ADempiere Review – Open Source ERP

Accounting Reporting

The financial reporting in ADempiere is both good and bad. I would argue it is more bad than good due to a lack of canned reports. All the underpinnings are there for an incredible accounting system; however, the lack of existing canned reports leave you or your integrator to create some reports from scratch. Financial reports fall into two categories: (1) financial statement reports, and (2) account defense reports.

1. Financial statement reports include your Income Statement, Balance Sheet, Cash Flow, etc… These documents communicate audited financial results. Just the basic reports exist. Microsoft Dynamics, for example, offers better canned report options.
2. Account defense reports include Aging, Accrued Purchases or Not Invoiced Receipts (NIR) or Goods not Invoiced (GNI), Bank in Transit, Accounts Receivable, Accounts Payable, UnReconciled Payments, etc… These documents help audit and defend your financial results. Some of the above reports exist; however not all (bad). Most do not exist for multi-currency defense reporting. I install my own versions (good). More on this topic below.

The financial report ‘engine’ is great (good) with one critical flaw (bad). The most powerful feature of the reporting engine is your ability to nest (create hierarchies) accounts. You can report on the individual accounts or the nested hierarchies. This feature allows for fast and accurate report generation. The one critical flaw is the lack of the ability to specify a date range when running an income statement. Your choices are year to date and period to date. You can still determine account balances for a specific date range; however, you just cannot do it in your Income Statement.

Dynamic Account Combination

ADempiere uses dynamic general ledger posting. This means that a given document uses its fields to derive the accounting segments. Therefore, ADempiere can include segments like Business Partner, Product, Project, Sales Campaigns, Activities, Sales Regions, etc… in the general ledger. Accountants love this feature (good) because you can create Income Statements based on business activities. Sales Campaigns represent a good example. ADempiere will automatically record Revenue by Sales Campaign. Accounting can post expenses to specific Campaigns. As a result, Accounting can produce accurate ROI measures based on real revenue and expenses.

Accounts Payable and Accounts Receivable (AP and AR)

I am a big fan of how ADempiere manages Accounts Payable (AP) and Accounts Receivable (AR) (good). There are two facts that make receivable and payables in ADempiere strong:

1. Single list of business partners (customers, vendors and employees in one list).
2. Same architecture for both AP and AR

Because of these two facts, you can manage a high degree of scenarios without ‘working around’ the system. This power is best described with an example: You can apply an open AR Invoice to an open AP Invoice and every ties nicely (good). Anyone who has ever faced this battle will smile from ear to ear.

The aging reports for invoices are good. They just work. The only downside (bad) is the fact that it only expresses the open balances in terms of the document’s currency. This fact causes issues when you go to defend your general ledger AP or AR balances. There is more discussion about this topic below.

It is important to note that ADempiere manages invoices and payments using separate accounts. Open AP Invoice balances are held in AP general ledger accounts. Open AP Payments balances are held in Payment Selection general ledger accounts. This fact is bothgood and bad. If you are a larger company managing multiple currencies, this is a great (good) feature because it allows you to have incredible insight into what documents are contributing to what balances. If you are a smaller single-currency company, this is a hindering feature (bad) because it adds complexity as compared to simple accounting systems.

By default, there is no consolidated aging report (invoices and payments in the same report) (bad). I use a report from Adaxa, an Australian ADempiere integrator, to solve this issue. It is also worth mentioning that Adaxa is a major contributor to the ADempiere project – thanks!!

Multiple Currencies

The ability to manage multiple currencies is both good and bad. The architecture of how ADempiere record rates and GL postings is as good as any tier 1 ERP (good). The canned reports to help ensure your individual and consolidated financial statements are accurate practically do not exist (bad). As a result, I have created my own reports to support the balances of the critical balance sheet accounts.

It is worth mentioning that ADempiere posts to the general ledger in both the source and document currencies (good). Being able to run a trial balance or reporting on the general ledger in both currencies helps ensure the system is balanced and accurate. In my experience, my most diverse customer is spread between 6 organizations and 10 countries. We exercise general ledger reporting extensively. This feature is also what helps provide the balance sheet defense reports (good).

It is also worth mentioning that Adaxa created an Account Reconciliation tool that helps match offsetting general ledger entries (good). This tool helps reconcile any account where one or more actions put money into a general ledger account and one or more actions remove money from the same account. By creating a common link code for all symmetrical general ledger entries, you can see what ‘open’ postings represent that account’s open balance. This tool is valuable in two ways:

1. If you are out of balance, and you need to see all offsetting general ledger entries, this tool will help you make quick work of millions of GL postings.
2. If you have low volume accounts where you need to ensure that every dollar put in eventually goes out, this tool provides a very nice and easy interface. Accruals fit this description.

The Adaxa Account Reconciliation will be released in ADempiere version 3.8. I am specifically calling this tool out because of its ability to manage high volumes of postings and its simplicity of use (good).

I mention the Adaxa Reconciliation tool as part of the multiple currency section because defending open balances across documents with multiple currencies is very challenging in high volumes. This tool provides amazing insight (good).

I do not recommend using this tool for high volume accounts like AP, AR, Bank, Bank-in-Transit, Not Invoiced Receipts (Accrued Purchases), and some of the clearing accounts. The reason is that you already are going through the process of matching, allocating, and reconciling these accounts as part of your normal everyday business. There is no reason to perform the same process twice. Instead, you should create sub-ledger-based reports that derive your open balances for these high-volume accounts. Let me know if you need more information…

Multiple Organizations

ADempiere allows you to manage multiple sets of books inside the same login (very good). This feature is probably my most favorite within ADempiere. When accountants witness this feature, they both smile and cringe at the same time. They smile because the system allows you to:

1. Create individual and consolidated financial reports from one system.
2. Stay logged into the same system for all organizations.
3. Obtain insight across all organizations within the same report. Topics include inventory, open sales and purchase orders, financial reports, etc…

The cringing comes because much of new ADempiere Controller’s work goes toward proving the system is stable and accurate across all organizations. ADempiere has proven stable every time (good).

Order Management

ADempiere’s ability to manage orders is good. The document management and approval process is excellent. Here is an article that elaborates on the order and document workflow process.

You can attach any document to any record in ADempiere (very good). This is particularly useful when vendors send you specification sheets, certification of conformance, order confirmations, etc… This is also useful when customers send you purchase orders. Being able to zoom to any order from anywhere in the system and view the original documents helps with quality certifications like ISO:9000:xxxx.

ADempiere has a strong change log or audit trail (good). Any change by anyone to any field in any record is logged. There are few questions as to why or how a situation occurred.

Security

ADempiere role and security management is good. The roles are flexible. You can nest roles. You have control over window access, field access, and even record access. The ability to isolate roles from specific organizations is good. The programming interfaces used to manage security are intuitive and easy to work with.

The biggest weakness in security architecture has to do with usability. You can log in with only one role. Changing roles requires you to logout then log back in (bad). For most situations this is a non-issue; however, there is always that one person who can and does do everything. In this situation, you either create a Super User role, or you force them to switch between the existing roles.

Returns

Returns in ADempiere are bad. While it would not take much to greatly improve the returns process, the default system is not desirable. The below sections explain your options.

Customer and Vendor RMAs

The Customer and Vendor RMA depends on previous shipments and receipts. This is bad. When going live, you do not have previous shipments and receipts. The actuals Returns Receipt and Shipment windows are defaulted from the original shipments and receipts. This is bad. There is no way for the person who is creating the RMA to specify what warehouse or what lot number to use as part of the return process.

The returns process unwinds the original general ledger postings exactly. This is bad. Typically, you want a AR Return Memo to touch a Returns general ledger account and not Revenue.

Negative Order for RMAs

It is worth mentioning that you can use negative Purchase Orders, Sales Orders, Material Receipts, and Shipments to process RMAs. While this concept provides much freedom and flexibility, it also is not intuitive (bad). The negative Purchase and Sales Orders play with reservations and replenishment (bad).

Lot Material Management (WMS)

Lot requirements play a big role in how well ADempiere performs for your organization. Lot management typically falls into three categories:

1. No lot management – ADempiere performs very well (good) in this situation. It just works!!
2. Strict lot management – ADempiere performs OK in this situation. I elaborate more below.
3. Hybrid lot management – ADempiere performs well (good) in this situation.

No Lot Management

ADempiere performs well (good) when managing inventory where lot management is not needed. It just works!!! Behind the scenes, ADempiere will track your lots for your. Your biggest task is to update the storage reports to remove visibility into lot details.

Strict Lot Management

Regarding strict lot management, ADempiere has the ability to capture lot tracking on all material management windows. This is good. Where ADempiere tends to struggle with strict lot management is with fulfillment. A business will typically fulfill using one of two methods: (a) system picks the lot or (b) user picks the lot.

Strict Lot Management – System Picks

In the ‘system picks’ lot scenario, ADempiere will need to be modified to write each lot ID to each shipment line. While his change is low in scope, it is a change. Because it is a change, it gets flagged as both good and bad. How can this be both good and bad? It isbad that you need to modify the default behavior. It is good that you can change the behavior to do exactly what you want with just a little effort.

Strict Lot Management – User Picks

In the ‘user picks’ lot scenario, ADempiere will need to be modified to allow the user to specify what lots were picked for each shipment line. This change is bad. The scope is larger than the system picks scenario change. It is not an architectural change (that is good); however, it will require a change in how the user interacts with the system. I have made this change before. Let me know if you need more details…

Hybrid Lot Management

With hybrid lot management, you do not use ADempiere’s lot number as your lot number. Instead, you create a license plate label when you receive or create product. You dictate what the lot number looks like. This implementation gives you the most freedom and flexibility. The scope of the change depends on the complexity of your needs. The simple implementation is to scan the lot numbers at your company’s borders to track what products went to what places. Quality requirements (example: ISO 9000) are most easily satisfied by this implementation.

Open Source ERP

Because ADemipere is open source, you get all the source code with the application. This is good because ERP is the one applicaiton that everyone modifies. In wholesale distribution, almost everyone helps support the process of buying, storing, and shipping product; and almost every company is unique in some special way. Because ADempiere is open source, every company can tweak the minor issues in the system that do not perform exactly like you wish.

Here is an article that better illustrates this point: Who Needs a Manual When You Have Source Code – Open Source ERP Guide

Conclusion

I have been very fortunate to lead some great ADempiere ERP projects. Our successes are still being realized today. It is my opinion that your biggest goal and challenge is to determine if ADempiere is a good fit for your organization. If the answer is truely yes, you will create a strategic operational advantage known by few other companies. If yes, your ability to innovate and exceed customer expectations will drive increased profitability well beyond today’s norm.

Here is a discussion regarding “Is ADempiere a good fit

The alternative, if ADempiere is not a good fit, will leave you frustrated and struggling to keep up with you competition. My whole reason for writing this review is to help you begin to make an educated decision. I believe an honest, expert resource is the fastest way to help ensure the correct decision and your business success. I would be honored and privileged for the opportunity to work with your team. Enjoy and good luck!

Please be quick to let me know if I can improve this review in any way. If you found this post helpful, please let me and others know.