Efficient inventory management is vital for any product-based business. As inventory comprises a major cost center, keeping tight control over stock levels directly impacts profitability. NetSuite ERP helps streamline inventory management through features like centralized visibility, automated workflows, and real-time analytics. This results in leaner operations, fewer stockouts, better cash flow, and more informed decisions.
In this article, we’ll explore how NetSuite transforms inventory management across manufacturing, wholesale distribution, ecommerce, and retail.
Centralized Inventory Visibility
One of the biggest challenges with managing inventory is poor visibility across different locations, sales channels, and stakeholders. NetSuite offers complete visibility through a unified platform that captures all transactions and movements in real-time.
For example, when a purchase order gets created in NetSuite, the favorable variance hits the inventory even before the stock arrives physically. Any outgoing sales order immediately reflects as a commitment against the same inventory. This connects procurement, logistics, manufacturing, and sales on a common platform with up-to-date stock positions.
Such end-to-end visibility enables better planning, fewer stockouts, and identifying excess or slow-moving inventory for liquidation. It also aids auditability with an inventory trail capturing every order, receipt, and adjustment.
Optimized Inventory Controls
Maintaining optimal inventory requires balancing multiple parameters like replenishment times, holding costs, service levels, seasonality, introduce shortages, and dead stock. Manual methods cannot adjust these levers efficiently.
NetSuite equips businesses with tailored inventory optimization controls across:
• Reorder Points: Automatically trigger purchase orders or manufacturing work orders when the stock level hits minimum thresholds. This ensures continuous supply availability.
• Preferred Stock Levels: Replenish inventory to defined target quantities based on historical consumption. This prevents shortages.
• Maximum Stock Levels: Cap inventory to curb excess stock and reduce holding costs.
• Safety Stock Levels: Buffer additional stock as a protection against uncertainties in demand or supply.
• ABC Analysis: Stratify products as high, medium, and low value based on annual consumption to prioritize management attention appropriately.
These parameters can be defined at granular SKU or location levels based on seasonal demand shifts, cost of stockouts, replenishment lead times etc. The integrated platform then orchestrates various supply and sales transactions to align actual stock positions with the optimized targets.
For example, if the inventory level for a particular product goes below its reorder point, NetSuite can automatically create and email a purchase order to the vendor for replenishment. It will also block sales orders from committing against the unavailable stock.
Real-time Inventory Tracking
Updating inventory records manually leaves room for errors and delays. Businesses need real-time tracking across the supply chain to make reliable promises to customers.
NetSuite delivers perpetual inventory balancing through continuous transactions processing. Instead of periodic snap-shots, it offers rolling inventory visibility with every order, shipment, receipt or adjustment.
Let’s understand this with an example. Say a business receives purchased consignment of 100 units with a cost of $10 each. The inventory account would instantly show 1,000 worth of stock-in-hand. If a sales order for 30 units gets booked, it would automatically commit against this inventory with an updated balance of 70 units. At the time of delivery, the same sales document decreases the actual stock to 40 units while updating the cost of goods sold.
Such real-time tracking with running balances enables making commitments based on true stock availability. The built-in validations also ensure that no order document permits negative inventory. This combination results in operational efficiency along with data accuracy.
In fact, NetSuite goes further by capturing inventory ownership changes at every stock movement between locations. This aids visibility across transfers, drop-shipments, assignments etc.
Inventory Analytics in Real-Time
Inventory managers need to analyze metrics like ageing analysis, stock turns, net requirements, excess stock, consumption trends etc. Manual identification of actionable insights can be challenging with changing data.
NetSuite enables real-time analytics by perpetually updating reports, KPI scorecards, and dashboards from the same transactional database. This allows informed, proactive decisions rather than reactive approaches.
Some examples of inventory analysis in NetSuite include:
• Stock Ageing: Classify inventory based on duration in stock to identify slow-moving items for markdown or liquidation.
• Stock Turns: Evaluate overall inventory efficiency by combining stock value, COGS, and sales over time.
• Net Demand: Estimate expected consumption over future periods based on historical trends and seasonal patterns.
• Procurement Analysis: Determine optimal reorder quantities and frequency based on average lead times and supply availability.
• Product Revenue Contribution: Assess product line profitability by comparing inventory assets, COGS, and sales of items.
Inventory Optimization Services
While NetSuite equips with inventory best practices out-of-the-box, the solution also allows customization to each business’s unique requirements. Developing such tailored optimization logic requires deep domain expertise combined with technical experience.
Anchor Group offers NetSuite consulting services to craft inventory optimization tailored to each client’s needs. Some ways in which we help are:
• Detailed As-Is Process Analysis
• Data-driven To-Be Process Models
• Buffer Stock, Reorder Point, and other Calculations
• Inventory Policy Definition and Configuration
• End-to-End Solution Validation
With over 15 years exclusively on NetSuite, 200+ consultants globally, and 250+ successful implementations, Anchor Group helps transform inventory operations on NetSuite through practical optimization. Contact us for a free consultation on boosting working capital efficiency.
Why Choose Anchor Group?
When considering a NetSuite implementation and inventory optimization partner, Anchor Group stands out for:
Industry Expertise: 200+ NetSuite resources with deep domain experience across manufacturing, distribution, retail, services, non-profit and more.
Proven Methodology: 250+ successful Fixed Bid or Time and Material engagements using proprietary processes refined over 15+ years.
Comprehensive Services: End-to-end capability across advisory, implementation, integration, customization, managed services, and Titanium partnership.
NetSuite Focus: Exclusive practice on NetSuite since 2006 with solution expertise that businesses can rely on.
Global Delivery: 20+ countries served with consultants across North America, EMEA, and APAC time-zones.
Customer First: 95% referenceable customers and a client-centric focus from sales to delivery.
Conclusion
Inventory optimization is a balance of people, processes, and systems. NetSuite provides the foundation to evolve inventory management from a cost center to a profit driver. Our inventory management advisory services help businesses maximize these capabilities. To learn more, book a free solution scoping session today!
