This article is relevant if you desire insights into NetSuite’s Inventory ledger, lot and serial numbers, bins and inventory details.
Background
Navigating NetSuite’s inventory ledger can sometimes be perplexing, especially when attempting to construct detailed inventory reports and saved searches. Understanding NetSuite’s database structure is crucial for addressing complex inventory queries.
One of our most requested offerings is the stock ledger sublist bundle as part of our Labs offering, provided complimentary to any NetSuite customer upon request. This accelerator bundle is instrumental in elucidating the fluctuations in inventory quantity and value over time. For further details, refer to our 2020 article, Explain NetSuite Inventory Quantity, Value and Average Cost Over Time. However, it’s worth noting that the genesis of these inventory insights can be traced back to my 2015 article, Solving the NetSuite Cumulative Saved Search Tally Challenge, where I tackled the challenge of accumulating saved search tallies in NetSuite, laying the groundwork for the comprehensive understanding of inventory movements we present today.
NetSuite’s inventory ledger intricacies often involve its subrecord system, which becomes relevant when dealing with Bins, Serial Numbers, or Lot tracking. Through numerous client consultations, we’ve identified a common need for a deeper comprehension of NetSuite inventory management and costing mechanisms. This article aims to demystify these inventory relationships, offering clearer insight into the workings of NetSuite’s inventory system.
NetSuite’s Base Concept for an Inventory Ledger
NetSuite’s approach to managing an Inventory Ledger is particularly intriguing, mirroring the principles of a General Ledger by being entirely based on real-time transactions. For a closer look, see my 2022 article, Best Practices for Modeling the General Ledger in NetSuite. For business users, the Inventory Ledger isn’t represented by a single, tangible object. Instead, understanding your current inventory values, both in quantity and cost, requires aggregating transaction data from the inception (starting) point up to your current moment of interest.
NetSuite provides immediate visibility of stock values within the inventory item ledger, but it’s crucial to recognize that these figures are summaries of all relevant transactions linked to the corresponding General Ledger inventory accounts and item records. Grasping that these stock values are cumulative allows you to construct your posting-based transaction saved searches, enabling you to compile and review these aggregates at any given point in time, thus offering a dynamic snapshot of your inventory’s financial standing.
Click the related image to help better understand the base inventory concept.
Inventory Commitment Concepts
Proper configuration of the NetSuite system and adherence to robust inventory management practices are crucial to prevent negative (or underwater) inventory situations. Many times, our firm is working with clients who are learning how to hold a perpetual inventory. It’s easier than it sounds. It’s crucial to understand that accurate costing becomes unreliable with negative inventory. To uphold the integrity of a perpetual inventory system, it’s essential to avoid negative inventory, a discussion outlined in NetSuite’s Help guidance on “Avoiding Underwater Inventory.” I recommend reading the documentation carefully.
To avoid negative inventory, a key approach is implementing Item Commitments. This method reserves inventory through non-posting (planning) transactions, ensuring that there’s enough stock for upcoming posting transactions, such as item fulfillments, thus maintaining a positive inventory level.
However, navigating Item Commitments in NetSuite can be complex. It’s vital to recognize that these commitments interact with non-posting records like Sales Orders and Work Orders, planning the inventory allocation for future transactions. Only with a commitment in place can you confidently proceed with a posting transaction that will utilize the reserved inventory. Understanding Item Commitments involves recognizing that their management is indirect; you don’t directly assign commitments to transactions but allow NetSuite’s system to manage the allocation, ensuring inventory levels remain positive. Finally, it is possible to craft transactions, such as invoices, directly without a sales order planning record. In these cases, the item commitments are in play — the record will not save unless there is inventory available and uncommitted so that inventory can be simultaneously committed and consumed in one operation.
Advanced NetSuite Inventory Management Insights: Bins, Lots, Serial Numbers, and Inventory Detail
Beyond the foundational aspects of managing NetSuite’s inventory ledger, as discussed above, more complex scenarios can now be navigated through the use of subrecords. These subrecords can be more opaque; thus, consider the following foundational concepts:
- NetSuite Bins: Think of bins as subdivisions within a physical location, helping you organize inventory more granularly. While bins are commonly used to store smaller items in trays on a rack, they can be creatively applied. For example, we set up a “Drivers” location for a goods delivery service client, where each bin represented a different delivery vehicle; all the while, we could see how much inventory we had in drivers’ hands at any time.
- Inventory Numbers – Lots and Serial Numbers: Both lots and serial numbers are tied to inventory items, with the main distinction being the quantity factor. Serial numbers are unique by item and are limited to a quantity of one, while lot numbers can encompass any positive quantity, including fractions. These identifiers, known as Inventory Numbers, carry descriptive details like the serial or lot number and additional information such as expiration dates. Our firm often links these Inventory Numbers to custom records to enhance storytelling and improve reporting capabilities. For comprehensive lot genealogy reporting, our clients greatly prefer the custom record approach for its enhanced intuitiveness.
- Costing for Lots and Serial Numbers: Costing can be assigned at the lot or serial number level, which is particularly useful for high-value items like jewelry, where serial numbers facilitate specific identification costing methods. Lot numbers, on the other hand, are suited for batch costing. It’s crucial to weigh the administrative overhead of using lots or serial numbers, especially if considering standard or average costing methods. If you use non-specific costing methods, there are alternative, less burdensome ways to achieve serialized and lot tracking outside of NetSuite’s native functionalities. Our firm often discusses alternatives with clients to ease the record administration. I have written a number of articles about lots that may be of interest.
- Inventory Detail (Assignment): NetSuite also provides an Inventory Detail record, which is a junction between transaction lines (the backbone of the inventory ledger), and both Bins and Inventory Numbers. This record is central when working with NetSuite’s inventory assignment pop-up, which some users find challenging to use in practice. To streamline this, our firm often automates assignments based on predefined defaults and rules, enhancing inventory management practices.
For a clearer visualization of how these components interact and to grasp their relationships more fully, click the image to see more information and better understand the relationship between the objects.
Inventory Commitment Allocation and Lots/Serial Numbers
The Inventory Commitment system in NetSuite operates in a nuanced manner, requiring an understanding beyond mere item assignments. It’s a common misconception among new NetSuite learners that assigning a Lot or Serial Number equates to an inventory commitment. It seems like it should. In reality, such assignments do not guarantee an item has been committed. The commitment must be verified at the transaction level to ensure accuracy. Discrepancies between the assigned quantity in a Lot Number record and the actual committed quantity can lead to confusion and frustration, as these mismatches aren’t readily apparent within NetSuite’s standard saved search functionality. Furthermore, they are often discovered when you try to save a record and then receive an error — not fun.
To bridge this gap, SuiteQL has introduced a powerful capacity: the InventoryNumberInventoryBalance record. This record object provides more in-depth insights into the specifics of inventory commitments, offering clarity on the details that standard searches might miss. Leveraging this capability can significantly enhance visibility for users navigating these intricate records. Click the image to see the results of the SQL and the new values that are available.
For clients requiring robust, scalable business processes, we recommend automating these complexities through our license-free Record State Manager framework. This approach, detailed in my 2018 article on building scalable NetSuite sales order practices, optimizes procedural efficiency which then allows teams to focus on truly exceptional cases, thereby increasing operational throughput.
Optimizing NetSuite Operations through Expert Guidance and Best Practices
Leveraging NetSuite to its full potential requires a solid understanding of inventory and record management fundamentals. Our firm’s Operations Practice stresses the importance of meticulous planning and the establishment of robust operational protocols to unlock NetSuite’s capabilities. We often remind our clients that success with NetSuite isn’t automatic; while the platform adeptly models transactional scenarios, its effectiveness is contingent upon the strength of your operational practices. Weak practices can lead to frustration and dissatisfaction.
Fortunately, there are proactive measures you can take. Our Operations Practice frequently assists clients in delineating their processes and leading them to best practice adoption. Recognizing that building proficiency takes time, our firm advocates for a systematic approach that includes planning, modeling, prototyping, and training. This method not only fosters skill development but also ensures a smoother transition to optimized operations. Additionally, refining reports and implementing alerts can significantly enhance an organization’s ability to maintain oversight and control.
If you found this article relevant, feel free to sign up for notifications to new articles as I post them. If you are ready to tackle your inventory practices, let’s have a conversation.
Marty Zigman
Holding all three official certifications, Marty is regarded as the top 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 30 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.
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