For organizations that buy and sell physical goods, being able to efficiently and accurately move inventory within warehouse(s) is critical. Knowing exactly how many units of each product you have in a particular location and/or bin drives both purchasing and sales activity, so it is extremely important that changes to inventory are recorded correctly and in a timely manner.Using NetSuite as your ERP software introduces a number of processes designed to help maintain inventory accuracy, including a few different methods for transferring inventory. In this article, I’ll discuss the different options for moving inventory without your NetSuite environment and share a few practical use cases to help you decide which processes best align with your needs.
Inventory Transfers
Inventory transfers are designed to move inventory from one location to another, including the ability to draw inventory from and put inventory into individual bins should they be enabled in one or both locations. The two locations must be distinct, which means that inventory transfers cannot be used to move stock between bins at the same location. When you enter an inventory transfer, the inventory is immediately withdrawn from the “From Location” and added to the “To Location” without any intermediary steps in between.
Since this is an instantaneous transaction, it is ideal for moving inventory out of or to a virtual location that is physically in the same location that is fulfilling/receiving the inventory, such as a quarantine location that is used for holding inventory during an inspection process. I generally advise against using inventory transfers to move inventory between distinct physical locations, because the inventory will display inaccurately at either the fulfilling location or receiving location while in transit (depending on whether you enter the transfer before or after receipt).
Transfer Orders
Transfer orders function similarly to inventory transfers in that they move inventory between locations and support bin-level quantities, however they introduce separate steps for fulfillment and receipt. When the transfer order is initially entered, it has no impact to inventory (aside from displaying as committed in the “From Location”). When the items are prepared for transfer, a user enters an item fulfillment. Depending on the configuration of your NetSuite environment, this will either follow a single-step or multi-step (pick/pack/ship) fulfillment process. Once a fulfillment reaches the “Shipped” state, inventory will not be available at either the fulfilling or receiving location. Instead, it will be shown as “In Transit” from the “From Location” and “On Order” at the “To Location.” Upon reaching the receiving location, a user enters an item receipt to accept the inventory and move it into stock. At this point, it will no longer appear as “In Transit” or “On Order,” but will instead be included in the “On Hand” inventory at the “To Location.”
Because the transfer order process accounts for inventory that is in transit, it is ideal for transferring inventory between distinct physical locations. The most common use case for a transfer order is to replenish stock at one warehouse with stock from another warehouse, though you can also use a transfer order to move inventory between a virtual location and a physical location (such as the quarantine scenario mentioned previously) if you want to enforce a systemic, multi-step process.
Intercompany Transfer Order
Intercompany transfer orders function identically to transfer orders, however they allow inventory to be moved between locations that exist within different subsidiaries. This is ideal for organizations that need to move inventory from one distinct business entity to another as a result of an acquisition, restructuring, or general business process.
Bin Transfer
A bin transfer is designed to move inventory between bins within a single location. Unlike inventory transfers and transfer orders, bin transfers can ONLY move inventory within one location and cannot be used to move inventory between bins at different locations. When a bin transfer is entered, inventory is immediately moved between bins with no intermediary steps (similar to an inventory transfer). There is currently no multi-step process for moving inventory between bins.
Bin transfers are typically used as part of general warehouse management, as inventory is moved from storage or overstock bins to primary picking bins. Because the inventory movement is immediate, it is important that these are entered as close to the time that the inventory is physically moved as possible in order to prevent discrepancies.
As you can see from the processes described above, you have considerable control over how and when you move your inventory when you use NetSuite as your distribution ERP. Do you have questions about how to best manage your inventory in NetSuite? Contact Concentrus today to discuss your needs with one of our NetSuite experts.
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