Balance control and correct formation of orders to the supplier taking into account reserves

Why do reserves “break” purchasing if they are not controlled? 

Imagine this situation: a customer orders a product, you issue an invoice and wait for payment. Physically, the product is still on the shelf, but in fact it is already “someone else’s”. If another salesperson checks the program at this moment, they will see this product in stock and may sell it. Or the opposite situation: a purchasing manager creates an order for the supplier, the program shows that the product is in stock, so the manager does not order it. But when it comes time to ship the product to the first customer, it turns out that there is not enough stock. 

Entrepreneurs regularly contact technical support with questions such as: "Why does the program say that we need to order a product if it is physically available?", "How can we understand how many products we actually lack for issued invoices?" or "How can we remove a product from reserve so that it can be sold freely again?". 

The reserve and order control mode is designed specifically to separate free stock from products already promised to customers, and to use this shortage as the basis for accurate purchasing without freezing extra funds.

1. How the reservation logic works in Torgsoft

The basis of correct ordering is understanding how the program “sees” reserved goods. In Torgsoft, reservation most often takes place through the «Trade with Invoice» mode (TWI) or when creating a «Customer Order for a Product».

There are two main reserve policies:

1. Moving to a temporary storage warehouse (Goods Held as Collateral Warehouse). When reserving, the product is automatically moved from the main warehouse to a special 3rd-level warehouse. From the point of view of computerized accounting, this product is no longer in the main warehouse. It does not participate in normal goods turnover, it cannot be accidentally sold through a regular sale, and it is not included during the standard inventory of the main warehouse.

2. Nominal reserve in the main warehouse. The product is reserved only nominally and remains on the balance of the main store. It can be sold if the administration allows such a policy; the main point is to ensure its availability by the time the order is shipped.

How does this affect the order to the supplier? If you use the first method, where goods are moved to a collateral warehouse, the product balance in the main accounting center decreases. If this balance falls below the set «Minimum Stock», the program automatically recognizes it as a shortage and, the next time the «Create Supplier Order» mode is used, suggests ordering this item.

2. Analyzing product demand for specific invoices

To let the manager clearly see which products and quantities need to be ordered for issued invoices, Torgsoft has a special «Product Availability in Warehouses» tab in the «Invoice» tab of the «Trade with Invoice» mode. This tool allows you to track shortages at the level of each document.

Here the program performs an exact mathematical calculation using the following columns:

• In reserve — shows the quantity of goods that has already been successfully reserved specifically for this invoice.

• Order — shows how many more units are critically missing to fulfill the customer order. The value is calculated using the formula: "Quantity of goods in the invoice minus" "Quantity of goods in reserve minus" "Quantity in stock".

If there is not enough stock in the warehouse for full reservation and you try to reserve it, part of the available quantity will be reserved, while the remaining part will receive the status «Awaiting Reservation». This quantity is a direct signal for the purchasing manager to contact the supplier.

3. Mass creation of orders taking shortages into account

When a manager needs to create a general order to the supplier for the entire store, the mode «Document» — «Create Supplier Order» is used.

How does the program determine what exactly needs to be ordered?

1. It analyzes the Minimum Stock, which can be set as a single value for the entire network or separately for each warehouse using an additional option.

2. The program generates the «Need to Order» column, which is calculated as the difference between the set minimum stock and the current actual stock in the warehouse.

3. In the filter on this form, you can select the «Goods to Be Ordered» parameter. This combines the following conditions: goods with zero/negative quantity + goods that are running out.

4. Accounting for reserves in Production for manufacturing companies

If your company uses the additional option «Production: accounting of materials and finished goods», reserves play a key role in purchasing raw materials. Materials can be reserved for production acts or route sheets to avoid creating several acts for the same stock balances.

In the «Production Planning» mode, where supplier orders for raw materials are created, the program displays:

• Required quantity — how much material is needed in total.

• Quantity available — calculated as the current free warehouse stock + the existing reserve for this production act.

• Order — automatically calculated as the difference between the required quantity and the quantity available. If the value is negative, the system understands that there is enough material. After that, clicking the «Create Orders to Suppliers» button generates ready purchasing documents.

Summary: how to set up the process?

1. Define your reserve policy: decide whether the product will be physically moved to the "Held as Collateral" warehouse or remain in the main warehouse. For most retailers, it is safer to use temporary warehouses to avoid stock mix-ups and accidental sales.

2. Set minimum stock levels for fast-moving goods. Then any movement of goods into reserve will automatically prompt the program to remind you about purchasing.

3. Sales managers should regularly monitor the «Product Availability in Warehouses» tab in TWI and track goods with the «Awaiting Reservation» status.

4. Purchasing managers should work with the «Create Supplier Order» form using the «Goods to Be Ordered» filter, taking into account that all correctly created reserves have already affected the current free balance.