Inventory management is a crucial process for any business that manufactures or sells physical products. Efficient inventory control can mean the difference between smooth operations and costly headaches. In this blog post, we’ll explore best practices for managing stock levels and inventory workflows using NetSuite.
Overview of NetSuite Inventory Management Capabilities
NetSuite is a cloud-based ERP system with robust capabilities for tracking inventory. Key features include:
- Real-time visibility into stock levels across multiple warehouses and locations
- Automated reordering based on customizable stock level rules
- Lot and serial number tracking for improved traceability
- Multi-location inventory transfer management
- Barcode scanning and mobile device integration
- Customizable inventory reports and KPI dashboards
By leveraging these tools, businesses can gain greater control over their inventory to help optimize turnover, minimize carrying costs, and prevent costly stockouts.
Key Steps to Improve Inventory Management
Managing inventory isn’t merely an accounting necessity. When done strategically, efficient inventory management can give your business a competitive advantage. Here are five steps to make the most of NetSuite’s inventory management functionality:
1. Classify Inventory Into Categories
Start by organizing your inventory into logical categories and subcategories within NetSuite. Common classifications include:
- Raw materials
- Components
- Work in progress
- Finished goods
Proper categorization allows you to set inventory control rules and settings tailored to each specific class of inventory. For example, you may want more stringent stock level monitoring and reordering parameters for high value finished goods than for inexpensive raw materials.
2. Define Optimal Stock Levels
Determine a target minimum, maximum, and reorder point for each inventory item category. Factors that affect these stock level rules include:
- Average monthly or weekly sales velocity and seasonal/cyclical demand patterns
- Production or delivery lead times
- Storage costs and space constraints
- Risk factors like supply chain variability or product shelf life
NetSuite makes it easy to input these inventory optimization parameters at the item level. The system can then automate purchase orders and warehouse transfers to maintain stock within your defined levels.
3. Improve Inventory Accuracy
It’s impossible to effectively manage inventory if the on-hand quantities in NetSuite don’t match your actual physical counts. When discrepancies arise, use NetSuite’s inventory adjustment feature to update stock levels to match reality.
To minimize future inaccuracies, employ barcode scanners or mobile devices at your warehouse locations for all inbound and outbound transactions. This best practice ensures changes in inventory quantities always get captured in NetSuite.
4. Track Inventory Movements and Ownership Changes
For manufacturers especially, understanding where inventory resides at every stage from raw material to finished goods is imperative. NetSuite enables users to track inventory ownership changes like:
- Issuing parts or materials to a work order
- Completing production on a work in progress item
- Transferring finished goods from production warehouse to retail locations
By documenting inventory movements, you gain better visibility for forecasting and production planning.
5. Monitor Key Inventory Performance Indicators
Leverage NetSuite’s real-time dashboards and reporting to monitor key operational metrics like:
- Days in inventory
- Inventory turnover
- Excess or obsolete stock
- Out-of-stock events
- Carrying and storage costs
By keeping tabs on such KPIs, you can catch inventory issues early and continuously refine stock levels and turns.
Why Choose Anchor Group?
Anchor Group couples NetSuite experts with industry veterans across distribution, retail, manufacturing, services, and more. By assessing your specific business processes and needs, we can customize a NetSuite inventory management solution to suit your situation.
Our optimization best practices transform inventory management from a cost center into a value creator. Contact NetSuite developers and consultants at Anchor Group to learn more about deploying inventory control with NetSuite to:
- Decrease carrying costs
- Improve inventory turns
- Prevent production stoppages
- Minimize write-offs and obsolescence
- And ultimately drive higher profitability
With robust features and detailed visibility into every stock item and movement, NetSuite provides a powerful inventory management platform. But realizing the full benefits requires adapting NetSuite to your workflows. Anchor Group offers strategic NetSuite guidance so you can get inventory processes smoothed out. Reach out for a consultation on leveraging NetSuite for optimized inventory control.
