External Warehouses and Cost Layers
When managing inventory through external warehouses, stock levels are automatically synchronized. However, cost information for these externally managed items might not always be immediately available. This guide explains how cost layers and variances work in this scenario.
Cost Layers
A cost layer represents the price associated with a specific quantity of stock.
For items in external warehouses, cost layers are created based on known costs from logged receipts or purchase orders (POs).
If an external warehouse reports stock quantities differing from financial records, a variance is recorded.
Variance Layers
A variance layer represents discrepancies between the physical stock count at the warehouse and the system's financial stock count.
These variance layers are valued at $0, indicating uncertainty or temporary discrepancies.
Example Scenario
Step 1: Initial Sync
Your external warehouse reports 500 units.
Your financial system currently recognizes 400 units with valid costs.
A variance layer of 100 units (500 - 400) is created at a $0 cost.
Step 2: Identifying and Correcting Variances
You realize at month-end that a PO for 100 units was never logged.
You create and log a receipt for the missing 100 units.
Temporarily, your system stock increases by 100, now showing 600 units (500 initial + 100 receipt).
Step 3: Next Stock Sync
During the next automatic stock synchronization, the external warehouse again reports 500 units.
The temporary variance layer of 100 units at $0 is resolved and removed, aligning your financial system back to 500 units.
The final stock count and financial count are now accurately synchronized at 500 units, all with valid costs.
This ensures accurate inventory valuation and seamless integration with external warehouse stock management.