Choosing the inventory organization for an electronics company

The decision about the hierarchy level at which you should have your inventory organizations defined depends on several factors.

• Can inventory ownership be established by virtue of physical locations?

  Your inventory organization provides a clean segregation of inventory between two inventory organizations. If physical locations can establish the legal ownership of your inventory, this feature may not be necessary to establish that ownership. If you can afford that luxury then your inventory organization can be defined up higher in the organization hierarchy allowing better and expanded inventory views across multiple organizations.

• Does an organization need the ability to be able to source its sales order from another organization?

  Currently, Sterling™ Order Management System Software does not allow order promising and scheduling for the sales orders of one selling organization from any other inventory organization but its own (except when inventory is maintained externally). If organizations belonging to two different legal entities must be able to source from each other, then they must share a common inventory organization.

  This situation can also arise when vendors publish inventory information to organizations. A common inventory organization is designated for all vendors and the organization needing access to vendor inventory. This allows organizations to have visibility to their vendor's inventory also.

  Note that even though an organization can have only one inventory organization, all supply update transactions in Sterling Order Management System Software provides the capability to specify the "Inventory organization" for which the transaction is being carried out. This provides a powerful feature where a vendor can publish their inventory information to multiple inventory organizations at the same time. If the inventory is published into two different inventory organizations for the same product, the vendor must ensure that they have logically segmented their inventory to avoid over allocations.

• Should I model the sales organizations or the legal entities as inventory organizations?

  Inventory organizations can be modeled at the legal entity level without much concern if:

  • Your sales organizations are involved in selling of completely different products
  • The same product is sold by multiple sales organizations but each sales organization has complete ownership of a physical location and thus inventory. Note that access still needs to be controlled through distribution groups to prevent one sales organization from accessing another sales organization's physical location.

    If the same physical location is shared by multiple sales organizations involved in selling the same product and you need clear separation of inventory for each sales organization then the inventory organization must be modeled as each sales organization. In the future, Sterling Order Management System Software may provide enhanced segmentation capabilities to handle such situations.

    It is strongly suggested that you keep inventory organizations at the legal entity level, as this greatly enhances the inventory visibility across organizations.

• Should I model legal entities or the company as inventory organizations?

  Keeping inventory organizations at the company level gives visibility on the company's inventory to all organizations in the company. But to be able to do so, the following criteria should be evaluated.

  • Can inventory in each physical location be tied to a legal entity? If yes, than inventory ownership does not cause problems and does not provide a roadblock. If no, can Sterling Order Management System Software be oblivious to inventory ownership? In some cases this may not be necessary as Sterling Order Management System Software may be used as a pure fulfillment solution with inventory ownership data being maintained in another system.
  • Can a common catalog organization be established between legal entities to ensure that the same item identifiers do not represent two physical products? A common catalog organization serves the function of providing the "global item id" even when two legal entities may name the same physical item differently and in some cases, two separate physical products the same.

If the above questions are answered affirmatively, the company can be modeled as the inventory organization.

Typically, the inventory organization should be modeled at the highest level possible to provide the most visibility across organizations.