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Location-Based Tracking

Audience: Warehouse managers, operations team, system administrators

Overview​

Location-based tracking determines whether inventory quantities are tracked separately for each location or combined across all locations. This business rule affects how you find items, move stock, and report inventory.

Key Question: Do we need to know exactly where items are, or just how many total we have?

What is Location-Based Tracking?​

Definition​

A setting that determines how inventory is tracked:

  • Track by Location (Enabled): System maintains separate quantities per location
  • Not Track by Location (Disabled): System maintains only total quantity across all locations

The Two Tracking Methods​

Method 1: Track by Location (Enabled)​

Setting: Location tracking enabled for an item

Behavior:

  • Separate inventory record per location
  • Must specify location for every transaction
  • Can query: "How much at Location X?"

Example:

Item: Lavender Perfume 100ml

Main Warehouse:    500 bottles
LA Warehouse:      300 bottles
NY Warehouse:      200 bottles
─────────────────────────────
Total:           1,000 bottles

Query Options:

  • "How much at Main Warehouse?" → 500
  • "How much company-wide?" → 1,000

Method 2: Not Track by Location (Disabled)​

Setting: Location tracking disabled for an item

Behavior:

  • Single inventory record for entire company
  • Location is optional/ignored in transactions
  • Can only query: "How much total?"

Example:

Item: Sample Bottle

Total Company:   1,500 bottles
(location doesn't matter)

Query Options:

  • "How much do we have?" → 1,500
  • "Where is it?" → Cannot answer (not tracked)

When to Track by Location​

Scenario 1: Multi-Warehouse Operations​

Situation:

  • 3 warehouses (Chicago, LA, New York)
  • Each serves different region
  • Need to know which warehouse has stock

Decision: Track by location ✓

Benefit:

  • Ship from nearest warehouse
  • Transfer between warehouses when needed
  • Regional inventory planning

Example Query: "Can we fulfill NYC order from NY Warehouse?" → Check NY warehouse stock

Scenario 2: Different Storage Conditions​

Situation:

  • Some items in climate-controlled area
  • Some in regular storage
  • Need to track separately for quality

Decision: Track by location ✓

Locations:

  • Cold Storage (5°C)
  • Room Temperature Storage

Benefit: Ensure items stay in correct environment

Scenario 3: High-Value Items​

Situation:

  • Expensive perfumes ($500+ per bottle)
  • Need tight control
  • Security requirements

Decision: Track by location ✓

Benefit:

  • Know exactly where each bottle is
  • Audit trail of movements
  • Security accountability

Scenario 4: Retail + Warehouse​

Situation:

  • Warehouse holds bulk stock
  • Retail stores have display inventory
  • Need to manage transfers

Decision: Track by location ✓

Benefit:

  • Transfer stock from warehouse to stores
  • Know when stores need replenishment

When NOT to Track by Location​

Scenario 1: Virtual/Digital Items​

Situation:

  • Software licenses
  • Digital downloads
  • No physical location

Decision: Don't track by location ✗

Why: Location is meaningless

Scenario 2: Low-Value, High-Volume​

Situation:

  • Inexpensive items (sample bottles)
  • Large quantities
  • Location not critical

Decision: Don't track by location ✗

Benefit: Simpler transactions, less data entry

Example: 10,000 sample bottles—don't care where, just how many total

Scenario 3: Single Location Business​

Situation:

  • Only one warehouse
  • No plans for expansion
  • No internal zones/areas

Decision: Don't track by location ✗

Why: Only one location—no need to track separately

Scenario 4: Fungible Goods​

Situation:

  • Identical items, any unit is same as another
  • No quality differences by location
  • Just need total count

Decision: Don't track by location ✗

Example: Generic packaging materials

Real-World Examples​

Example 1: Track by Location (Perfume Distribution)​

Item: Rose Eau de Parfum 100ml Setting: Track by location ✓

Inventory:

Main Distribution Center:  800 bottles
LA Regional Warehouse:     400 bottles
NYC Regional Warehouse:    300 bottles
Flagship Retail Store:      50 bottles
───────────────────────────────────────
Total:                   1,550 bottles

Use Cases:

  • Customer in LA orders 100: Ship from LA Warehouse (closest)
  • NYC low stock: Transfer 100 from Main Distribution
  • Audit: Count each location separately

Example 2: Don't Track by Location (Sample Bottles)​

Item: Sample Bottle 5ml Setting: Don't track by location ✗

Inventory:

Total Company: 5,000 bottles
(distributed across various locations, don't track specifically)

Use Cases:

  • Give away 50 samples: Just record -50 total
  • Receive 1,000 more: Just record +1,000 total
  • Simple tracking: No need to know "where"

Configuration Options​

Item-Level Setting​

Most systems: Location tracking is set per item.

Configuration:

  • Item: Lavender Perfume 100ml
  • Track by Location: Yes/No

Benefit: Different policies for different items

Example:

  • Finished goods: Track by location (need to manage distribution)
  • Office supplies: Don't track by location (not critical)

Impact on Transactions​

With Location Tracking Enabled​

All transactions must specify location:

Purchase Receipt:

  • Received: 100 bottles
  • Location: Receiving Dock ← Required

Sales Shipment:

  • Shipped: 50 bottles
  • Location: Main Warehouse ← Required

Stock Movement:

  • From: Main Warehouse ← Required
  • To: Retail Store ← Required

With Location Tracking Disabled​

Location is optional/ignored:

Purchase Receipt:

  • Received: 100 bottles
  • Location: (not tracked)

Sales Shipment:

  • Shipped: 50 bottles
  • Location: (not tracked)

Stock Movement:

  • Not applicable (can't move between locations if not tracking!)

Reporting Differences​

Track by Location: Detailed Reports​

Inventory by Location - Rose Perfume 100ml

Location                  Quantity    Value
──────────────────────────────────────────────
Main Warehouse               800    $40,000
LA Warehouse                 400    $20,000
NYC Warehouse                300    $15,000
Flagship Store                50     $2,500
──────────────────────────────────────────────
Total                      1,550    $77,500

Drill-down capability: See inventory by location

Don't Track by Location: Summary Only​

Inventory Summary - Sample Bottles 5ml

Total Quantity:  5,000 bottles
Total Value:     $2,500

No drill-down: Can't see location breakdown

Business Rules​

Rule 1: Policy Is Per Item​

Each item can have its own location tracking setting.

Example:

  • Finished Perfumes: Track by location
  • Sample Bottles: Don't track by location
  • Raw Materials: Track by location

Rule 2: Cannot Change with Existing Inventory​

Scenario: Item has inventory at multiple locations

Cannot: Change from "track by location" to "don't track"

Why: Would lose location information

Solution: Zero out inventory, change setting, re-enter inventory

Rule 3: Stock Movements Require Location Tracking​

Cannot create stock movements if item doesn't track by location.

Why: Movement is "from Location A to Location B"—meaningless if not tracking locations!

Common Questions​

Q: Can I track some locations but not others?​

A: No. Either track all locations or none.

Workaround: Create separate items for tracked vs untracked

Q: What if I want to track buildings but not bins?​

A: Use location hierarchy.

Example:

  • Track: Building level (Main Warehouse, LA Warehouse)
  • Don't track: Bin level (Bin A-01, Bin A-02)

Setup: Create locations at building level only

See: Location Hierarchy

Q: Can I switch from not tracking to tracking later?​

A: Yes, but:

  1. Must have zero inventory first
  2. Change setting
  3. Re-enter inventory with locations

Or: Create new item with tracking enabled, discontinue old item

Q: Does this affect cost?​

A: Not directly, but:

  • Track by location: More data entry, more complex
  • Don't track: Simpler, faster transactions

Choose based on business need, not cost alone

Best Practices​

1. Default to Tracking by Location​

Recommendation: Unless you have a reason not to, track by location.

Why:

  • More flexibility
  • Better visibility
  • Easier to add locations later

Exception: Low-value, non-critical items

2. Match Business Operations​

If you:

  • Have multiple warehouses → Track by location
  • Transfer stock between sites → Track by location
  • Only care about total → Don't track

Align setting with how you actually work

3. Consider Future Growth​

Today: One warehouse Future: May expand to 3 warehouses

Decision: Track by location now

Why: Avoids migration pain later

4. Group Similar Items​

Consistency:

  • All finished goods: Same tracking policy
  • All raw materials: Same tracking policy

Why: Simpler to understand and manage

5. Document Your Policy​

Create standards:

Location Tracking Policy:

Track by Location:
- All finished goods
- All raw materials
- High-value components

Don't Track by Location:
- Sample bottles
- Office supplies
- Marketing materials (not for sale)

Visual Comparison​

Integration with Other Concepts​

Storage Locations​

Relationship: Location tracking uses locations defined in system

See: Storage Locations

Stock Movements​

Impact: Only possible if tracking by location

See: Stock Movements

Stockable Items​

Relationship: Only stockable items have location tracking setting

See: Stockable Items

Last Updated: 2025-10-28