How Manufacturing Companies Can Benefit from NetSuite
Manufacturing companies have critical business processes that go into product lifecycle management. Whether you manufacture a single item with few components or many items with varied and complex elements, you need those processes to be centrally managed and integrated with the rest of your business. NetSuite is a complete business management solution that allows manufacturers to automate their product lifecycle management, quote-to-cash, and plan-to-report processes. Its powerful manufacturing capabilities are fully integrated with NetSuite’s other features, including financials and sales. This means that demand and supply planning data can be linked directly into the production process, and data coming out of the manufacturing process can be linked to inventory reports in real-time.
NetSuite offers both Basic and Advanced Manufacturing. Depending on your needs and processes, you may benefit from NetSuite’s native manufacturing functionality, or you may need more advanced features that support more complex production processes. This blog will outline the features of each and when you might want to choose one level of manufacturing over the other.
Basic Manufacturing is NetSuite’s standard manufacturing functionality that covers a basic assembly build process to create finished goods assemblies from components. Work orders can be used for basic assembly builds to more closely track the production of assembly items. This can be done via special work orders (work orders that are built for a specific sale), or production work orders (orders designed to increase stock on hand).
Advanced Manufacturing breaks down the manufacturing process into multiple steps using work orders and Work in Process. Work in Process enables companies to determine steps for issuing raw materials, assembling the raw materials into finished goods or ‘completing’ the work order, and reconciling variances by ‘closing’ the work order. Using WIP can help companies better control their inventory and raw materials.
Advanced Manufacturing also gives companies the ability to define routings for the manufacturing process. Routings allow companies to create complex operational sequences and track costs associated with these operations such as labor, run costs, and overhead, using cost categories. Routings provide the basis for the infinite capacity scheduling engine that can help identify which resources are being over- or under-utilized.
Manufacturing work centers can also be set up, which allow companies to create operational teams or groups within the production process. For example, a company can define a staging team, build team, or quality assurance team.
Aside from these main features, there are additional enhancement features that can be used when Advanced Manufacturing is enabled. This includes an advanced Bill of Materials that replaces the standard assembly/Bill of Materials record and allows you to track a completely separate BOM from the items in NetSuite. This advanced BOM also provides greater flexibility to apply unique BOMs at various stages of the product lifecycle and define yield at the component level. You can also make use of BOM revisions to track detailed changes to a bill throughout its lifecycle.
An Advanced Manufacturing SuiteApp further extends the manufacturing capabilities in NetSuite by providing a manufacturing ‘Work Bench’. This SuiteApp can be installed on mobile devices and provides additional insight into manufacturing performance measures such as downtime and loss, as well as the ability to customize work order processes around locations.
What Level of Manufacturing is Right for Me?
Basic Manufacturing works best for companies who do simple assembly work and do not need to track Work in Process or labor separately. Those with more involved manufacturing processes would benefit from using Advanced Manufacturing as a means of tracking all aspects of the production process. The functionality provided by WIP, work centers, and routings allows for full insight into manufacturing costs and time.
Another gauge to determine what level of manufacturing your company might need is to examine the accounting impacts of each. Basic assembly builds would only create a simple entry to reduce quantities of the inventory component and increase quantities of the assembly item, whereas using Work in Process would result in more complex postings.
Using WIP and routings also provides even greater detail into costs associated with the production process, as shown in the following chart:
Depending on the complexity of your manufacturing process as well as your desired level of tracking into each step, you may suffice with the capabilities of Basic Manufacturing or require the additional insight and control provided by Advanced Manufacturing. NetSuite provides flexibility for all manufacturers to meet their needs, whether you have simple production processes or complex needs. With its full integration with financials, sales, and service, NetSuite truly offers manufacturers an all-in-one business management solution.
If you are unsure about what type of manufacturing would best suit you, Rand Group can help. We are an experienced NetSuite partner that can examine your company’s processes and make knowledgeable recommendations based on your needs. We can also determine whether you may benefit from customizations. Talk to a Rand Group representative today for more information.
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