Best Practices : Inventory, Location and Multi-Location Inventory (MLI) features

The Inventory feature allows users to manage and track the items and services the company buys and sells in the course of their operations. Specifically for Inventory and Assembly item types, this feature enables users to monitor its quantity and value; where the latter will be vital in the calculation of its profitability since this will be converted to Cost of Goods Sold once the item is sold.

At the time of implementation, some customers may not have multiple locations/warehouses to store and track their inventory, but will enable the Location feature for classification purposes (like the need to determine which outlet store/branch should be associated to transactions involving procurement and sales).

However, should the same customer decide to enable MLI feature after acquiring additional warehouses, with the intent of tracking quantity and value of inventory/assembly items per location, the customer may encounter the following implications below:

1. The quantity and valuation of their Inventory and Assembly items shown in their inventory reports will erroneously include the quantity distributed per location plus the running balances of quantity and value from transactions with locations prior to enabling MLI (supposedly intended for classification purposes only).

Note: Users should contact NetSuite Customer Support for assistance in filing an issue to resolve the above implication. Also, note that the misstated quantity and value is only displayed on inventory reports, where the correct quantity and value is still shown on item records and on customer's financial reports.

2. Items with negative quantity as of date of enabling MLI (caused by selling the items underwater, among other reasons) cannot be used on transactions because these items cannot be distributed due to its negative quantity state. Note that after enabling MLI feature, distributing the items via Inventory Distribution page is a requirement before the user can use the same item on future transactions (see SuiteAnswers article titled "Distribute Items with Negative Quantity on Hand").

Hence, it is considered a best practice to enable Multi-Location Inventory feature immediately after enabling the Inventory feature to avoid these implications. Even if the user does not intend to acquire separate warehouses or there is no need to track inventory quantity and values per location yet, the user may still decide to create just one location under Setup>Company>Locations. With this practice, should the user decide to enable MLI in the future, there will be no distribution implications since all items created after enabling MLI feature no longer requires an Inventory Distribution.