This article is relevant if you are using NetSuite and you want to enhance your order processing for lot numbering.
NetSuite Lot Number functionality is a common inventory feature for distribution companies. ¬†The ability to assign inventory lots to transactions provides more granular cost tracking and better inventory management. ¬†Yet, additional cost tracking may mean you need to expend more effort to get good information.
During order fulfillment, lot numbers must be defined so that proper costing can be accounted for. ¬†In NetSuite, an Item Fulfillment will setup the cost side of a sale transaction with a debit to cost of goods sold and a credit to inventory. ¬† Revenue is captured during subsequent invoicing which will generally¬†debit accounts receivable and credit sales. ¬†When you use lot number cost tracking, ¬†you can assign different costs across your inventory which will provide ¬†you with more opportunities to produce better gross margin analysis.
However, for companies that use NetSuite’s lot tracking feature, ¬†they increase the demands on order management. ¬†Within the order management process,¬†a lot number must be assigned to commit an item fulfillment record. ¬†If you want to bulk process your Sales Orders to produce your Item Fulfillment records, you may find it won’t process because NetSuite needs lot assignment information ahead of time.
Overcoming Lot Number Item Fulfillment Assignments
The key to overcoming NetSuite’s Lot Number Item Fulfillment assignments is to define the lot number during the Sales Order process. ¬†Because an Item Fulfillment gets its information from the Sales Order, the lot number can be inherited (defaulted).
But not so fast. ¬†Sales Order entry and management is typically conducted by sales people or possibly automated from eCommerce or other electronic based sales. ¬†Sometimes knowing which lot number to assign may require some specialized knowledge ¬†— not to mention that assigning lot numbers during sales order entry may cause frustration and slow down busy sales staff.
Automating Lot Number Assignments to Sales Order
The key to this challenge is to automate the assignment of Lot Numbers to Sales Orders based on rules. ¬† Recently, for one client, here is what we did to solve their bulk fulfillment concerns. ¬†Your rules may be different but the theme should be relevant:
- We defined a custom default lot number assignment on the item record to give us control over the lots we want to pull from.
- When a Sales Order is entered, there is no need to enter the lot number assignment (keeps it nice and easy). ¬†This works for phone-based sales (manual entry) or electronic orders (eCommerce, imported or integrated).
- When the Sales Order is committed and approved, the algorithm will lookup our default lot number definition to determine if there is any inventory assigned. ¬†If so, we assign the lot number on behalf of the user.
- If there is no inventory available on the default, we then perform a custom first-in, first-out ¬†(FIFO) algorithm to pick the next available lot number for assignment. ¬†Because internal IDs are sequential, we use it as a way to sort our available inventory records to find the oldest (first) available quantity.
- Finally, if we can’t find any available inventory, we naturally can’t assign the lot number — looks like a back order and more work must be done to get inventory on hand.
Now we can leverage NetSuite’s Bulk Fulfillment processor against our updated Sales Orders which greatly speeds up the preparation of orders helping the warehouse staff pick, pack and ship without adding additional order processing burden to order entry staff.
NetSuite is Designed for Innovation
We believe this lot number automation is a great example of how you can innovate on the NetSuite platform. ¬†If you are looking to streamline and improve your processing ability on your NetSuite account, contact us. ¬†Perhaps we can refine these algorithms to meet your needs.