What Are Inventory Cost Layers?
Inventory cost layers refers Propago’s system for tracking unit costs of a SKU across inventory transactions. Each time a SKU is received into a warehouse location, you can specify the unit cost for that batch, enabling precise cost tracking over time.
The system records and maintains unit cost information associated with each inventory transaction. We call this information “inventory cost layers.” Inventory cost layers give you transparency into your true inventory costs.
- You have 100 shirts at Location AA, each costing $10.
- You receive 100 more shirts at the same location, but this time, the cost is $15 per shirt.
- Upon receiving the new batch, the system prompts you to update the overall unit cost of this SKU. You have several options:
- Average the unit cost, resulting in 200 shirts at $12.50 per shirt.
- Maintain the previous unit price, keeping 200 shirts at $10 per shirt.
- Update to the new unit price, setting 200 shirts at $15 per shirt.
- Store the new inventory in a different location, creating a new cost layer for better tracking.
Benefits to You
- Maintain precise records of inventory valuation.
- Compare changes in unit costs over time using reports.
- Use cost layer data to make informed purchasing and pricing decisions.
How It Works
By leveraging inventory cost layers, you and your clients can achieve greater financial transparency, optimize cost management, and improve overall inventory efficiency.