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NetSuite Inventory Management: A Comprehensive Guide

Zees Zeeshan — Wed, 12 Oct 2022 21:50:13 +0000

If you’re like most business owners, you know that effective inventory management is key to your success. But what does that mean? And how can you make sure your inventory is working for you – not against you? This comprehensive guide will show you how to get your inventory under control and performing at its best. Read on for tips and tricks on everything from stocking the right number of products to tracking stock levels and making changes in real time. Also, With NetSuite inventory management you’ll be able to keep your inventory moving while maintaining a healthy profit margin – no sweat!

What Is Inventory Management?

Inventory management is all about keeping track of the items in your stock, from raw materials to finished products. It includes everything from ordering and receiving new goods to tracking how much inventory you have on hand and where it’s located.

Why do Businesses Need Inventory Management?

Good inventory management is critical to the success of any business that holds inventory. It is important to track and manage inventory levels so that businesses know what products they have on hand, where those products are located, and how much of each product they need to keep in stock. By keeping a close eye on inventory levels, businesses can also avoid overstocking, which can tie up valuable cash flow in unnecessary inventory. In short, inventory management is important because it helps businesses maximize sales, minimize costs, and keep customers happy.

Methods to Effectively Manage Your Inventory

If you want to be a successful retailer, you need to know how to effectively manage your inventory. That means having a system in place to track what you have in stock, what needs to be reordered, and what’s selling well. Here are methods of inventory management:

FIFO

The first-in, first-out method is one of the most commonly used inventory management techniques. This system assumes that the first items to arrive in your stock are the first ones to be sold. FIFO can help manage perishable goods or seasonal items. For example, if you run a bakery and receive a shipment of flour every Monday, the flour that arrived in this week’s shipment would be used before the flour from last week’s shipment. This ensures that your bakery is using the freshest ingredients possible, which provides the best taste for your customers. The first-in, first-out method can also help to prevent waste, as older items are used before, they have a chance to expire. Overall, the FIFO system is a simple and effective way to manage inventory and ensure that your business is running smoothly.

LIFO

The last-in, first-out method is the opposite of FIFO. In this system, the assumption is made that the last items to arrive in your stock are the first ones to be sold. LIFO can help manage inventory for businesses that sell fast-moving goods or seasonal items. For example, if you run a clothing store and receive a shipment of sweaters every Monday, the sweaters that arrived in this week’s shipment would be put on the shelves first, while the sweaters from last week’s shipment would be put on the shelves last. This ensures that your customers are seeing the newest items in your store, which can help to boost sales. The LIFO system can also help to prevent waste, as older items are used before they have a chance to expire. Overall, the LIFO system is a simple and effective way to manage inventory and ensure that your business is running smoothly.

ABC Analysis

The ABC analysis is a method of inventory management that categorizes inventory based on its importance. In this system, inventory is divided into three categories:

A items are the most important items in your inventory, and they represent the items that generate the most revenue for your business.
B items are less important than A items, but they still generate significant revenue for your business.
C items are the least important items in your inventory, and they generate the least amount of revenue for your business.

The ABC analysis can help manage inventory because it allows businesses to focus on the items that are most important to their bottom line. This system can also help businesses to save money by reducing the amount of inventory they need to keep on hand. Overall, the ABC analysis is a simple and effective way to manage inventory and ensure that your business is running smoothly.

Just-In-Time

The just-in-time method is a type of inventory management that seeks to minimize the amount of inventory on hand by only ordering goods as they are needed. This system can help reduce costs and maximize efficiency. Just-in-time inventory management can be difficult to implement, but it can be very beneficial for businesses that can do so. The main advantage of just-in-time inventory management is that it can help businesses to save money by reducing the amount of inventory that needs to be stored. In addition, just-in-time inventory management can also help businesses to maximize their efficiency by ensuring that they always have the necessary materials on hand without having too much surplus. While just-in-time inventory management can be difficult to implement, businesses that can do so can reap significant rewards.

Best Ways to Improve Inventory Management

Any business owner will tell you that managing inventory is a challenging but critical task. After all, if you don’t have the right products in stock, you’ll miss out on sales opportunities. But if you have too much inventory, you’ll tie up valuable resources that could be used elsewhere. So how can you strike the right balance? Here are some of the best practices:

Use Unified Inventory Management System

A unified inventory management system is a software solution (like NetSuite) that helps businesses to track and manage their inventory. This type of system can help improve inventory management because it provides businesses with a centralized place to track all of their inventory data. In addition, unified inventory management systems often come with features that can help businesses to improve their overall efficiency. For example, some unified inventory management systems come with barcoding features that can help businesses to streamline their picking and packing processes. Overall, a unified inventory management system can be a valuable tool for businesses that want to improve their inventory management.

Keep an Eye on Your Old Goods

One of the best ways to improve inventory management is to keep an eye on your old goods. As items get older, they become less valuable and more likely to expire. As a result, it’s important to continuously monitor your inventory and remove old items as necessary. This can be a challenge, but it’s important to stay on top of it to avoid having too much dead inventory.

Monitor Your Inventory Levels Closely

This means keeping track of how much inventory you have on hand and how quickly it’s selling. Doing so can help you to avoid stockouts and overstocks. Additionally, it can help you to make more informed decisions about your inventory levels. For example, if you know that you typically sell through your inventory within two weeks, you can order new goods accordingly.

Communicate With Your Suppliers

To keep your inventory levels in check, it’s important to communicate with your suppliers. This way, you can ensure that you’re always getting the goods you need when you need them. Furthermore, it’s important to build strong relationships with your suppliers so that you can negotiate better terms and get discounts when possible.

Major Mistakes in Your Inventory Management

While there are many things you can do to improve your inventory management, there are also some major mistakes that you’ll want to avoid. Here are some of the biggest mistakes you can make:

Not Ordering Enough Goods

Another common mistake that businesses make in terms of inventory management is not ordering enough goods. This can lead to many problems, including lost sales opportunities and stockouts. To avoid these problems, it’s important to always have a good sense of how much inventory you need and order accordingly.

Ordering Too Many Goods

On the other hand, businesses can also order too many goods, which can lead to overstocks and wasted resources. To avoid this problem, it’s important to keep an eye on your sales data and order accordingly.

Failing to Communicate with Suppliers

Another mistake that businesses make is failing to communicate with their suppliers. This can lead to several problems, including stockouts and late deliveries. To avoid these problems, it’s important to build strong relationships with your suppliers and always communicate your needs.

Not Tracking Your Inventory Levels

Not tracking your inventory levels can have some serious consequences. For one thing, it will be very difficult to manage them effectively. As a result, you may end up with stockouts or overstocks. Additionally, you won’t be able to make informed decisions about your inventory levels. This can lead to inefficiencies and higher costs. In the worst case, it can even jeopardize the success of your business. So, if you’re not already doing so, start tracking your inventory levels today. It’s essential for effective management and decision-making.

Seasonality Problems

Many businesses experience fluctuations in demand due to seasonality. This can be a challenge for inventory management because you need to have the right amount of inventory on hand at all times. If you don’t, you may end up with stockouts or overstocks. As a result, it’s important to take seasonality into account when planning your inventory levels. This way, you can be sure to have the right amount of inventory on hand when demand is high. Seasonal demand can vary quite a bit from year to year, so it’s important to keep an eye on trends and adjust your inventory levels accordingly. By doing so, you can avoid the costly consequences of stockouts and overstocks.

Types of Inventory Losses

Inventory loss is often seen as an inevitable cost of doing business. But with the right systems and processes in place, businesses can do a lot to reduce the amount of inventory they lose each year. Here are some main types of inventory losses;

Employee Theft

Employee theft is one of the most common types of inventory losses. This can take many different forms, such as taking inventory home without permission or selling inventory on the side. Theft can also occur when employees fail to properly document inventory levels or when they damage inventory.

While it is impossible to eliminate employee theft, several steps can be taken to minimize its occurrence. One way to deter employees from stealing is to conduct regular audits of inventory levels and require employees to sign out inventory when it is removed from the premises. Another way to reduce theft is to offer incentives for employees who report instances of theft or help prevent it from happening. By taking these measures, businesses can help to reduce the amount of inventory loss due to employee theft.

Customer Theft

Customer theft is another common type of inventory loss. This can happen in many ways, such as shoplifting or return fraud. While it is not possible to eliminate customer theft, there are many steps that businesses can take to minimize its occurrence. One way to deter customers from stealing is to have a clear and visible security presence in your store. This can help to deter potential thieves and make it more likely that they will be caught if they do try to steal. Another way to reduce customer theft is to implement security measures such as CCTV cameras and alarms. By taking these measures, businesses can help to reduce the amount of inventory loss due to customer theft.

Breaking and Expiration of Goods

Another common type of inventory loss is breakage or expiration of goods. Reasons are damaged packaging or products that have reached their expiration date. While it is not possible to eliminate this type of inventory loss, businesses can take steps to minimize it. One way to reduce breakage and expiration is to carefully track inventory levels and remove damaged or expired goods from the premises as soon as possible. Another way to reduce this type of loss is to implement quality control measures such as regular inspections of products. By taking these measures, businesses can help to reduce the amount of inventory loss due to breakage and expiration.

Incorrect Inventory Counts

One of the most common causes of inventory loss is incorrect inventory counts. This can happen for a number of reasons, such as human error or problems with the inventory management system. Incorrect inventory counts can lead to stockouts or overstocks, which can be costly for businesses. To avoid this type of loss, it is important to regularly audit inventory levels and to have a robust inventory management system in place.

How NetSuite Inventory Management Can Help Your Business?

NetSuite inventory management system provides many benefits for businesses, including the ability to reduce inventory on hand, optimize inventory levels, ensure product availability, and keep inventory costs low. Here are some benefits of using NetSuite for inventory management;

Reduce Inventory on Hand

One of the main benefits of NetSuite inventory management system is that it allows businesses to reduce the amount of inventory they have on hand. This is because NetSuite gives businesses a single, real-time view of inventory across all locations and sales channels. This means that businesses can make more informed decisions about what inventory to keep on hand and what can be safely sold or shipped from other locations. As a result, businesses can free up cash that would otherwise be tied up in excess inventory.

Optimize Inventory Levels

Another benefit of NetSuite inventory management system is that it helps businesses optimize their inventory levels. By giving businesses a single, real-time view of inventory across all locations and sales channels, NetSuite helps businesses avoid stockouts and overages. This is because businesses can see exactly how much inventory they have on hand at all times and can make adjustments accordingly. As a result, businesses can avoid costly stockouts and maximize their sales potential.

Ensure Product Availability

In addition to reducing inventory levels and avoiding stockouts, NetSuite inventory management system also helps businesses ensure product availability. This is because NetSuite gives businesses a complete view of their supply chain, from raw materials to finished products. As a result, businesses can plan production more effectively and ensure that products are available when customers need them.

Keep Inventory Costs Low

Finally, NetSuite inventory management system helps businesses keep their inventory costs low. This is because NetSuite includes features such as lot tracking and expiration date tracking. These features help businesses keep track of their inventory so that they only purchase what they need when they need it. As a result, businesses can avoid waste and save money on their inventory costs.

Overall, NetSuite’s Inventory Management System provides many benefits for businesses that can help them save money, avoid stockouts, and ensure product availability. If you’re looking for ways to improve your business’s bottom line, consider implementing NetSuite’s Inventory Management System today.

Conclusion:

Inventory management is a critical part of any business, and there are many ways to manage it effectively. By auditing inventory levels, implementing a robust inventory management system, and keeping track of inventory, businesses can avoid costly mistakes and ensure that their products are available when customers need them. NetSuite’s Inventory Management System provides many benefits for businesses that can help them save money, avoid stockouts, and ensure product availability.

If you’re looking for an effective and comprehensive way to manage your Netsuite inventory, contact OdeCloud NetSuite professionals. Our team of experts can provide you with a custom solution that takes into account your specific needs. We’ll work with you to create a system that is efficient and easy to use, so you can focus on your business goals. Contact us today to learn more about our inventory management services.

The post NetSuite Inventory Management: A Comprehensive Guide appeared first on OdeBlog.

FAQ: 10 Things To Know About Inventory Management In NetSuite

Osar Iyamu — Fri, 24 Apr 2020 23:24:00 +0000

Customer Challenges

Manually entering and tracking inventory in spreadsheets and sending stock levels through email is simply not a scalable solution. This manual process often leads to human error, leading to inaccurate inventory displayed on our online stores and POS, which then leads to over-selling or under-selling products. A large part of the issue that comes with scaling a business is the lack of visibility into business operations and company assets and the inefficiencies of manual processes.

Process Before Automation

#1. Manual daily counts

#2. Manual daily order and shipment reconciliation

#3. Inventory reports distributed through email or shared file

Is This NetSuite Module Right For You?

NetSuite inventory management is right for you if you wish to track inventory in one or multiple locations, implement and track safety stock, automatically create purchase order when items reach their re-order points, automatically create cycle counts, use demand planning and distribution requirements planning to optimize your inventory and cashflow.

Please note that some of these features may come at an additional cost to your NetSuite subscription.

Typical project duration: 1 month
This duration does not account for online store, POS or WMS integration. Large data migration might also extend this duration.

FAQ

1. What is an Item Record?

In NetSuite, Items are the goods and services sold to customers and/or bought from vendors. The term “Item” is also used to represent discounts, miscellaneous charges and item groups.

Inventory

An inventory item is a product that you purchase and resell, or manufacture into another item for resell.

Non Inventory

A non-inventory item is a product that you sell or purchase but do not record into inventory.

Assembly

An assembly item is a product that is manufactured using other inventory, non-inventory and service components. Assembly items may be sold or can be used as a component of a higher-level assembly item

Download

A download item allows for customers to purchase and download items from the web store/customer center. If required, a license code can be specified and made available to customers within the customer center. (Note: NetSuite does not provide the generation of the license key)

Service

A service item is an item you create to track time and record billable hours.

Other Charge

Other charge items are typically used to represent miscellaneous charges that do not fall into other categories.

Item Groups

Item groups are used to consolidate items on invoices for either display to customers, ease of entry or VSOE bundling. The member items are treated independently from a revenue perspective.

Item Kits

Kits or packages let you create a product that is a collection of other items. Revenue is tracked by the kit item and multiple price levels can be assigned. Whenever you sell a kit, the individual item members are deducted from inventory.

Discount/Markup

These items can be applied as a line item or to the total amount of the transaction. The discount/markup can be calculated as either a percentage or a flat rate.

2. How are items priced?

In NetSuite, you can set up different prices levels for each item and service. The price can be available for choice on a per transaction basis or based on the definition of the customer. For example, if you want to sell an item at Reseller level sometimes and at Direct Customer level other times, you can create a sales price for Reseller customers and a sales price for Direct customers.

Price groups allow assignment of customer-specific price levels for groups of items. For example, you can create a pricing group called “Enterprise Software License” and associate the pricing group with all of your enterprise software license items. Items can be added to this group by associating this pricing group with the item on each item record. On a customer record, you can select the pricing group and select the price level you want to charge this customer.

3. What are the available item costing options?

The inventory costing method you choose defines the way NetSuite calculates the cost of items. Standard costing methods are:

First-In, First-Out (FIFO) - Using FIFO

The first goods purchased are assumed to be the first goods sold so that the ending inventory consists of the most recently purchased goods. This method is useful to track different shipments of similar products.

Last-In, First-Out (LIFO) - Using LIFO

The last goods purchased are assumed to be the first goods sold so that the ending inventory consists of the first goods purchased.

Average costing (weighted-average method)

COGS are calculated as the total units available during a period divided by the beginning inventory cost plus the cost of additions to inventory.

Standard costing

Standard (expected) costs are entered for each item and inventory will be valued against these figures. Any difference between the standard and actual item costs during purchasing and assembly will be posted to pre-defined variance accounts

4. How de we manage our serialized items?

Serialized inventory is a means to track the purchase and sale of physical inventory items by assigning a serial number to each item. The item’s serial number enables you to choose a specific serial numbered item to fulfill or receive an order. You can access the history of any serialized item to track the cost of the item, or check its status. You can include serialized items in assembly items, or build assemblies which have a serial number assigned to them. Customer records will show the serial numbers of items purchased by each customer to reference for returns or entering cases.

5. How de we manage our perishable and lot managed products?

Lot items track the purchase, stock and sale of a group or quantity of items by assigning a specific number to the group or quantity. For example, a food distributor can track goods by assigning a lot number and expiration date to a group of perishable products.

Lot numbered item records track the quantity of items and the specific cost for each lot as products are purchased and sold. On the lot number record, you can identify an expiration date and enter notes about the lot.

6. How de we manage our items characteristics such as colors and sizes?

Transaction item options are fields that you can add to the line items of your transaction records to gather information specific to your business needs. Item options can refer to characteristics of an item. For example, you might record different colors of an item as item options.

Because a transaction item option is tracked in NetSuite as an option and not as an individual item record, you cannot track the purchase, sale, cost or stock level of each color.

You can create item options for the following:

purchase items
sales items
opportunities
web store items
kits and assemblies

7. What would you recommend to create items with characteristics without creating each item and it’s available options manually?

You can create and maintain your item records more easily using an item matrix. An item matrix allows you to track your items by certain options, such as size and color. An item matrix consists of a parent item and sub-items. The parent item does not appear on transactions. With an item matrix, each individual combination is tracked separately.

8. Can I create bundles of products and services in NetSuite?

In NetSuite, item groups can be used to facilitate input of items, group items for display or bundling for VSOE purposes. The items in a group are treated independently from a sales perspective with their own quantity, price and associated revenue/deferred revenue accounts.

They differ from kits in that a discount or specific price cannot be applied to item groups.

9. Can I create packages containing multiple products, but sold as one unit in NetSuite?

Kits or packages let you create items that are collected from other items. Unlike with item groups (as described below), you can assign multiple price levels to your kits and even make them available in your Web site. Whenever you sell a kit, the individual item members are deducted from inventory.

You are able choose to print all the members of the kit, with their display names, quantities, descriptions and rates on the invoice or other form. If you prefer, you can also print only the description and amount of the kit or package on the form.

You are able to add description, inventory, non-inventory, other charge, service, kit and assembly items to your kits or packages.

10. How de we manage our multiple units of measure?

In NetSuite, the Multiple Units of Measure feature can be used to define various units used to stock, purchase and sell inventory items. Using units of measure allows greater flexibility and accuracy when tracking and selling inventory.

A Units Type can be set up and each unit for that type can be defined. For example, a Units Type called Length can be set up. Then, Length units of Inch, Foot and Yard are set up. A base unit is defined and each unit is defined in terms of the base. For example, if the base unit is Inch, the unit Foot is defined as 12 inches.

Once a Units Type is set up, a unit can be defined to default for each item on a particular transaction. On item records, a unit can be designated to default as a purchase unit, stock unit or sales unit. Then, on transactions:

Purchase orders default to show the item in purchase units
Invoices default to show the item in sales units
Inventory adjustments default to show the item in stock units

Benefits After Implementation

Tighten control over your full inventory lifecycle
Slash costs for procurement and logistics
Eliminate stock-outs and cost of rush deliveries
Monitor and improve performance with real-time analytics

For more information, contact us.

About the Author

Osar Iyamu
Co-Founder, CEO @ OdeCloud.

I help accelerate NetSuite projects & end user support through high-performing NetSuite teams..

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