Item Types in NetSuite

SuiteFoundation Series

What do you know about item types in NetSuite? Understanding the item types in NetSuite—what they are, how they are different from one another, how they impact the G/L, and how they impact inventory—is crucial to ensuring that you are using them accurately and well.

What is an Item Type?

First, we need to define what we mean by “item type.” When we talk about item types in NetSuite, we are talking about different categories of things a company buys and sells. NetSuite has unique record types for each of those categories. So when we talk about “item types” in NetSuite, we are referring both to the categories of items as well as to the item record types that represent those categories.

Key Item Types

NetSuite has about twenty different item types (see the complete list here). But don’t worry! We’re going to cover only eight of them: inventory, non-inventory, serial numbered, service, group, kit/package, assembly, and matrix. The SuiteFoundation study guide highlights these eight item types as the key types to know for the SuiteFoundation exam. To better understand these key item types in NetSuite, we’re going to break them down into four categories: physical items, service items, clustered items, and matrix items. Let’s dive in!

Physical Items

First, we’ll look at three physical items. These items are physical because they exist as real objects (as opposed to, say, a service item).

Inventory

A large portion of any company’s item records is going to be inventory items. Inventory items are physical items that a company sells to its customers. On an inventory item record, you can see exactly what the physical item is, how much of that item is in your inventory, and the financial value of the item.

As you can imagine, inventory item records definitely have an impact on a company’s finances. NetSuite automatically factors the value of any current inventory on your balance sheet and reflects the markup of inventory items on your income statement. In any business, inventory is constantly in flux. As a result, inventory item records help to keep your Cost of Goods Sold, income, and asset accounts up-to-date and accurate.

Non-Inventory

Non-inventory items are another physical item type. NetSuite delineates the following three categories of non-inventory items: non-inventory items for sale, non-inventory items for purchase, and non-inventory items for resale.

Non-inventory items for sale are items that are not housed in your inventory and cannot be added to a purchase order, but these items can be added to sales orders, cash sales, or invoices.

Non-inventory items for purchase are physical items that your company needs to run its various operations, but these aren’t items that you will sell to your customers. For example, office equipment and office supplies would be non-inventory items for purchase.

And non-inventory items for resale are items that your company would both purchase and sell, but they never enter your inventory. Drop ship items would fall into this category. Drop-ship items are items that you sell to your customer, but they go directly from your vendor to your customer, without ever passing through your inventory.

Serial Numbered

A third key physical item type are serial numbered items. This category is similar to inventory items, just more specific. Like inventory items, serial numbered items are physical items that your company holds in inventory. Serial numbered items, however, each have a unique serial number in order to keep track of each individual item as it enters and leaves your inventory. Inventory like laptops or cell phones would need to be serial numbered. When you create a transaction for a serial numbered item, you would put the serial number of the item in the Serial/Lot Number field to connect the exact item with the transaction.

Service Items

Though they are a specific item type, service items belong in their own category. A service item describes non-tangible services that your company buys or sells, like cleaning or software consulting. Service item records in NetSuite are necessary in order to track things like time and billable hours. As with non-inventory items, there are three categories of service items: services for sale, services for purchase, and services for resale.

Services for sale are services that the employees of your company provide for your clients. You don’t buy these services first, because the services are performed by your own employees. You only sell the service to your clients. Services for purchase, on the other hand, would be services that your company purchases from another business without intending to sell the service. For example, maybe you pay a cleaning company to clean your office once a week. This would be a service that you only purchase. A service for resale would be a service that you buy from an outside source and then sell to your customers.

Clustered Items

Sometimes, you may need to stock and sell items in specific combinations. These types of items are called clustered items, and the following three item types are the cluster combinations that NetSuite provides.

Group

First, there are item groups. With an item group, multiple individual items are all bought or sold together. Each individual item has its own inventory item record, though. The individual items (rather than the group) would be marked as received, fulfilled, and stocked. But on sales orders and purchase orders, you would have the option to select any existing item group records to add them to the transaction. With item groups, the price of the entire group depends on the prices of the individual components. The value of an item group is that it can save you time creating transactions for items that are frequently bought or sold together.

Kit/Package

Second, there are kit/package items. As with item groups, kit/package items are made up of other items (whether inventory, service, other kits, etc.) that your company may also be selling individually. The difference is that a kit/package item is seen as more of a unit than an item group. Unlike item groups, the price of a kit/package item is not dependent on the prices of the individual components. So a company can set different price levels for the kit, which allows for things like providing discounts to customers who purchase the kit as opposed to buying the items individually. With kit/package items, the individual items are tracked in the inventory rather than the entire kit. However, revenue is posted for the entire kit after a sale, rather than posting for the individual items.

Assembly

The final clustered item type is assembly. Assembly items are individual items that are made up of multiple components. Your company would purchase the components individually and assemble those components to create a new item for sale. For assembly items, the inventory needs to include both the individual components and the final assembled items. This ensures that you always know exactly how many fully-assembled items are available for you to sell as well as how many un-assembled items you have the materials for. Then, as you assemble more of these items, NetSuite will increase the number of assembled items and decrease the amounts of the individual components in your inventory.

Matrix Items

The final item type we’ll look at is matrix items. On a matrix item record, you would select a parent item along with subitems. Matrix items enable you to track inventory when there are different options available, like size and color, for the same inventory item. For example, if you sell clothes, you may have a shirt that can be any one of three colors and any one of three sizes. Instead of creating a different inventory item for each color and size combination of the shirt, you could simply create a matrix item record. A matrix item record can be created for different types of items, such as inventory, non-inventory, service, and serialized items. Only item groups and kit/package items cannot be on a matrix item record.

Conclusion

Unfortunately, we’ve only begun to scratch the surface for item types in NetSuite. But hopefully this article has provided a solid foundation for understanding some of the major item types. If this post helped you understand NetSuite better, be sure to subscribe to our mailing list below to receive future posts directly in your inbox once a week!