An inventory organization represents an organization level in the organization hierarchy at which all inventory information is consolidated.
An inventory organization provides any of the following functions:
- Inventory identification for a product. Different organizations could have different product identifiers for the same inventory item. Inventory organization provides a mechanism to rationalize these product identifications into a single nomenclature across multiple organizations. This allows a consistent global view of a product across organization hierarchies and enables better decision making for the business.
- Establishes ownership of inventory when a single physical location is shared across multiple organizations without having the need to create multiple logical locations to establish the inventory ownership (for example, 3PL scenarios)
- Inventory separation. All organizations that are defined as part of the same inventory organization have visibility to inventory of all other organizations that are part of this inventory organization. This allows better visibility across organizations but can also create data security and other issues. An inventory organization creates a separate silo of inventory definitions in the system. This silo cannot be accessed by organizations belonging to a different silo and thus provide a complete segregation of inventory.
All organizations must either be defined as an inventory organization or must designate another organization as their inventory organization. An inventory organization designated for an organization should share the same catalog organization. This ensures that appropriate cross-referencing can be made to arrive at the inventory identification of an item. This also ensures that two separate physical items do not create a situation where they have the same inventory identifier within the inventory module and thus can't be differentiated.
Also note that, if the sales organization legal entity is not the same legal entity associated with the physical location from where the product is being sourced, Sterling Order Management System Software has the capability to automatically generate a purchase order (created as chained order) to ensure proper inventory ownership transfers. This is done even though the inventory organization is common. In some cases, this is not desirable - as in the case of a 3PL where the physical location is owned by the 3PL organization and does not indicate real inventory ownership. This can be prevented in one of the following two ways:
- Designate a node as a 3PL node to suppress such chained order creations.
- Flag the owner organization of the node as "chained order not required".
Typically, the legal entity in an organization hierarchy is designated as the inventory organization for all subsidiary organizations.