Some tips on getting per-location costing in Cin7 Core for more accurate margins.
Cin7 Core is a cloud-based inventory system which is currently GrowthPath’s default recommendation for general purpose cloud ERP systems.
Cin7 Core has a well-thought-out approach to stock valuation. From the beginning Cin7 Core was designed to give users the chance to activate batch and serial number tracking for receipts, and Cin7 Core decided to fully support this with FIFO product costing per batch or serial. In fact, Cin7 Core uses FIFO costing as its costing method for standard stock as well; the common choice is weighted average. FIFO and weighted average are the same over time.
Like its competitors, such as Unleashed, Trade Gecko and Cin7 Omni, Cin7 Core allows multiple locations, but it does not keep costs per location.
Imagine that you are receiving stock into an Australian warehouse and a New Zealand warehouse from a Chinese supplier. You may have the same FOB price, but different landed costs. Cin7 Core handles landed costs very well and they are practical to use, so you would like to see different costs at the two different sites. However, if you have a standard product without batch or serial, the FIFO calculation is maintained across all locations: the next item you sell will have the same cost price regardless of the warehouse it is shipped from. Not what we want.
But if you activate batch costing for this product, you can solve the problem. When you receive goods, you provide a batch number. You can leave it blank, and Cin7 Core will create a batch code based on the PO number. If you apply landed costs to the order, they are also tracked against the batch. Because the batches are stored by location, shipments from the NZ warehouse will only involve batches received there. Auto-pick is smart enough to manage that if you don’t want to manually choose batches.
With this approach, costing per warehouse is quite easy, and you will have more meaningful margins. The one thing we can’t do with this is keep NZ stock in NZD: if AUD is the base currency of the system, stock with supplier and third party costs in non-AUD is converted to AUD and only AUD. There is no solution.
A note about Cin7 Core’s landed costs: costing is updated retrospectively, so with Cin7 Core, you can receive and ship goods without waiting for supplier and third-party invoices, and still get the benefit of landed costing.