How to book transactions for MRO Items in MS Dynamics Ax 2012?

Depending upon the business processes, scenarios and consumption, Item may be divided into the following types:

1.    Raw Materials: the items which becomes identifiable parts of a finished goods, or which takes the major part of the finished product, that organisation produces.

2.    Consumable items: the items which are not easily identifiable in the finished goods, or a small part of it is required for the production as compared with the Raw Material required in the production. Say for example, butter paper in case of a cake manufacturing.

3.    Work In Process: the items which are in between the operation of production process, say batter of a cake while producing cake.

4.    Finished Goods: the items which are produced and ready to sale.

5.    Fixed Assets: this items are required to be defined for procurement purpose only, for handling Fixed Assets, you can refer my blog http://msdax12.blogspot.in/2014/09/how-to-book-transaction-for-fixed_62.html

6.    MRO items: the items which do not take part in the producible goods, but are required for maintenance and upkeep of the machines required for production operations. Wikipedia defines MRO items as:

Maintenance, repair and operations (MRO) or maintenance, repair, and overhaul involves fixing any sort of mechanical, plumbing or electrical device should it become out of order or broken (known as repair, unscheduled, or casualty maintenance). It also includes performing routine actions which keep the device in working order (known as scheduled maintenance) or prevent trouble from arising (preventive maintenance). MRO may be defined as, "All actions which have the objective of retaining or restoring an item in or to a state in which it can perform its required function. The actions include the combination of all technical and corresponding administrative, managerial, and supervision actions."

In MS Dynamics Ax 2012, by using the facility Inventory Adjustment, an item could be consumed as an expense. Say for example, Insulated Electrical Wires of 100 m used in repairing an equipment, now to book the item in Repair and Maintenance Charges account, an Inventory Adjustment for the said item could be booked. After posting this entry, respective main accounts will get debited or credited. The posting accounts depends upon the posting setup done in the posting setup of Inventory and Warehouse.

So, while booking transactions for the MRO items, proper cost centers must be loaded with its cost, and along with this, proper General Entries must be recorded so that the Financial Accounts gets debited accordingly. To automate the process of booking accounting transaction while consuming the MRO items, in MS Dynamics Ax, the Setup of Posting Profile of Items is required, which could be found at, Inventory and Warehouse Management -> Setup -> Posting -> Posting.

This setup of the Posting is a key element for booking the transactions for consumption of the MRO items. The main setups required for handling the MRO items are:

·         Issue,

·         Loss,

·         Receipt,

·         Profit

But do remember that while posting the transactions, proper main account is debited, but as far as the dimension is concerned, if different dimension if required, then proper financial dimension could be selected while entering the inventory adjustment journal.

The Receipt and Profit setups are used if incase any reverse entry is needed or any Inventory Adjustment entry have any positive quantity, or so to say any increase in quantity occurred. Normally a Main Account Inventory Adjustment account is used for adjusting the profit.

Let us elaborate with some scenarios, for better understanding:

Scenario 1: 5 packets of Photo Copy Paper of A4 size issued to Accounts department, this is to be debited to a main account 2262300 - Printing and Stationery which is of Main Account Type: Profit & Loss, under a Main Account Category: Administrative Expenses.

Solution: While booking the transaction for procurement, and stocking, the Store and Spares Account has been debited (in this case, we have used inventory posting setup). If we look into the Posting Setup for Inventory, in the transaction of Issue type the Item Group: STN – Printing & Stationery, the Main Account: 1135100 – Stores and spares – in Factory, has been setup. That means while issuing the item from the said item group, the main account Stores and Spares – in Factory will be credited, as shown below:

For the booking the expense the loss transaction type for group STN, debited to the Printing and Stationery main account, as shown below:

Therefore, the following transaction takes place:

Debit – 2262300 - Printing and Stationery

Credit – 1135100 – Stores and Spares – in Factory

After validating and posting the voucher, and looking into the Voucher Transaction, we found that Printing and Stationery account has been debited with Rs. 657.16 as shown below:

a)   Select Transactions

b)   Select Financial Voucher

 You might note that the account debited is shown as 2262300-AdminExp. The AdminExp is actually a Financial Dimension, which is explained in the scenario 2.

Scenario 2: Some items issued for operating a Forge Hammer to a work centers, as shown below

Item number	Item Name	Size	Site	Warehouse	Issue Quantity	Financial Dimension
OIL-00008	H. S. Diesel	0	BLB	Main Store - BLB	20	Forge Shop-Hammer2-Operation
GEN-00032	Hand Gloves	10"	BLB	Main Store - BLB	10	Forge Shop-Hammer2-Operation
GAS-00018	Filled Oxygen Gas Cylinder	7 m3	BLB	Main Store - BLB	1	Forge Shop-Hammer2-Operation

The expense must be segregated to the Financial Dimension, so that later on expenses on that particular financial dimension could be calculated for a period.

Solution: To book the transaction for issuing the material, could be done through the Inventory Adjustment, as shown below:

Created an inventory journal for the three items, issued the quantity as asked.

For each line selected a dimension named _CostCenter, with a value of FS-Hammer2-Operation.

After validation and posting, if we look into the financial transaction we find the followings:

Where respective main account – 2260900- Consumption of Stores and Spares debited, with a financial dimension of FS-Hammer2-Operation.

With the help of Financial Report Manager or else through SSRS, customized report based on the Financial Dimension, could be prepared, for example: