Setting Up Placeholder SKUs

What is a Placeholder SKU?
A Placeholder is a special type of SKU which does not represent a specific item, rather it is set up specially to represent (or hold) the inventory value for an entire class or category of inventory for which stock information is not kept.  For example, many stores do not keep inventory (QOH's are blank) for their Fastener department so they set up a single "placeholder" SKU which holds the inventory value for the entire department. 

Why?
Ending inventory reported by Mango and your Eagle (Business Advisor and RIV) is calculated by multiplying quantity-on-hand times cost for each SKU in your inventory file. If an entire class of SKUs are set to Keep Stock Info = "N" then their quantity-on-hands are blanked out and therefore have zero inventory dollar value.  In this case, your store can prop up its inventory with a placeholder SKU so inventory dollar value is not under-reported on its balance sheet.

How?
It's important to set up a Placeholder SKU in a way that Mango can identify so that it does not get reported on your Count Sheets, Cost Exceptions or your Overstock Report!  Below are a few rules to follow when setting up Placeholder SKUs.

  1. (optional) SKU = FASTENER (FASTENER is the default SKU for fastener department placeholder. You can continue to use your own SKU if different, or if setting up for a non-fastener class).
  2. Set Rep. Cost and Avg. Cost to $500.00 and Retail to $1000.00.
  3. Last Received and Last Sale date must be blank.
  4. If a Fastener Placeholder then put it in a Fastener Class 580.  Or, if the SKU is representing Ace Warehouse inventory then set the appropriate class.
  5. Set the SKU's Location to INVAL
  6. Use Qty on Hand (times cost) to determine the Placeholder's total Inventory Value.  For example, to represent $15,000 of inventory then you would set QOH to 30 (30 x $500 = $15,000).

Note: if $500 is too high of an average cost increment then you can use a lower Avg. and Rep. Cost, but keep them above $100.

  • Steps to use placeholders to keep drawer-level inventory value for specialty fastener drawers ("Hillman drawers").

    1. SKU (can be any SKU).
    2. Class = 578
    3. Fineline = 57899
    4. Last Received and Last Sale date must be blank
    5. QOH = 1
    6. Set the Cost, Avg Cost, and Mfg. Cost to the total cost of the drawer.
    7. Location (can be any location).

  • There are two common mistakes stores make when using Placeholder SKUs.

    1). The covered class of inventory is set to also accumulate QOH values. For example, if you create a Placeholder SKU to cover your Fastener department then make sure the SKUs the Placeholder SKU is covering are set to not Keep Stock Info (Codes Tab of Inventory Maintenance, Keep Stock Info = "N"). Otherwise, these SKUs will accumulate inventory value as they are sold (Negative Value or run the risk of accumulating positive QOH value errantly).

    2). The Placeholder SKU value becomes stale. If your store chooses to use Placeholder SKUs then it is up to you to establish a process for periodically updating its inventory value. For example, if you are using a Placeholder for your Fastener department then you will want to figure out a way to ascertain an inventory value at least once per year. You can use Mango's Excel-based Inventory Value Analysis tool to make sure your Fastener or Bulk Placeholder SKUs have reasonable value. It is important these SKUs Inventory Value do not become stale over time.

Rental - Rental SKUs that carry an inventory balance need to have the location code of "RENT".  These SKUs will be specially classified in Mango and will not show up in Obsolete value, Count Sheets, will be treated as Excluded Shrink. 


Important - Placeholder SKU
Changes to your store's inventory value (through Placeholders or otherwise) which do not have corresponding sales or receipts will directly affect the store's Cost of Goods Sold equation and therefore its Gross Profit.  Adding to net inventory value will generate a one-time Gross Profit event and lowering value will create a loss.  Take care before setting up or changing Placeholder SKUs to make sure your owner, bookkeeper, and/or CPA is in sync with this change. Your bookkeepers may already be compensating for this inventory by making adjusting entries.

Many stores will set up a "Dump SKU" to handle both the purchasing and selling activity to the covered class of SKUs.  Make sure this SKU is set to Keep Stock Info = N so that it does not accumulate inventory value.