Rounding in ERP world

Rounding in ERP world

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As you might know, ERP tools are based in integers and decimals. There are other tools which are much more powerful from a mathematical perspective. These are the engineering tools which are mostly used in those environments where precision in calculation is higher than what we are used to. Also, these use fractions (1/3) instead of integers and decimals. Going back to ERPs, these are to track inventory, G/L, to plan accordingly … The majority of the customers do not require high precision on the calculation while they do not require complex mathematical equations.

Having this in mind, we also need to understand what happens in real life. If we assume we buy boxes of given item and each box has 3 pieces of that same item, would you really consider your customer is shipping 1/3 of a box instead of 1 piece? I guess your customer does not want to mention 0,33333333333333333 period of a Box, right?. That is why it is important to avoid rounding. This is not only to avoid rounding in ERP. This is about avoid rounding in real life.

The truth is that setup in ERP need to have one premise: avoid rounding as much as it can be done. In order to do this, mostly all ERP provide a setting which define what is the base unit of measure. This is the unit of measure which is going to be the base on each calculation which takes place in inventory. Going back to our example of BOX and PCS, we need to setup ERP with the fact that the smallest unit (PCS) is set as the base Unit of measure. This way, all calculation will be based in PCS as base UoM. In other case, if we don’t do this, we can run into a rounding issue when BOX is set as base UoM and customer ships one PC. But … what is really doing the customer? It shipped 1 PC and not 1/3 of a BOX.

Consider what you do in real life. Take the smallest UoM as base UoM.

Lastly, consider this as an entry about ERP, this is not about NAV specifically.

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