Gain immediate insights into your inventory, monitor manufacturing stages, and manage components seamlessly with NetSuite's manufacturing management features.
This covers the complete journey from sales orders and component purchasing to assembly and inventory adjustments.
Are you interested in real-time visibility of your inventory? Imagine instantly checking how many component parts you have on hand or allocated. Would you like a solution to monitor every step in the manufacturing process? NetSuite’s comprehensive manufacturing management tools definitely merit your attention.
Today, we'll navigate through the entire manufacturing journey, utilizing NetSuite to oversee everything. For our example, let’s consider that we are a manufacturer of dining and conference tables, available in various colors and sizes, which we distribute to retailers.
The manufacturing journey always kicks off with a work order - an internal request to manufacture or assemble a defined number and type of one or multiple inventory items. These items can either be final products or intermediary components. For example, if we create a floating table composed of a top and a bottom, each made up of several further components, we can arrange our manufacturing accounting so that the table top functions as an intermediary assembly that can be constructed independently. Work orders can operate independently (to build stock inventory) or can be linked to a specific sales order (for a build-on-demand approach). Here, we’ll initiate with a sales order so you can see how effortlessly a sale can transition into a work order.
Sales Order
One of our retailers has placed an order for additional floating tables! We input this request by generating a sales order (Transactions > Sales > Enter Sales Order). Alternatively, OrSuiteCommerce (NetSuite's premier e-commerce platform) could facilitate direct sales orders from the webstore. Choose the appropriate form; we’ll utilize the Standard Sales Order form. Select the customer (in our case, Tables Inc). Optionally, you can specify anticipated start and/or completion dates for the sale. Enter assembly items (the final products you offer - here, a floating table, not a table top) in the Items subtab. Ensure these items have been previously registered for you to add them to the sales order (Lists > Accounting > Items > New). It’s crucial to select assembly items, as they are intended for generating work orders.
To include various item types, click the Add Multiple button. In the pop-up window, select an item from the left panel to add it to your order. You’ll notice that it displays the price and available quantity of each item, along with the item type (here, these are all assembly items).
If you’ve pre-set the price of your items in the item record, you just need to enter the quantity of each item ordered by Tables Inc. Since one of the items is currently out of stock, NetSuite provides a warning pop-up to alert us of this issue.
If this sales order requires urgent fulfillment, we must inform the customer about the unavailability of some items. However, in our example, the customer is ordering with the expectation that we will manufacture these items, which means the marble floating table falls into a build-on-demand category.
In the Items subtab, verify that any items requiring assembly are marked with a “Yes” in the “Create WO” column, as this will automatically generate a work order for that assembly item.
Before saving, navigate to the Shipping subtab and input the “Shipping Cost.” Once you save the sales order, it needs approval from the designated authority within your organization. (The approver just clicks the “Approve” button at the top of the sales order record.) After approval, the sales order will display as pending fulfillment with that label at the top, and you’ll also have options to record any deposits or partial payments made by your customer against the total sale price.
Work Orders
Now that the sales order is approved, we need to assemble any items not yet available for shipment. To start this manufacturing phase, we require a new work order. (You can also bypass the sales order step and go directly to creating a work order if you are merely looking to build a stock of assembly items unrelated to specific sales orders. Navigate to Transactions > Manufacturing > Build Work Orders. Since we started with a sales order, we can simply go to the Related Records subtab on the sales order record. You can configure your settings to ensure that a work order for any outstanding assembly items is generated automatically upon sales order approval.
Observe that our work order is labeled as “Released,” indicating it has been dispatched to the shop floor. Click on the date to access the work order record. You’ll find a “Created From” field that connects back to the sales order.
Pay attention to three important numbers here:
Buildable: This indicates how many assembly items (i.e., finished products) you have sufficient components to produce. This may even show zero if all necessary components are allocated (i.e., reserved) for prior work orders.
Built: This reveals the quantity of completed assembly items, ready for shipment to the customer.
Quantity: This represents the number of assembly items the work order is requesting to be built, directly taken from the sales order that prompted this work order. In our scenario, we currently do not possess enough uncommitted components to manufacture even a single table.
At the bottom of the work order record, in the Items subtab, you can see the components that constitute each assembly item. NetSuite can also manage lot or serial numbers for these components if necessary.
In our illustration, it’s easy to see that we have an adequate number of Table Bottom Parts, as all 30 required are already allocated to this work order. The bottleneck is caused by the Table Top part, for which there are none in stock (at least in this specific color and material). If this constraint were not an issue, we could have proceeded directly to producing our assembly items. Instead, we first need to address our inventory shortfall.
Purchase Orders
Since we lack sufficient quantities of a key component to manufacture our assembly items, we must order those components. (If the missing component were an intermediate assembly item, we would need to acquire its underlying constituent parts that are currently out of stock.) In NetSuite, purchasing is managed through a Purchase Order record, which functions as the reverse of a sales order. You can create a new purchase order directly (Transactions > Purchases > Enter Purchase Orders), but since NetSuite has already detected our shortage, it has auto-generated the purchase order for us.
Note: You can modify your preferences so that a new purchase order is only created when a certain deficit is reached (which can help lower shipping costs and take advantage of wholesale pricing) or when inventory levels dip below a predetermined minimum quantity (ensuring you never run out of critical items).
To locate this automatically produced purchase order, access the work order record. In the Items subtab, on the line for the out-of-stock item, look for “Spec. Ord.” in the Transaction column.
Click this hyperlink to be directed to the purchase order. In the purchase order record, add the vendor from whom you will acquire the missing component. If a purchase price for the component is already linked to its item record, the Rate and Amount fields should autofill. Feel free to add or remove items or modify quantities as necessary. The Expected Receipt Date default is set to 14 days ahead unless adjusted.
By clicking “save and print,” NetSuite creates a PDF purchase order that you can send to your supplier via mail or email.
Upon returning to the work order record, you’ll notice that the “Spec. Ord.” for the ordered item has been replaced with the transaction number of the purchase order. Click this transaction number to revisit the purchase order.
Receiving a Purchase Order
When the ordered items are delivered to your warehouse, you should update the purchase order record to reflect their arrival.
Click the “Receive” button at the top. If the quantities delivered differ from the ordered quantities, make any necessary adjustments and click “Save.” (Select Save and Bill if you wish to settle the payment immediately.) The received items should now update your inventory records.
Checking Updated Inventory and Item Commitment
Within the work order, in the Items subtab, the committed items quantity has now been updated; the parts you just ordered are automatically reserved for this build and won’t be available for other work orders (although they might still show as “on hand”). Notice that we now have everything needed to fabricate these 30 tables, and it now indicates “30” in the Buildable field.
Build Assembly Items
With the components back in stock, it’s time to progress that work order into production! Your manufacturing team on the shop floor will see that the Work Order, which was released earlier, is now ready to be built. (Optionally, you could keep the work order status as “Planned” while awaiting missing components, only releasing it when it can be fully or partially built.)
To monitor the building progress in real-time, you should check WIP in the work order record, utilizing the Work in Progress functionality. However, we’ll keep this simple; the shop floor can simply notify us (or update the record themselves) when the work order is finished. To mark the completion of the work order, click the “Create Build” button at the top of the work order. This will launch an Assembly Build record linked to the work order:
The assembly build record is how you inform NetSuite that you have completed the assembly items listed in the work order. After saving this assembly build, inventory quantities will adjust to show that you’ve utilized the components in the build, resulting in the addition of 30 more finished assembly items (i.e., tables).
To observe this inventory shift from parts to assembly in accounting terms, navigate to the GL Impact subtab of the Assembly build. The value (based on purchase cost, not the selling price of the assembly items) for each component stays consistent, whether assembled or not.
For instance, before the build, components had a total worth of $12,000 and $21,000. Post-build, that same total of $33,000 remains intact; it now simply appears under assembly items instead of components.
With the assembly builds saved, you can note that the work order record has updated to reflect “30” in the Build field. Because the assembly build is connected to this work order, you can always revisit it through the Related Records subtab if you ever wish to access it again.
At this stage, the manufacturing process is essentially complete (the tables we produced are all assembled and ready for delivery to customers). You can now reassess your inventory of assembly and component items in preparation for your next work order or sales order.
Fulfilling Sales Orders
Since we have started with a sales order, let’s conclude in the same manner, ensuring the complete sales and manufacturing workflow wraps up. Return to the sales order record that initiated the work order.
In the Related Records subtab, you will find any completed work orders corresponding to this sale:
Observe how it indicates “Built” under the “Status.” This confirms that you’ve created a build assembly for that work order.
In the Items subtab, the table should display the total quantity of ordered items under the “Committed” column. Your order is now ready for fulfillment! Click the “Fulfill” button and save the Item Fulfillment record that appears. When ready for shipment, you can select the “Close” button on the sales order record to mark that order as complete.
Conclusion
In this comprehensive guide, we’ve examined the fundamental process from sales order creation and procurement to manufacturing and order fulfillment. To delve deeper into how NetSuite Manufacturing and NetSuite Advanced Manufacturing can be customized to enhance your production processes - like with detailed Work in Progress (WIP) tracking or a summary dashboard in the Production Manager Role - explore more about these configurations.
We hope this article provides valuable insights as you strive to understand how NetSuite can benefit your business.
