Overcome NetSuite’s Inbound Shipment Over Receipt Challenge

This article is relevant if you are seeking to understand how to work with NetSuite’s Inbound Shipment Record and produce over receipts and subsequent inventory transfer.

Background

Many of our distribution based client operations who are located in the United States are realizing that their business will scale more efficiently if they focus on sales and product development and leave warehouse operations to organizations that specialize in inventory management and logistics. Such is the case for a recent third party logistics (3PL) integration between our client’s NetSuite account and their move to a new warehouse operation.

Our client engaged us to help them plan the NetSuite aspects of the migration away from in-house fulfillment operations. In the process, the client needed to mature away from spreadsheet-based purchasing operations so they could coordinate well with the new 3PL organization.

General Pattern for NetSuite based 3PL Integrations

The most simple pattern when working with a 3PL is to understand that they are primarily about inventory movements.

1. Inbound: inventory is moving to the warehouse typically from purchasing/sourcing efforts.
2. Outbound: inventory is moving away from the warehouse generally from sales order shipments.

Thus, this movement can most easily be accomplished by using the information on the Purchase Order to anticipate goods flowing through the warehouse and a subsequent item receipt record for actual warehouse receipts. Likewise, NetSuite’s Item Fulfillment record in the picked/packed state represents an opportunity to send tailored instructions to the 3PL warehouse to ship goods. Once a shipment is complete, the item fulfillment record is changed to ship status along with tracking information.

Introducing More Complexity to 3PL Inventory Movements

While the simple model often works and is the easiest to implement, there may be more demands depending on the situation.

Advanced Ship Notifications

Depending on the requirements of the 3PL warehouse operations, more information may be needed to help that operation plan. The most typical case is that the 3PL would like an Advanced Ship Notification (ASN) to help them understand the nature and timing of when goods are expected to arrive so they plan their receiving dock operations.

In our client’s situation, they needed to leverage NetSuite’s (relatively new) Inbound Shipment record which helps shape how goods are going to arrive by freight container. I have written a number of articles about Inbound Freight Containers and how to automate landed costs primarily before NetSuite introduced this record type.  Our approach is more flexible than NetSuite’s yet we always first attempt to work with native NetSuite record structure before we enhance:

1. Track NetSuite Inventory In-Transit with Freight Containers and Automated Landed Costs
2. Global Logistics Practices for NetSuite Driven Distribution Companies

The primary consideration to support the Advanced Ship Notification is that our client needed to formalize their efforts to craft purchase orders as well as adopt the use of Netsuite’s Inbound Shipment record so that it could be used to produce meaningful information to the warehouse.

1. Purchase Orders: formalize our client’s method of crafting purchase orders; as the client had hundreds of lines on an order, we leveraged our Record Import Export Manager license-free toolset to ease the creation of large purchase orders.
2. Inbound Shipment Records: likewise, the use of the inbound shipment record is required to track how suppliers have packed freight containers that originate from a manufacturer across an ocean to help track in-transit flows.

Transfer Inventory

Due to the nature of the goods, a quality inspection would be required at the receiving dock.  Thus, it was important to be able to intake goods in a special quarantine area before they would be available for sale. In our client’s situation, the good news is the receiving operation was relatively quick for the 3PL to make their quality inspection.  Hence we were notified only once about item receipts and inspection results in one communication.

Over Receipts

Likewise, the nature of the goods being shipped was expected to have some quality problems. This is compensated by over shipping more than the specified purchase order quantity as a matter of practice.

Challenges Over Receiving NetSuite’s Inbound Shipment Record

With that background, as a NetSuite Systems Integrator, our challenge is to completely automate this operation so that the client can maintain a near real-time perpetual inventory ledger.  To do this requires understanding that NetSuite’s Inbound Shipment Record has some peculiar behavior relative to other business record operations:

1. Over Receipts: the inbound shipment record does not accept over-receipts despite activating the global switch that allows you to receive on PO based item receipts.
2. Asynchronous Operations: the inbound shipment receipt record does not actually update records in real-time. Instead, it acts as a job to effectively perform PO based item receipts and link together the records after it processes.

Of note, the inbound shipment record also does not conform to other ways you expect to work with it at the platform level. While the subject of a separate article, NetSuite software developers may be warned to watch out for assumptions around dates and internal identifiers.

Solving For Over Receipts and Inventory Transfers

After carefully studying NetSuite’s record patterns and our client’s more complex operational requirements, I worked with one of our consultants who invented an Inbound Shipment Receipt Helper record.  The purpose of this record is to coordinate the following:

1. Anticipate Overages: allow for overages at the item receipt level despite NetSuite’s Inbound Shipment limitation.
2. Coordinate Inventory Transfers: after the goods are fully received in the quarantine area, we then move the good inventory to the respective “for sale” location in the warehouse so that the “Available for Sale” quantity can be used in sales and existing order allocation efforts.

The key to this record was to track, at the line level, the inbound shipment record information and how it was connected to the respective purchase orders.  Given the asynchronous nature of the inbound shipment record normal receipt operation, we listen for traditional item receipt events to fire so that we can then affect our “additional help” to move the record along.

Click on images to get a feel for the record structure.

Fully Automate NetSuite to Drive Warehouse Operations

As a NetSuite Systems Integrator, our specialty is to bring best practices to our clients’ business operations while helping them fully automate their operations to keep costs low and scale. Readers may be interested in a related article: NetSuite Warehouse Management Systems Integration Patterns.

The point being is that the NetSuite Platform is a robust domain for achieving world-class operations. The key is to work with a mix of high caliber talent that can think carefully about business concerns and translate that to meaningful action plans.

If you found this article valuable, feel free to sign up to receive notifications of new posts. My promise is to not solicit you. If you have a challenging inventory integration effort, let’s have a conversation.

Marty Zigman

Holding all three official certifications, Marty is regarded as the top NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 30 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.

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