Unit of measure triangulation
A Unit of Measure Triangulation occurs when the order unit of measure for the purchase order line item is not the same as the base unit of measure for the material. Hence, three different units of measure are in play:
-
The invoice line item unit of measure.
-
The purchase order line item unit of measure.
-
The base unit of measure for the material.
For example, the construction company in example 2 decides to order more concrete, though this time they wish to order 10 pallets. The purchase order would be raised as follows:
|
Material No |
Description |
Quantity |
Unit of Measure |
Unit Price |
Total |
|---|---|---|---|---|---|
|
1234A |
Concrete |
10 |
PAL |
$1,398.00 |
$13,980.00 |
The vendor continues to bill in LBS, and submits their invoice as follows:
|
Description |
Quantity |
Unit of Measure |
Unit Price |
Total |
|---|---|---|---|---|
|
Concrete |
900 |
LBS |
$4.72 |
$4248.00 |
Within the ERP system of the construction company, the base unit of measure for the material remains as BAG.
Dealing with this situation requires an additional entry in the unit of measure conversion table to represent the conversion ratio between the material base unit of measure (in this case, BAG) and the purchase order unit of measure (in this case, PAL).
Each single pallet holds 20 bags; hence the additional entry must be as follows:
|
Material |
BaseUOM |
Numerator |
Denominator |
UOM |
|---|---|---|---|---|
|
1234A |
BAG |
1 |
15 |
LBS |
|
1234A |
BAG |
20 |
1 |
PAL |
When converting the invoice quantity, Kofax AP Agility first converts it to the quantity in the base unit of measure, then converts it again into the same quantity, but expresses it in the purchase order unit of measure.
The calculations are as follows:
When converting to base unit of measure, the following equation is used.
Base UOM Quantity = Invoice Quantity * (Numerator / Denominator) = 900 * (1 / 15) = 60
When converting to the purchase order unit of measure, the following equation is used.
Converted Quantity = Base UOM Quantity * (Denominator / Numerator) = 60 * (1 / 20) = 3
Line pairing now succeeds for the invoice line item where a quantity of 3, a unit of measure of PAL, and a total of $4248.00, is passed to the downstream ERP system.
Under no circumstances must an entry in the table be made as follows:
|
Material |
BaseUOM |
Numerator |
Denominator |
UOM |
|---|---|---|---|---|
|
1234A |
PAL |
1 |
300 |
LBS |
Whereas this may be correct mathematically, it is INCORRECT from a table population point of view, and may lead to incorrect quantity conversions as the base unit of measure for the material is not pallets. You should always check with the organization so that the base unit of measure for the material can be established correctly. The content of that column must be consistent for all entries in the table relating to a given material.