Introduction
Handling products that come in different sizes or quantities? Using multiple units of measurement (UOMs) can make it easier. This article will guide you through setting up and managing UOMs with practical examples, and explain how inventory movement is tracked in reports.
Here’s how it works!
Steps to Enable and Add Multiple UOMs
Go to Products & Services > +New > Scroll to the Unit of Measurements section.
Toggle on 'Multiple UOMs' to display the UOMs table.
Click '+UOM' to add additional units of measurement.
Setting Up UOMs with Examples
First example, imagine you’re managing inventory for chocolate bars. You can set up UOMs as follows:
Base Unit: The smallest unit, such as a single chocolate bar.
Bulk Unit: A larger unit, such as a box containing 10 chocolate bars.
In this setup, each box contains 10 chocolate bars.
Set the rate to 1 for the base unit (individual bar) and 10 for the bulk unit (box).
Second example, let’s consider managing inventory for orange juice. This product can be tracked using various UOMs:
Base Unit: The smallest unit, such as a single bottle.
Intermediate Unit: A commonly used larger unit, such as 1 pack (6 bottles).
Bulk Unit: The largest unit, such as a carton (12 six-packs or 72 bottles).
This means each carton contains 12 six-packs, totaling 72 bottles of orange juice.
Set the rate to 1 for the base unit (individual bottle), 6 for the intermediate unit (pack), and 72 for the bulk unit (carton).
Selecting UOMs in Transactions
When creating a transaction, after adding and selecting the inventory item, click on the UOM to choose the desired UOM from the dropdown menu.
Inventory Movement in Report with Examples
In the Inventory Detail Report, inventory movement is always calculated and tracked based on the base unit.
1st Example: Inventory Movement for Chocolate Bars
Purchasing 10 boxes of chocolate bars increases your inventory by 100 bars (10 boxes × 10 bars per box). Selling 2 bars and then 8 bars will decrease your inventory by those amounts.
2nd Example: Inventory Movement for Orange Juice
Purchasing 1 carton adds 72 bottles to inventory. Selling 1 pack (6 bottles) and 5 additional bottles will decrease the inventory accordingly.
When to Use Multiple UOMs
Using multiple UOMs can be crucial for efficient inventory management. Here’s how different UOMs can be applied:
Base Unit (Bottle): Essential for detailed tracking and individual sales. This unit provides precise control over inventory levels for single items.
Intermediate Unit (Pack): Practical for retail packaging and useful for bundling products. This unit is ideal for promotions, sales, or easier handling of grouped items.
Bulk Unit (Carton): Best for bulk shipments and large-scale inventory control. This unit helps manage larger quantities and simplifies ordering and storage.
By utilising multiple UOMs, you can streamline inventory processes, from individual sales to bulk handling.
Important Things to Take Note
Base Unit Label Changes: Adjusting the label for the base unit only changes the name of Label 1. It does not alter the UOM itself. Ensure you’re not confusing renaming with switching UOMs.
Hierarchy of UOMs: The smallest unit is always your base unit, with larger units designated as subsequent labels. This hierarchy helps in organising and managing inventory effectively.
Setup Before Transactions: Always set up your UOMs before recording transactions. Once you start using the base unit for buying or selling, you are unable to add or switch to a smaller UOM later. Proper setup ensures accurate inventory tracking from the beginning.