’s side of things, as they don’t do a good job (at this time) of presenting all of the “site” and “location” information to third party programs.
If you aren’t building assembly items then the first two issues aren’t important. Keep in mind that this is a new program, and that there are a lot of variables involved with all of the options available in QuickBooks. I’ve found them to be very responsive to issues that have been pointed out to them so far.
Create Purchase Orders
Now that we have a list of items that should be purchased, can we create the purchase orders? This is a simple task in MISys Easy Purchasing.
Note in the lower right corner of the prior screen – the “purchasing lead time” value. In a more sophisticated MRP system you would have a lead time value for each inventory item, but QuickBooks doesn’t provide this. Unlike QuickBooks Auto PO’s, however, MISys Easy Purchasing lets you enter an offset for your PO’s. This is the number of days, from today, that the PO due dates will be set to (I’ll use 10 in my test).
MISys Easy Purchasing will show you the preferred vendor (from the QuickBooks item list) for each item listed, but you can override this by either selecting a different vendor for specific items, or using the checkbox in the lower left to purchase all items from one vendor.
Click the Preview POs” button and you get a “preview” list of the orders that will be created. Note that items from the same vendor will be grouped into one PO for that vendor. Also note that the “expected date” is offset by the lead time I entered.
If this list is acceptable, click the Create POs button at the bottom of this screen. You get a list of the POs that were created in QuickBooks.
Here is one of the purchase orders that were created, shown in QuickBooks:
Some Good Points, and Room for Improvement
This is a brand new program so it isn’t surprising that there are a few things that can be improved. Also, different people are looking for different kinds of results, and I’ll admit that what I’m looking for might not be what someone else is looking for.
Overall, I really like this program. It is simple to use, the price is reasonable (I’ll talk about that below), the company is very responsive to feedback.
- MISys has 25 years of experience developing high-end inventory planning systems. This program isn’t just something that was cobbled together, it has their very large knowledge base to back it up.
- The program works with both QuickBooks Premier and Enterprise (the new “Auto PO” feature in QuickBooks is only found in Enterprise).
- It calculates the quantity to be ordered for you, rather than making you break out the calculator to determine the number from various reports.
- It is very simple to use.
- The program recognizes the “multiple site” feature in QuickBooks Enterprise Advanced Inventory, and provides you with the ability to work with sites.
- You can work with inventory assembly items, so that any assembly on a sales order can be broken down to include its components in the purchase list.
- There are extensive help videos and FAQ’s on their website.
- This does not alter how QuickBooks works and doesn’t require any added data that is stored outside of QuickBooks. This is a very important consideration for a utility like this.
- It correctly deals with negative quantities on hand (I hope that you don’t have that situation, but it does come up often).
- The pricing for this product is VERY REASONABLE.
- This is an SDK based application – which means that it does NOT copy your database into the cloud just to be able to generate this report. Although you need an Internet connection, your data stays home. Since this is working with QuickBooks for Windows, that makes a lot of sense.
There are some issues that I see with the program as it stands now, but since it is new MISys is gathering feedback from their users to see what people want. I pointed out a few things in the early version and they were VERY responsive to my suggestions, some of which have already been implemented.
And, as I said, people may not agree with my opinions here…
Here are some issues where I see room for improvement as the product evolves:
- I would like to have the ability to select (or not) specific sales orders to be included, as an option. I might want to select for a given customer, for example. You only can select by date at this time.
- I would also like the option to print a list of the sales orders that were included in the process.
- While you can see a list of the PO’s that are to be created (or that were printed), I would like to be able to easily print that list for my records.
- I wish that the help feature was “context sensitive”, so that requesting help would take you to the topic that relates to the screen you are on (which is complicated to implement).
- The calculations don’t seem to take into account the quantity of components needed to fulfill “pending builds”.
- It doesn’t handle the “build point” for assembly items correctly. It treats it as zero, which I don’t agree with.
- It doesn’t appear to handle some aspects of the multiple location feature in QuickBooks Enterprise with Advanced Inventory correctly. I didn’t see it working with open purchase orders in the way that I expected, even if I told it to ignore location information.
Pricing, Reseller Program
If you purchase this program directly, the cost is a low $20 per month with no annual contract. This is VERY reasonable. If you deal with any amount of material purchasing, but don’t want to step up to the major inventory systems, this is an exceptional price.
If you are an accounting professional and you want to recommend this product to your clients, MISys wants to work with you:
- You can get a free copy of the program so that you can demo it to clients.
- You have the option of passing on a discount to your client (3 months free), or giving them a 50% discount off the first month and retaining a commission for yourself.
- Your company name will show in the footer of the program window for any client that purchases through you (see the following screen shot, sorry it is a bit fuzzy).
Please note that this is a new “partner” program and the offerings are subject to change, contact MISys for the latest offer.
If your business relies on QuickBooks for inventory management, if you are using purchase orders to buy inventory parts, MISys Easy Purchasing is a great way to get a better handle on your purchasing needs. It won’t give you all the features that a major inventory planning add-on will, but at this price I see it as a tremendous option for many of my inventory clients. I like the product and I like the company. Sure, there are a few “first version” rough spots, but I’m sure that these will be worked out soon. Try it!