When last I found time in my crazy schedule to post I promised to write about setting up the Item Catalog in NetSuite, in some detail. So here it is, ready or not! There are several types of Inventory Items including the single Inventory Item, the Lot Inventory Item, the Matrix Inventory Item, the Serialized Inventory Item and of course the Assembly, Group and Kit Inventory Items. But before we get to the details of setup it is worth our while to spend a minute talking about what is an Inventory Item. Do you have to actually keep an inventory item in the warehouse or store? Well, no you don't. There are cases where it makes sense to set up an item as an inventory item even when you currently drop ship the item. One of the important conversations you should have with your NetSuite Consultant is laying out the vision of the company. What you are doing today may not have any relation to where you see the business in 1, 3 or 5 years. Make sure the NetSuite implementation team understands this. If they set up matrix items as non-inventory items because you currently drop ship, then if your business grows as you expect and you soon have a large warehouse filled with product, you are going to have to rebuild the item catalog, at no small cost to you and your sanity. There is simply no simple way to change the non-inventory matrix items to inventory matrix items. You have to rebuild and this is a time consuming manual effort, one item at a time. So what's the difference between an inventory and a non-inventory item? Simple, the inventory item has 3 accounts associated: Cost of Goods Sold, Income and Asset Account. The non-inventory item has only the Income and the Expense account associated with it. But both Items can be Drop-Shipped or Special Orders. So if you drop-ship today but warehouse tomorrow, set up your Items as Inventory items and save yourself a lot of headache in the future. And if you drop ship an Inventory Item there is no negative effect on the books since it is in an out of inventory as fast as you can save the transactions. There are a couple of other things I want to talk about in relation to Inventory Items. First, what is a matrix? A lot of customers are not real familiar with this term, so let's spend just a moment on it. A matrix item is simply an item for which the customer must select two or more attributes. for example, they may have to select color, shape and size. When you require more than one attribute to identify exactly what the customer purchases then matrix items are your best bet. Setting up the matrix can be a bit tricky. You must set up three separate components first, including a custom List of Values, a custom Item Field and a custom Transaction Item Option. Finally these options are attached to the Item. As I mentioned above, you can sell an Item with one or more options but it can be challenging when you have more than two. For example, if you offer blue, green and red in colors and rectangle and oval in shape, and 5' x 6' and 7' x 9' in length sizes, the system will create 3 x 2 x 2 items, 12 in all plus the parent. Now if you have one Item that does not have ovals in red then you can always delete those child items - the ones that are oval and red - during the matrix generation; however, the combination will still appear as a valid item on the webstore until the customer goes to check out, and then they receive an error. So setup matrix items with care, but they enable you to generate the items that you need to sell and keep them really well organized. The other thing I would like to mention is the importance of both selecting the correct costing method at the outset and doing an Inventory Adjustment also to register your actual physical inventory at the end of implementation, just before go-live. Once you select a costing method on an inventory item you are stuck with it. The field cannot be changed. So what happens if you select, for example, Average, as the costing method? Each time you purchase inventory items you will add them to inventory along with their cost. As you sell the items the system will calculate the cost of goods sold by dividing the total number of items by the total cost of the same items. When implementing NetSuite keep this in mind because if you do not do an inventory adjustment before go live the system will not have a way of calculating COGS. You can adjust the inventory on the item itself, but more likely it will be easier to navigate to Transactions >> Inventory >> Inventory Adjustments. As you can see, when talking about the item catalog it does not take long before the post gets a little long. I'll save the rest for tomorrow. | 
