Executive Summary

Information about purchased material represents the heart of a distribution environment, and a significant portion of cost of sales for most manufacturing environments. Information about purchased material can be segmented into company-wide information (such as the item number, quality management policies, and sales data) and location-specific data (such as planning data to replenish inventory). Several factors must be considered in item identification such as units of measure and alternative identifiers for sales and purchasing purposes. Other considerations include approaches to the item description and item- related text. Quality management policies include lot- and serial-tracking requirements as well as approved vendors . Sales data involves defining item prices and discount percentages and possibly substitute items. Costing data for purchased material includes standard and actual costing methods , and vendor agreements about purchase prices and discounts . Location-specific planning data for purchased material includes a lead-time and reordering policy. Other types of items may be sold, such as item variants, non-stock items, and kit items. The case studies highlight variations in distribution environments, such as daily usage rates and rules-based pricing.