Understand NetSuite Item Groups vs. Kits to Produce Superior Reporting

This article is relevant if you are considering using NetSuite Item Groups and you would like to understand the implications for reporting.

Background

When working with clients in the setup of their NetSuite system, a fundamental design element is the constitution of the item (product) master.  The selection of the appropriate item type is important because it has implications on operational and management reporting.  In addition, once you create an item of a particular type, you can not easily convert them to another type.

In general, I have observed that as my clients mature their business practices, they seek superior information reporting to help them assess sales performance. ¬†I believe the item group offers a mechanism to help management offer bundled product offerings yet allows them to understand how the related items perform collectively. ¬†Meaning, if you have a primary product with accessories you are attempting to sell, the bundle technique works very well to simplify the customer purchase. ¬†Different bundles can offer different configuration options of the same member products — yet management typically asks questions such as “How many of the primary product did we sell?”. ¬†A NetSuite item kit will not allow you to answer this question.

Item groups offer a way to bundle items for sale but track their constituent components by quantity and dollar value.  In contrast, a NetSuite Item Kit effectively creates an item that acts, for the purpose of the sale, independent from its constituent components.   While a kit may produce freedom from the individual items that make up the bundle (kit), the price you pay is obscure sales performance reporting.

Below are key concepts to understand:

Sales Order Item Group Presentation

During order entry, sales are sold at the Item Group level.  NetSuite will automatically explode out the related items on to the sales order.  Typically, the key complaint of using an item group is that the price is dependent on the sum of all of its member items.  How do you offer the item group at a discounted rate (think Big Mac Value Meal)?  The key is to use discount items as part of the definition.  In the example illustration, we added a discount to the end item group which effectively applies to all the elements of the item group. The price of the Item Group becomes the sum of all of its related component items which now specifically outlines the discount element.

With a discount item now in play, you have the ability to set a standard price for the individual member items.  With this configuration, reporting is now more consistent in that you can observe what your product price would have been at list and separately what discounts you had to offer to actually produce the sale.     Go further, with more than one type of discount element on the sales order, you can separate the different meaning of the discounts.  For example, one discount on the sales order line which is part of the item group is a management offering as part of the overall product marketing; yet another discount line added by the sale person represents a specific selling proposition offered by the salesperson.

Item Fulfillment Presentation

Not shown, but during item fulfillment work, the item group does not come over as a line. Only the item constituent components are provided. If a component of the item group requires a drop ship, the purchase order creation process will be managed at the Sales Order line level.  The item fulfillment will effectively drive the costs of goods sold side of the transaction.

Invoice Item Group Presentation

The invoice looks effectively the same as the Sales Order. ¬†From a general ledger perspective, the item group is not sold; only its constituent items are revenue elements. ¬†This leads to questions such as “How many units of the item group did we sell?”. ¬†The key to this question lies in using Saved Search versus Sales Reports. ¬†Let’s review the two different views of the transaction.

The actual invoice to the customer can be customized to show only the elements that you want.  We have done plenty of finely tuned invoice work with our Content Rendering Engine technology which supercharges NetSuite Advanced PDF/HTML Templates

Item Group Sales Reports

We generate a standard Sales by Item report which uses the Invoice transaction as its basis.  NetSuite will automatically apply the sales discount to the related items by weighted average price.  Again, the item group is not shown in the report.

Another report by Sales Orders by Item, versus invoice, shows a different presentation.  The key concept is that the discount is a separate line in the NetSuite database; however during the presentation of reports, NetSuite will allocate the discount based on weighted average price.  This is quite handy because we can readily see gross vs. net price in separate columns without needing to worry about the weighted average discount math allocation which was produced via a separate transactional line.

Saved Search Item Group Quantity Sold Analysis

The Saved Search of the transactions reveal a closer view of how the information is captured. Using Saved Search, you can see the item group quantities sold. Note they are at zero dollar because the constituent line quantities hold dollar values.  Thus, using Saved Search can answer questions about how many item groups have been sold.  But we also can easily see how many of the underlying items were sold as well.

Optimize your NetSuite Business System

Given our professional services is organized around accounting and software architecture, we especially enjoy the robust NetSuite model to meet business requirements. ¬†Even though we invent with the platform, it is important to leverage pre-built capacities. ¬†Many times, we see situations where NetSuite was not well modeled during the implementation which consequently thwarts management’s efforts to run the organization well. ¬†If you would like to get more out of your NetSuite investment, let’s have a conversation.

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Marty Zigman

Holding all three official certifications, Marty is Southern California's NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 25 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to setup a conversation.

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| Tags: , , , | Category: Accounting, NetSuite, Reporting | 19 Comments

18 Comments

  1. John
    Posted September 14, 2015 at 9:13 am | Permalink

    Just curious how this works with E-Commerce. How is the item displayed on the web store?

    I know for external E-Commerce sites (non-NetSuite) the order import may have issues.

    But that being said I much prefer the item group pluses you mention vs. kits.

    Thanks for a great article.

  2. Posted September 14, 2015 at 4:27 pm | Permalink

    Hi John,

    Item groups in NetSuite Site Builder is considered an enhancement (at the time of this writing). There, kits work better as they are single line revenue items. That makes sense from an eCommerce standpoint because the shopper’s cart is effectively a hidden sales order. So you can’t have those extra lines exploded out or it will confuse the web customer.

    Out of the box, you lose the benefits I suggested here. We have written a number of external eCommerce integrations that work with item groups. When the order is consumed via our integration, we explode out the item element using NetSuite’s native capacity. We then compare the price sold on the external web site to the Item Group for a respective price level. When the prices do not match, we allocate another discount line to account for the differences. Works very well as it gives the Digital Marketing team running the web site the ability to change price on the front end while NetSuite holds the “list” price on the back end.

    In the case of NetSuite Site Builder, we would need to maintain a cross reference between a phantom (dummy/fake) item and the item group. When the order is committed, we would script the phantom item to be replaced by the item group. We can include similar logic to what I described above.

    Not a big deal when you have done it before. We bring these scripts to our clients as we have done a number of different ways. The business can tailor the behavior and logic they want.

  3. Dan Milne
    Posted October 1, 2015 at 7:13 am | Permalink

    Marty, One challenge with kits is profitability reporting within NetSuite. The revenue stays with the Kit Item and the costs stay with Kit members. To overcome this challenge, I believe one needs to use scripting and/or another custom solution to tie the revenue and cost together, in order to report profitability. Any recommendations?

  4. Posted October 9, 2015 at 6:00 am | Permalink

    Hi Dan,

    I am not a fan of item kits due to this reason. One way to pull it together is to use a dimension (perhaps a custom one) that allows you to analyze it using the GL. Ultimately, in general, transaction profitability in NetSuite is a complex endeavor.

    As far as scripts… perhaps… But the item fulfillment is driving the cost side of the transaction and the item kit is not in play except for the revenue. So any script (may now work with Custom GL Lines) would need to careful consideration as there is going to be cost overlap.

    Marty

  5. Annie D
    Posted January 25, 2016 at 12:16 pm | Permalink

    Marty, I use the item group with a discount included in the item group to get to the desired bundled price. My challenge is that sales wants a saved search reporting sales $’s for the month including only one line for the item group. Is this possible?

  6. Posted February 9, 2016 at 5:40 pm | Permalink

    Hi Annie,

    You are giving me an idea for a new blog article! Yes, the way you need to do it though is with an aggregate search. Summarize the lines so that it appear to be an item group and roll up the underlying line prices. It’s a more advanced Saved Search technique but can get the job done.

    Marty

  7. Nick
    Posted February 29, 2016 at 5:45 am | Permalink

    I have a question. Let’s say I am selling a sixth grade history book on my website. But I want to sell that same book several ways on my NetSuite ecommerce website.

    1. Just the history book
    2. History subject kit (kit that includes the history book, teacher book, test pack, and test answer key).

    3. Sixth grade kit. (A kit that includes everything a student needs for sixth grade. This kit includes everything in the history subject kit (option 2) plus several other subject kits (math subject kit, English subject kit, literature subject kit, etc).

    Is there a way to sell all three of these products (option 1,2,and 3) using NetSuite ecommerce without setting up separate sku numbers for the history book? (i.e. I want the history book to be the same sku regardless of which method the customer uses to purchase the book (option 1,2 or 3). As a manager I want to be able to report the quantity on hand for the history book without having setup a different sku number for each way the book is sold.

    Any thoughts on this?

  8. Tom
    Posted March 8, 2016 at 12:23 pm | Permalink

    Hi Marty,
    Ive been searching for this answer for a while with not luck so Im trying here, when creating an item receipt from a Return Authorization for a KIT item we would like to break up the kit members so we can receive the componenets into its own respective locations, example Member1 goes to DEFECTIVE location, Member2 is received under NEW location. Currently we edit the RA and break up the kit members but im looking for an automated way or if netsuite supports receipt of kit members instead of the kit as a whole.

  9. Posted March 10, 2016 at 10:29 pm | Permalink

    Hello Tom,

    I haven’t worked that flow before. So I would need to ground myself. But I have seen that getting return items to route to different locations likely demand some script. The assumptions of a return from an invoice always assumes the location that originally shipped the good. As such, we probably could work through your concerns to address the member items with some script logic.

    Marty

  10. Posted March 10, 2016 at 10:34 pm | Permalink

    Hello Nick,

    You have different concerns here. This is a good example of how to use Item Groups to get the reporting you want. Yet, this will look different in the eCommerce area and all assumptions must be verified. I would have to study the different presentation options on a SiteBuilder eCommerce site. In SuiteCommerce Advanced, we could get control over it because there really is no “out of the box” method as the architecture is currently evolving and we ultimately have control via SSP.

    Marty

  11. Posted March 31, 2016 at 7:48 am | Permalink

    Hi Marty
    I have i-Seaports BFN and 4 clients. One of my seaport clients uses Item Group for a set of services common to every Opportunity and Sales Order. We set it up in 2012 and it has worked perfectly adding the group to every transaction since then. Suddenly last week it stope working properly displaying Internal IDs and numbers instead of the fields content for the items in the group. Any idea why? They have not been upgrade to 2016.1 yet. I tested in my own login and I get the same problem.
    George

  12. Posted April 5, 2016 at 3:53 am | Permalink

    Two suggestions: Did you check your show internal id preferences? Did the form definition change?

    Marty

  13. Charles Jackson
    Posted August 19, 2016 at 10:35 am | Permalink

    We have just started using item groups on quotes and sales orders. The problem we are running into is that we are trying to streamline the quote by just showing the item group name on the quote and a price. We did this by allowing the quoter to check and uncheck if you wanted these lines to show up on the quote. This was before item group. Now using the the item groups all the lines are printing because you cannot edit the “end of group” line to check it to print. Is there a way to have the price show up on the Item group description name line for the print out in PDF?

  14. Posted August 25, 2016 at 6:20 pm | Permalink

    Hi Charles,

    Yes, you can get control over item group presentation in the PDF if you build in some conditional logic. We also can get full control over the output by using our CRE tool as reference here: http://blog.prolecto.com/2015/06/01/supercharge-netsuite-advanced-pdfhtml-templates/

    Marty

  15. Justin
    Posted April 21, 2017 at 8:04 am | Permalink

    Does anyone have a solution where we have a 1,000 line bundles and enter them in netsuite?

  16. Posted April 22, 2017 at 4:47 pm | Permalink

    Hi Justin,

    Are you trying to constitute the item database? 1,000 lines in an item group is going to be problematic on the Sales Order due to technical / performance reasons. Might you consider a different approach?

    Marty

  17. Posted April 25, 2017 at 10:56 am | Permalink

    Is there another avenue we should take instead of item bundles? We’re trying to get the revenue to report by item, but have the customer just see the name of the solution.

  18. Posted April 25, 2017 at 11:18 pm | Permalink

    Hi Justin,

    The key is to distinguish your sales order / item fulfillment / invoice line work from “customer presentation”. Meaning, you can get the output to the customer you need by modifying the Advanced PDF template. For example, for an invoice, you can collapse the lines and show the item group level in the PDF. We have done it a number of times for our clients.

    Marty

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  1. […] a new client was implemented by a team that may have not read my article, “Understand NetSuite Item Groups vs. Kits to Produce Superior Reporting‘. ¬†The client’s business is heavily dependent on item based sales and management needs […]

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