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:
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 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:
Typically, the legal entity in an organization hierarchy is designated as the inventory organization for all subsidiary organizations.