The right configuration level depends on your business's size, product complexity, and how mature your operational processes are. Many manufacturers choose to start with NetSuite’s basic manufacturing tools, then expand into more advanced capabilities as operations scale.
Getting Your NetSuite Account Ready: What to Set Up First. Before turning on manufacturing features in your NetSuite environment, it's critical to have your basic setup in place. Skipping these foundational steps often leads to months of cleanup and troubleshooting - especially around BOM data. One of the most common issues? Duplicate component entries that cause ongoing data problems due to improper Bill of Materials setup.
Roles and Permissions Needed for Manufacturing Setup: To enable manufacturing features, you must have administrator access. Standard user roles in NetSuite won’t give you the authority to adjust company-wide settings related to transactions, inventory, or finance. Before beginning, be sure you have permissions for:
Setup > Company > Enable Features (requires Admin role)
Customization > Lists, Records, & Fields (to set up custom item fields)
Setup > Accounting > Accounting Preferences (needed for selecting a costing method)
Lists > Accounting > Items (to create inventory and assembly items)
Transactions > Manufacturing (to manage work orders and assembly builds)
If your organization uses NetSuite OneWorld, you'll need to set up manufacturing features separately for each subsidiary. Each one might require separate BOMs, item catalogs, and customized manufacturing preferences depending on their location-specific needs.
Which NetSuite Version Includes Manufacturing?
Manufacturing tools in NetSuite vary by subscription level. A standard NetSuite account includes basic assembly build functionality as part of inventory management - no extra licensing needed. This covers single-level BOMs, basic assemblies, and auto-backflushing of components.
For work orders and basic production tracking, enable the Work Orders & Assemblies feature.
To track routing steps, WIP costs, and labor, you'll need the WIP & Routings module.
For the most advanced features - like scheduling tools, MES integration, and shop floor control - you’ll need the Advanced Manufacturing module. These are not included by default and must be purchased separately. For pricing details, reach out to Oracle or your NetSuite partner.
Turning on Assembly and Work Order Features: Step-by-Step When enabling manufacturing functions, NetSuite follows a strict order of dependencies. Advanced options can automatically trigger more foundational features - understanding this prevents setup issues.
Accessing Manufacturing Features in NetSuite All feature settings live in one administrative area. After logging in with administrator credentials:
1. Go to: Setup > Company > Enable Features
2. Click the Transactions tab
3. Find the “Manufacturing” section
4. Review the descriptions and dependencies listed with each feature
What Enabling One Feature Turns On Automatically?
NetSuite’s design automatically enables base features when you activate more advanced ones to avoid configuration errors - but this can surprise admins unfamiliar with the process.
When you enable Work Orders and Assemblies, for example:
Assembly/Bill of Materials functionality turns on
The assembly item type becomes available when creating new items
BOM management tools show up on assembly item records
Work order transactions begin appearing throughout the system
Adding the WIP & Routings module enables additional tools, such as:
Routing setup for production steps
Work-in-process financial accounts
Configuring labor resources and machine centers
Operation-level cost tracking
And if you turn on Advanced Manufacturing, you unlock:
Finite capacity scheduling
MES features
Shop floor control and mobile capabilities
Advanced tools for managing production resources
NetSuite shows a confirmation screen listing everything that will get activated before saving changes. Review this list - some updates may affect transactions, interfaces, permissions, and reports across your account.
Once you activate features, give the system 2 - 5 minutes to apply the changes. If new functionality doesn’t appear, try logging out and back in.
Setting Up Bill of Materials (BOMs) for Assembly and Inventory Management. Bill of materials configuration is essential for accurate manufacturing processes in NetSuite. Everything from work orders and assembly builds to tracking component consumption depends on a precise BOM setup. Manufacturers that utilize well-structured multi-level BOMs typically deal with fewer production hang-ups. However, challenges still arise - particularly around the costing of assembled goods - when system features aren't configured correctly.
Creating Your First Assembly Item with Component BOMs.
In NetSuite, an assembly item is a grouping of inventory items turned into finished goods based on specified component relationships. Unlike regular inventory items that represent individual stock units, assembly items track two distinct quantities: the inventory of components and the inventory of finished goods resulting from the build process.
Here's how you can create your first assembly item in NetSuite:
Go to Lists > Accounting > Items > New
From the item type dropdown, choose Assembly/Bill of Materials
Fill in standard item details like name, description, and item number
Find the Bill of Materials subtab
Add the individual component items, including the quantity needed per unit of the finished good
Define units of measure if they differ from the final assembly's unit
Select a costing method appropriate for your workflow
Set the preferred stock locations for both components and final assemblies
Several fields directly impact how your manufacturing process functions:
Component Quantity: Determines how much of each component is needed to produce a single unit. This field accepts decimal entries - for instance, 0.5 meters of wire per unit.
Component Yield: Reflects the anticipated waste during production. If set to 95%, NetSuite assumes a 5% loss and adjusts the calculation accordingly to make sure you don’t run short on materials.
Quantity on Hand vs. Quantity Available: NetSuite makes a distinction between the physical inventory in stock and what’s actually available for use (which factors in pending work orders). BOMs rely on available quantity for production feasibility.
Costing Method: Dictates how NetSuite calculates the cost of the assembly. Your options include Standard, Average, FIFO, and LIFO (LIFO is U.S. only), depending on your account settings. Standard costing uses fixed values regardless of changes in component cost, while Average costing constantly recalculates cost using real-time component data - this yields more accurate but fluctuating product valuations.
Multi-Level BOMs
When and How to Use Nested Assemblies. Multi-level BOMs are used when component items are also assemblies, building out a product hierarchy that resembles how complex products are really made. For example, a finished product might include subassemblies, each containing its own nested parts, resulting in a three-, four-, or even five-tiered structure.
Though NetSuite can technically support unlimited BOM levels, it’s usually best to keep it to three or four layers due to the added complexity in managing inventory, scheduling production, and calculating costs.
Use cases for multi-level BOMs include:
Modular Manufacturing: Ideal for electronics companies that manufacture individual boards separately and later combine them into a finished unit. Each board has its own BOM.
Configurable Products: Companies building base equipment and customizing it with added features via subassemblies benefit from flexible BOM structures.
Phantom Assemblies: These are used solely for planning. They don’t exist in physical stock but instead allow for simplified builds. NetSuite skips creating a transaction for the phantom and directly uses its listed components in the build of the parent item.
To create multi-level BOMs, first set up the lowest-level assemblies. Only after those exist can you reference them in higher-level parent assemblies. Start from the ground up.
Keep in mind that costs get more intricate the deeper your BOM goes. NetSuite recalculates costs when component prices shift, but how and when depends on your costing method. With Average costing, updates happen automatically. For Standard costing, you’ll need to manually adjust cost values if component prices change and you want those reflected in the assembly valuation.
Configuring Assembly Builds for Simple Manufacturing Operations. NetSuite’s assembly build function is the basic option for manufacturing - it handles the production process in one transaction, consuming component inventory and adding finished goods without needing the complexity of managing work orders.
Manufacturers relying on automated backflushing through assembly builds spend significantly less time reconciling inventory, making it the go-to method for repetitive production processes where component usage follows predictable patterns.
Creating an Assembly Build Transaction from Start to Finish
Assembly build transactions in NetSuite closely replicate the actual production process - automatically reducing inventory for components while increasing it for finished goods. This approach keeps accounting accurate and cuts down on manual data entry.
To complete an assembly build in NetSuite:
Navigate to Transactions > Manufacturing
Select Build/Assembly
Choose the specific assembly item to produce
Enter the quantity you plan to build
Confirm the build location (where finished products are received)
Review the list of components and their quantities (auto-filled from the Bill of Materials)
Edit component quantities if real-world usage varies from the standard BOM
If using inventory status features, choose the status for finished goods
Save the assembly build to process the transaction
NetSuite automatically verifies critical data points before it finalizes an assembly build:
Component availability: The system checks if the build location has enough inventory for all components. If anything's short, it flags those items with an error.
BOM validation: Assembly builds only work if the item has an active BOM. If the BOM is missing or inactive, the build can’t proceed - prompting users to correct the configuration first.
Location integrity: All issuing and receiving must take place within the same inventory location. If materials are spread out, you'll need to use transfer orders before creating the build.
Once saved, the assembly build transaction updates the inventory as follows:
Reduces inventory levels for all BOM components at the build location
Increases inventory for the finished assembly at the same location
Adjusts inventory valuation based on component costs and the chosen costing method
Updates inventory-related accounts (though COGS won’t be impacted until items are sold)
Handling Component Shortages and Partial Builds
In real production environments, perfect BOM alignment rarely happens. Whether due to supply shortages, quality issues, or waste, you’ll often run into situations that don’t exactly match the original plan. NetSuite gives you the flexibility to accommodate these cases without derailing your inventory records.
If components are limited, NetSuite lets you do partial builds. Suppose your goal is to build 100 assemblies, but you only have enough parts for 73. NetSuite shows the maximum buildable quantity, and you can decide whether to proceed with the partial build or wait for more materials.
When a BOM component is out of stock but an acceptable substitute is available, you can make a manual substitution right on the assembly build - NetSuite doesn’t do this automatically.
Sometimes yields differ from the BOM assumptions - maybe your plan assumes a 95% yield but your production only achieves 90%. In these cases, you can adjust component quantities directly in the build transaction to reflect the actual material consumption. It’s a good practice to document the reason for changes in the notes field, so production managers can review and track variances.
For organizations committed to continuous improvement, this tracking becomes crucial. Use NetSuite saved searches to identify builds where the component quantities were changed. Over time, this information helps refine BOMs and improve forecasting accuracy.
Implementing Work Orders with Routing and WIP for Advanced Manufacturing
Work orders take NetSuite a step further, transforming it from a basic assembly tool into a robust production management system. While simple builds work well for repetitive, predictable processes, work orders are essential for job shops, custom manufacturing, or any operation with complex workflows involving labor, routing, and capacity constraints.
Defining Manufacturing Routings and Operation Steps
Manufacturing routings outline the full sequence of steps needed to turn materials into finished goods. Each step - called an operation - can take place at different work centers, involve different labor skills, and require different amounts of time or resources.
Important: To use routing features, your account must have the WIP & Routings module enabled
To establish manufacturing routings in NetSuite, go to Lists > Manufacturing > Routings > New and fill out the following details:
The operation name along with its sequence number
Work center where each step takes place
Run time per unit (duration it takes to process one unit)
Setup time (initial prep time before the process starts)
Required labor or machinery
Predecessor operations that must be completed beforehand
Your routing configurations play an essential role in both production scheduling and determining production costs. NetSuite uses your specified operation times to estimate how long work orders will take to complete and to calculate labor costs as employees track time spent on each step.
Once you’ve created a routing, link it to your assembly items using the Routing field on the assembly item record. Every assembly item utilizes one routing, though you can maintain multiple routing versions to accommodate varying production conditions.
Tracking Labor and Machine Time on Work Orders
Converting work orders from planning tools into reliable cost accounting resources starts with labor tracking. When employees clock hours against specific operations on a work order, NetSuite logs actual labor costs, identifies production variances, and highlights time spent in production compared to initial estimates.
Keep in mind: to record manufacturing time and account for WIP labor, you’ll need either the WIP & Routings module or Advanced Manufacturing. Without one of these, you can still use standard Time Tracking, but time entries won’t automatically post to WIP.
NetSuite supports manual time logging where team members or supervisors input time records, referencing the work order, operation, employee, and hours worked. For a more streamlined and accurate approach, Advanced Manufacturing provides mobile/MES tools - or you can integrate a compatible third-party MES - to track labor time automatically.
Labor costs from these time entries get posted to work-in-process (WIP) accounts, accumulating along with material costs to form the full manufacturing cost of a work order. Once a work order is marked complete and finished goods are received, NetSuite automatically moves those combined WIP costs into finished goods inventory value.
Connecting Inventory Management with Manufacturing
Manufacturing brings complex inventory management needs that go far beyond the basics of retail or wholesale. You’ll need to ensure components are available when needed, track WIP inventory separately from completed products, and often manage lot/serial details from raw materials through to finished goods.
Organizing Inventory Locations for Components and Finished Products
In most manufacturing set-ups, it's beneficial to divide inventory into physical areas that reflect progress along the production process. Using NetSuite's multi-location inventory features, you can clearly track quantity and movement in each of these spaces:
Raw materials warehouse: Where components arrive and wait for production use. Common items are often stocked in bulk, while rare or expensive items may have just-in-time or minimal stock levels.
Production floor locations: Areas holding WIP inventory or components linked to ongoing work orders. Some companies even set dedicated locations for each production line or work area.
Finished goods warehouse: Where completed products are stored before shipping. This may include locations for final packaging, staging areas, or ship-ready inventory.
Inspection/quality hold: Reserved space for items that require testing or quality approval before moving to the production or fulfillment stages. Especially important if your company follows strict compliance or audit procedures.
To create these locations, navigate to Setup > Company > Locations > New and set them up according to your actual facility layout. On both assembly and component item records, define the preferred location where each one is stocked - this helps align NetSuite transactions with your real-world operations.
When you perform an assembly build, NetSuite will automatically pull from the component’s assigned location and place finished goods in their designated storage area per the item's setup.
Automating Reorder Points to Avoid Stockouts
A shortage in component inventory can derail production schedules. That’s why Versich recommends using NetSuite’s reorder point system, which automates restocking by generating purchase orders or requisitions once a component drops below its designated level.
To determine an effective reorder point, consider the average pace of usage and vendor lead time:
Reorder point = (Average daily usage × Lead time in days) + Safety stock
Set reorder points on individual component item records in the Purchasing/Inventory tab. There, you'll define:
The reorder point quantity
Preferred vendor
Reorder quantity (how much to buy when replenishment is triggered)
This proactive approach helps ensure your production process runs smoothly, without delays from missing parts.
Unit of measure validation: Ensure every inventory item has a proper unit of measure defined and aligned with how it’s used in production and purchasing.
Inactive item cleanup: Remove or deactivate unused or redundant items to prevent confusion and incorrect selection on bills of materials or work orders.
Small issues in your item master snowball quickly once NetSuite's manufacturing features are active. Versich strongly recommends cleaning and validating all product and component data before enabling any assembly or work order processes.
Work Order and BOM Setup Mistakes That Disrupt Assembly Accuracy. Setting up work orders and bills of materials (BOMs) incorrectly is one of the fastest ways to break inventory transactions in NetSuite. Issues like missing routing information or incorrectly linked items can prevent you from completing builds or producing accurate costing data. Avoid these issues by following setup best practices:
Define routing steps for all production operations, even if they are simple. A routing tells NetSuite how time and resources are consumed in each build.
Make sure routing steps are linked to the correct work center and calendars so lead times and scheduling are properly calculated.
Validate BOM accuracy: ensure every BOM lists the correct quantities, component types, and versions to produce the assembly.
Consistently test builds using the “Enter Work Order Completion” or “Build Assembly” functions to simulate production prior to full rollout.
If something doesn’t work during testing, take it seriously. That error you brushed off during training will interfere with live production once assembly demand ramps up.
Stay proactive with regular BOM audits, especially after product changes or engineering updates. Versich has seen clients ignore said audits, only to encounter major production stops due to outdated or incomplete BOMs.
Overlooking Resource Calendars and Work Centers Leads to Scheduling Inaccuracy. Work order scheduling in NetSuite relies on calendars and work centers to allocate production time. If these aren't properly configured, NetSuite won’t have an accurate basis to estimate production timelines or identify scheduling conflicts.
Each work center should have:
A valid location assignment
Resource capacity limits
Custom calendars to model shifts or working hours
Resource calendars are especially important for accounting for weekends, holidays, and shift schedules unique to your manufacturing operation.
Versich advises clients to involve production leads when configuring calendars - those closest to the floor can provide the best insights into operational timing. Without accurate work centers and calendars, your production plan may look good on paper but fail during execution.
Consolidate any duplicate items before building Bills of Materials (BOMs). Consistent units of measure are critical - ensure components across your BOMs use appropriate units like each, box, pound, or meter, and confirm unit conversions are configured correctly. Align costing methods for all inventory items based on your accounting preferences. Also, review item statuses and deactivate obsolete SKUs so they don’t appear on new BOMs. Cleaning your data first prevents inventory discrepancies that disrupt manufacturing and eliminates hours of costly reconciliation work.
Automating Manufacturing Workflows with NetSuite Tools
Manufacturing automation replaces error-prone manual steps with streamlined workflows that need little manual input. Beyond activating basic assembly and work order capabilities, the real value for manufacturers comes from automating repetitive tasks and integrating production systems with sales, procurement, and inventory planning.
Creating Workflows to Auto-Generate Work Orders from Sales Orders
Demand-driven manufacturing means work orders are generated automatically when sales orders are received, reducing or even eliminating the need for manual scheduling - perfect for make-to-order scenarios. NetSuite workflows link sales orders to work order creation. A typical auto-generation workflow follows this model:
Trigger: Sales order is saved that includes manufactured items
Condition: Item type is “Assembly/Bill of Materials.”
Action: Create a work order for the assembly item
Quantity: Equal to sales order quantity
Due Date: Calculated by subtracting production lead time from the sales order ship date
To build this, go to *Customization > Workflow > Workflows > New*, choose “Sales Order” as the record type, and configure the trigger, condition, and action so that work orders are automatically created with the data pulled from the sales order.
More advanced workflows can include steps like checking inventory availability, validating shop floor capacity, assigning work order priority based on customer importance, and sending alerts to your production manager.
Using Saved Searches to Monitor Production Bottlenecks
Production issues often hide in plain sight within your data - saved searches in NetSuite bring potential problems to the surface. Whether it's delayed work orders, missing components, or inefficient resource use, saved searches get the facts in front of the right people fast.
Delayed Work Orders
Criteria: Work Order Status = “In Process” AND Expected Completion Date is before today
Results: Work Order Number, Assembly Item, Days Overdue
Alert: Send daily email summary to production manager
Component Shortages
Criteria: Work Order Status = “Released” AND Component Availability < Required Quantity
Results: Work Order Number, Short Component Item, Shortage Quantity
Use Case: Helps the purchasing team fast-track critical parts
You can schedule these saved searches to run automatically and push results to team members via email - eliminating the need to dig through the system manually.
Why Versich Actually Delivers NetSuite Manufacturing That Works
Plenty of NetSuite consultants know how to flip the right switches - turn on features, build BOMs, set up work orders - but successful implementations go far deeper. At Versich, we’ve built tailored solutions for manufacturers in discrete industries, job shops, and assembly operations.
Here’s what it means to work with Midwestern-native consultants who truly understand how a manufacturing floor runs:
We begin with your processes, not NetSuite menus. Before any configurations go live, we invest time in walking your floor - observing where materials are stored, how job travelers are handled, and what kind of info the shop team really needs. Only then do we map out and apply features that actually support your workflows.
We don’t push Advanced Manufacturing right out the gate. Most operations thrive with standard assemblies to start. We’ll phase in routing and multi-step tracking only when your process demands it.
BOM challenges? We've solved them already. From intricate multi-level assemblies with phantom subs to workflows that manage substitute components or variable yields - our team has already implemented these patterns in both industrial and consumer goods manufacturing.
Our automations get applied - not ignored. That includes sales-order-driven work order creation, purchasing alerts for missing components, and custom scripts tailored to your shop's unique processes.
Most of our manufacturing clients are up and running in weeks, not months. That happens because we don’t overcomplicate things or waste time fitting square pegs into round holes. Our focus is on delivering systems that perform the way you actually build a product.
This setup streamlines manufacturing responsiveness by ensuring production activities are triggered the moment sales demand occurs, reducing delays and avoiding planning bottlenecks. In fast-paced industries or make-to-order environments, automating work orders from sales orders is essential for on-time delivery and efficient resource allocation.
At Versich, we help manufacturers design workflows that support their unique order fulfillment processes - whether you're building each item to customer spec or maintaining baseline stock through demand planning. Our team ensures your workflow logic, timing conditions, and approval hierarchies all align to your shop floor realities and order management priorities.
Whether you’re just beginning to use NetSuite’s manufacturing tools or you’re optimizing a previous implementation that didn’t hit the mark, Versich brings practical expertise that transforms checkbox features into real-world results. We help you achieve the inventory accuracy, visibility, and cost control manufacturers need to stay competitive.
To get started, go to Customization > Workflow > Workflows > New in NetSuite. Choose "Sales Order" as the record type. From there, create a workflow state dedicated to triggering work order creation, using a condition like "Item Type = Assembly/Bill of Materials." Set up a Create Record action that initiates a Work Order, and ensure key fields - such as quantity, item, and a due date based on production lead time - are properly mapped from the sales order to the new work order.
If you want to expand the functionality, Versich recommends implementing more advanced workflow logic. This can include steps to check inventory availability, validate production capacity, prioritize based on the customer, and route alerts or approvals to your production team.
