Multi-Location Scenarios
Group Average Costing's primary advantage is simplified cost handling across multiple locations. This page covers common multi-location scenarios.
Basic Transfer Between Locations
Location Average vs Group Average
Transfer Comparison: Location Average vs Group Average
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SCENARIO: Transfer 50 units from Location A to Location B
┌─────────────────────────────────────────────────────────────────────────────┐
│ LOCATION AVERAGE (Not Group) │
├─────────────────────────────────────────────────────────────────────────────┤
│ │
│ Before Transfer: │
│ Location A: 100 @ $10.00 = $1,000 │
│ Location B: 60 @ $14.00 = $840 │
│ │
│ Transfer: 50 units from A to B │
│ │
│ After Transfer: │
│ Location A: 50 @ $10.00 = $500 │
│ Location B: 110 @ $12.18 = $1,340 ← Average changes! │
│ (60×$14 + 50×$10) / 110 │
│ │
│ ⚠️ Location B's average changed due to transfer │
│ │
└─────────────────────────────────────────────────────────────────────────────┘
┌─────────────────────────────────────────────────────────────────────────────┐
│ GROUP AVERAGE │
├─────────────────────────────────────────────────────────────────────────────┤
│ │
│ Before Transfer: │
│ Location A: 100 @ $11.50 = $1,150 │
│ Location B: 60 @ $11.50 = $690 │
│ Group Avg: $11.50 │
│ │
│ Transfer: 50 units from A to B │
│ │
│ After Transfer: │
│ Location A: 50 @ $11.50 = $575 │
│ Location B: 110 @ $11.50 = $1,265 │
│ Group Avg: $11.50 (unchanged!) │
│ │
│ ✓ No cost change - just quantity movement │
│ │
└─────────────────────────────────────────────────────────────────────────────┘
Transfer Order Flow
Transfer Order with Group Average
═══════════════════════════════════════════════════════════════════════════════
Step 1: Create Transfer Order
────────────────────────────────────────────────────────────────────────────────
From: Main Warehouse
To: Regional DC
Item: WIDGET-A
Quantity: 200 units
Rate shown: $11.50 (current Group Average)
Amount: $2,300.00
Step 2: Item Fulfillment (Ship from Main Warehouse)
────────────────────────────────────────────────────────────────────────────────
Main Warehouse:
Before: 500 @ $11.50 = $5,750
Ship: 200 @ $11.50 = $2,300
After: 300 @ $11.50 = $3,450
In-Transit:
200 units @ $11.50 = $2,300
Step 3: Item Receipt (Receive at Regional DC)
────────────────────────────────────────────────────────────────────────────────
Regional DC:
Before: 150 @ $11.50 = $1,725
Receive: 200 @ $11.50 = $2,300
After: 350 @ $11.50 = $4,025
In-Transit:
0 units
────────────────────────────────────────────────────────────────────────────────
RESULT: No cost change anywhere - Group Average remains $11.50
Just quantity redistribution between locations
In-Transit Inventory
Tracking In-Transit
In-Transit Location Handling
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When Transfer Order is fulfilled but not received:
┌──────────────┐ ┌──────────────┐ ┌──────────────┐
│ Source │ ──────► │ In-Transit │ ──────► │ Destination │
│ Location │ Ship │ Location │ Receive │ Location │
└──────────────┘ └──────────────┘ └──────────────┘
Example:
────────────────────────────────────────────────────────────────────────────────
Before Shipment:
Main Warehouse: 500 units
In-Transit: 0 units
Regional DC: 150 units
─────────────────────────
TOTAL: 650 units @ $11.50 = $7,475
After Shipment (before receipt):
Main Warehouse: 300 units @ $11.50 = $3,450
In-Transit: 200 units @ $11.50 = $2,300 ← Shows here
Regional DC: 150 units @ $11.50 = $1,725
───────────────────────────────────────────
TOTAL: 650 units @ $11.50 = $7,475
After Receipt:
Main Warehouse: 300 units @ $11.50 = $3,450
In-Transit: 0 units
Regional DC: 350 units @ $11.50 = $4,025
───────────────────────────────────────────
TOTAL: 650 units @ $11.50 = $7,475
✓ Group Average unchanged throughout entire process
Drop Shipment Scenarios
Direct Ship to Customer
Drop Ship with Group Average
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Scenario: Vendor ships directly to customer (no warehouse touch)
SALES ORDER:
────────────────────────────────────────────────────────────────────────────────
Customer: ABC Corp
Item: WIDGET-A (Drop Ship)
Quantity: 100 units
Sale Price: $25.00
Line Amount: $2,500.00
PURCHASE ORDER (linked):
────────────────────────────────────────────────────────────────────────────────
Vendor: Supplier XYZ
Item: WIDGET-A
Quantity: 100 units
Cost: $9.00
Line Amount: $900.00
COSTING IMPACT:
────────────────────────────────────────────────────────────────────────────────
Current Group Average: $11.50
Two possible treatments:
Option A: Use Purchase Cost for COGS
─────────────────────────────────────
COGS = 100 × $9.00 = $900.00
(Drop ship uses actual PO cost, not group average)
Option B: Use Group Average for COGS
─────────────────────────────────────
COGS = 100 × $11.50 = $1,150.00
(Maintains consistency with stocked items)
NetSuite Behavior: Typically uses PO cost for drop ships
since inventory never touches your stock
GROUP AVERAGE IMPACT:
────────────────────────────────────────────────────────────────────────────────
If drop ship affects group average:
Before: 650 units @ $11.50 = $7,475
Drop ship does NOT add to inventory
(Ships directly from vendor to customer)
After: 650 units @ $11.50 = $7,475 (unchanged)
✓ Drop ships typically don't affect Group Average
since inventory never enters your locations
Intercompany Transfers
Subsidiary to Subsidiary
Intercompany Transfer - Group Average
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Scenario: Transfer inventory between subsidiaries (OneWorld)
SUBSIDIARIES:
- US Operations (Subsidiary A)
- Canada Operations (Subsidiary B)
- Shared Item: WIDGET-INTL
BEFORE TRANSFER:
────────────────────────────────────────────────────────────────────────────────
US Operations:
Warehouse-US: 300 units @ $10.00 USD = $3,000 USD
Group Avg (US): $10.00 USD
Canada Operations:
Warehouse-CAN: 200 units @ $12.00 CAD = $2,400 CAD
Group Avg (CAN): $12.00 CAD
INTERCOMPANY TRANSFER: 100 units US → Canada
────────────────────────────────────────────────────────────────────────────────
Transfer Price: $10.50 USD (arm's length)
Exchange Rate: 1 USD = 1.35 CAD
US Side (Sale to Canada):
Revenue: 100 × $10.50 = $1,050 USD
COGS: 100 × $10.00 = $1,000 USD
IC Profit: $50 USD
Canada Side (Purchase from US):
Cost: 100 × $10.50 × 1.35 = $1,417.50 CAD
AFTER TRANSFER:
────────────────────────────────────────────────────────────────────────────────
US Operations:
Warehouse-US: 200 units @ $10.00 USD = $2,000 USD
Group Avg (US): $10.00 USD (unchanged)
Canada Operations:
Before: 200 @ $12.00 = $2,400 CAD
Receipt: 100 @ $14.175 = $1,417.50 CAD (converted)
After: 300 units = $3,817.50 CAD
New Group Avg (CAN): $3,817.50 / 300 = $12.725 CAD
────────────────────────────────────────────────────────────────────────────────
KEY POINTS:
• Each subsidiary maintains its OWN Group Average
• Transfer creates actual sale/purchase (revenue/COGS)
• Currency conversion affects receiving subsidiary's cost
• Intercompany eliminates on consolidation
Intercompany GL Entries
Intercompany Transfer GL Impact
═══════════════════════════════════════════════════════════════════════════════
US OPERATIONS (Seller):
────────────────────────────────────────────────────────────────────────────────
Dr. Intercompany Receivable $1,050 USD
Cr. Intercompany Revenue $1,050 USD
Dr. Intercompany COGS $1,000 USD
Cr. Inventory Asset $1,000 USD
CANADA OPERATIONS (Buyer):
────────────────────────────────────────────────────────────────────────────────
Dr. Inventory Asset $1,417.50 CAD
Cr. Intercompany Payable $1,417.50 CAD
ELIMINATION (Consolidated):
────────────────────────────────────────────────────────────────────────────────
Dr. Intercompany Revenue $1,050 USD
Cr. Intercompany COGS $1,000 USD
Cr. Unrealized IC Profit $50 USD
Dr. Intercompany Payable $1,417.50 CAD
Cr. Intercompany Receivable $1,417.50 CAD
Warehouse Consolidation
Merging Locations
Warehouse Consolidation Scenario
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Scenario: Closing East Warehouse, moving all inventory to Main Warehouse
BEFORE CONSOLIDATION:
────────────────────────────────────────────────────────────────────────────────
Item: WIDGET-A
Main Warehouse: 500 units
East Warehouse: 200 units
West Warehouse: 300 units
────────────────────────────
TOTAL: 1,000 units
Group Average: $11.50
Total Value: $11,500
TRANSFER ORDER: East → Main (All Inventory)
────────────────────────────────────────────────────────────────────────────────
Transfer: 200 units @ $11.50 = $2,300
Ship from East:
East Before: 200 units @ $11.50 = $2,300
East After: 0 units
Receive at Main:
Main Before: 500 units @ $11.50 = $5,750
Main After: 700 units @ $11.50 = $8,050
AFTER CONSOLIDATION:
────────────────────────────────────────────────────────────────────────────────
Main Warehouse: 700 units @ $11.50 = $8,050
East Warehouse: 0 units = $0
West Warehouse: 300 units @ $11.50 = $3,450
───────────────────────────────────────────────
TOTAL: 1,000 units = $11,500
Group Average: $11.50 (unchanged!)
✓ With Group Average, warehouse consolidation has ZERO cost impact
Just a physical movement of goods
Multi-Warehouse Fulfillment
Ship from Optimal Location
Multi-Location Fulfillment - Group Average Advantage
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E-COMMERCE SCENARIO:
- Customer orders 50 units
- Ship from warehouse with best availability/proximity
INVENTORY STATUS:
────────────────────────────────────────────────────────────────────────────────
Main Warehouse (East Coast): 300 units @ $11.50
Regional DC (West Coast): 200 units @ $11.50
Overflow Warehouse (Central): 100 units @ $11.50
Group Average: $11.50
FULFILLMENT OPTIONS:
────────────────────────────────────────────────────────────────────────────────
Customer Location: California
Option 1: Ship from Regional DC (closest)
COGS = 50 × $11.50 = $575.00
Option 2: Ship from Main Warehouse (if DC out of stock)
COGS = 50 × $11.50 = $575.00
Option 3: Split ship (25 from DC, 25 from Main)
COGS = 25 × $11.50 + 25 × $11.50 = $575.00
────────────────────────────────────────────────────────────────────────────────
✓ SAME COGS regardless of shipping location!
Benefits:
• Fulfillment decisions based purely on logistics
• No margin impact from warehouse selection
• Simplified margin analysis
• Consistent pricing/profitability
Consignment Inventory
Consignment with Group Average
Consignment Inventory Handling
═══════════════════════════════════════════════════════════════════════════════
Scenario: Consignment inventory at customer locations
YOUR LOCATIONS:
────────────────────────────────────────────────────────────────────────────────
Main Warehouse: 400 units
Consignment-CustomerA: 50 units (at customer site, you own)
Consignment-CustomerB: 75 units (at customer site, you own)
Total: 525 units @ $11.50 Group Average = $6,037.50
CONSIGNMENT SALE (Customer A uses 20 units):
────────────────────────────────────────────────────────────────────────────────
Trigger: Usage report from Customer A
Create Invoice:
Item: WIDGET-A
Quantity: 20
Location: Consignment-CustomerA
Sale Price: $22.00
COGS: 20 × $11.50 = $230.00
Inventory Impact:
Consignment-CustomerA: 50 - 20 = 30 units
Group Average: $11.50 (unchanged)
REPLENISH CONSIGNMENT:
────────────────────────────────────────────────────────────────────────────────
Transfer: 40 units from Main to Consignment-CustomerA
Main Warehouse: 400 - 40 = 360 units
Consignment-CustomerA: 30 + 40 = 70 units
Group Average: $11.50 (unchanged - just internal transfer)
────────────────────────────────────────────────────────────────────────────────
KEY POINTS:
• Consignment locations are YOUR inventory (not customer's)
• Group Average includes consignment quantities
• Transfers to/from consignment don't affect cost
• Sale occurs when customer uses/consumes
Bin Management
Bins Within Locations
Bin-Level Inventory with Group Average
═══════════════════════════════════════════════════════════════════════════════
Location: Main Warehouse
Item: WIDGET-A
Group Average: $11.50
BIN STRUCTURE:
────────────────────────────────────────────────────────────────────────────────
Main Warehouse
│
├── Receiving Dock (Bin: RCV-01)
│ └── 50 units (just received)
│
├── Primary Storage (Bin: A-01-01)
│ └── 200 units
│
├── Secondary Storage (Bin: B-02-03)
│ └── 150 units
│
└── Shipping Staging (Bin: SHIP-01)
└── 25 units (ready to ship)
Total at Location: 425 units @ $11.50 = $4,887.50
BIN TRANSFERS:
────────────────────────────────────────────────────────────────────────────────
Moving inventory between bins:
From: RCV-01
To: A-01-01
Quantity: 50 units
Result:
• No cost impact
• No GL entries
• Just bin quantity change
• Group Average: $11.50 (unchanged)
────────────────────────────────────────────────────────────────────────────────
Bin management is purely operational - no costing impact with Group Average
SuiteQL: Multi-Location Queries
Inventory by Location
-- Group Average inventory across all locations
SELECT
i.itemid AS item,
l.name AS location,
il.quantityonhand AS qty,
il.averagecost AS group_avg,
il.quantityonhand * il.averagecost AS location_value,
SUM(il.quantityonhand * il.averagecost)
OVER (PARTITION BY i.id) AS total_item_value
FROM
item i
JOIN inventoryitemlocations il ON i.id = il.item
JOIN location l ON il.location = l.id
WHERE
i.itemid = 'WIDGET-A'
AND il.quantityonhand != 0
ORDER BY
l.name
In-Transit Inventory
-- View in-transit inventory
SELECT
i.itemid AS item,
t.tranid AS transfer_order,
t.trandate,
tl.quantity AS in_transit_qty,
il.averagecost AS group_avg,
tl.quantity * il.averagecost AS in_transit_value,
loc_from.name AS from_location,
loc_to.name AS to_location
FROM
transaction t
JOIN transactionline tl ON t.id = tl.transaction
JOIN item i ON tl.item = i.id
JOIN inventoryitemlocations il ON i.id = il.item
JOIN location loc_from ON tl.location = loc_from.id
JOIN location loc_to ON t.transferlocation = loc_to.id
WHERE
t.type = 'TrnfrOrd'
AND t.status = 'TrnfrOrd:B' -- Pending Receipt
ORDER BY
t.trandate DESC
Location Comparison Report
-- Compare inventory distribution across locations
SELECT
i.itemid AS item,
i.displayname,
SUM(CASE WHEN l.name = 'Main Warehouse'
THEN il.quantityonhand ELSE 0 END) AS main_qty,
SUM(CASE WHEN l.name = 'Regional DC'
THEN il.quantityonhand ELSE 0 END) AS regional_qty,
SUM(CASE WHEN l.name = 'Overflow'
THEN il.quantityonhand ELSE 0 END) AS overflow_qty,
SUM(il.quantityonhand) AS total_qty,
MAX(il.averagecost) AS group_avg,
SUM(il.quantityonhand) * MAX(il.averagecost) AS total_value
FROM
item i
JOIN inventoryitemlocations il ON i.id = il.item
JOIN location l ON il.location = l.id
WHERE
i.itemtype = 'InvtPart'
GROUP BY
i.id, i.itemid, i.displayname
HAVING
SUM(il.quantityonhand) > 0
ORDER BY
total_value DESC
Best Practices
Multi-Location with Group Average
| Practice | Benefit |
|---|---|
| Use Transfer Orders | Proper audit trail for movements |
| Track In-Transit | Know where inventory is at all times |
| Consistent Location Setup | Same GL accounts per location type |
| Regular Reconciliation | Verify physical matches system |
| Plan Consolidations | Execute at period-end for clean cutoff |
Common Pitfalls to Avoid
| Pitfall | Impact | Solution |
|---|---|---|
| Manual adjustments without TO | Lost audit trail | Always use Transfer Orders |
| Ignoring in-transit | Understated inventory | Monitor pending receipts |
| Location without GL mapping | Posting errors | Configure all locations fully |
| Backdated transfers | Cost recalculations | Minimize backdating |
Next Steps
- GL Impact - Journal entries for all scenarios
- Migration Guide - Switching costing methods
- Calculation Logic - Deep dive into formulas