This article will be relevant if you are looking for alternatives to NetSuite’s Demand Planning or third-party supply planning tools.
Background
Effective supply planning is a critical and often complex task for distribution-based organizations of any size. In discussions with various growing organizations utilizing NetSuite, a primary concern for operational leaders is maintaining a reliable perpetual inventory ledger. NetSuite’s core tools provide the essentials for inventory management. However, achieving a perpetual inventory system requires dedication to accurate sourcing, receiving, holding, and fulfillment processes that accurately reflect real-world operations.
Sometimes, we are in discussions with clients about their inventory allocation practices. See my 2019 article, Learn How to Gain Control over NetSuite Inventory Allocation Challenges, for consideration. Ultimately, perpetual inventory practices are fundamental to any reliable planning narrative.
Establishing Perpetual Inventory Practices
The foundation of effective supply planning begins with establishing robust perpetual inventory practices. This involves ensuring that all inventory records are consistently updated and reflect the actual inventory status. Such practices are essential before advancing to more complex planning activities.
Moving Towards Planning Narratives
With a reliable perpetual inventory practice (not always an easy matter to get in place), the focus shifts toward developing planning narratives. For managers working on scalable practices, the emphasis is on enhancing planning activities. Effective planning is crucial for forecasting future needs and preparing appropriate actions to meet those needs when and where necessary.
Linking Inventory Supply and Demand Plans
The conversation around supply planning typically revolves around an inventory supply plan driven by a demand plan. The demand plan is based on management’s evaluation of expected future orders. For business-to-consumer eCommerce retailers, demand tends to be seasonal and often varies by product group or sales channel. Ultimately, a well-crafted supply plan leads to the generation of purchase orders and, in manufacturing contexts, work orders.
NetSuite’s Core Purchase Order Generator vs. Enhanced Add-On Options
In maturing client company environments, a common scenario is an inventory planner utilizing spreadsheets to analyze the global inventory situation and generate recommendations for purchase orders.
NetSuite’s Basic Purchase Order Functionality
NetSuite’s core functionality for suggesting purchase orders relies on location-based preferred stock levels and reorder points. These factors are compared with current inventory levels and anticipated demand (as indicated in sales orders) to formulate suggested purchase orders for inventory replenishment.
NetSuite also offers an automatic calculation for Reorder Point, using a basic algorithm that considers sales order demand, supplier lead time, and safety stock. This functionality is generally effective, but what if it falls short of your expectations, leading to impractical purchase order recommendations?
Potential Solutions to Enhance Inventory Planning
If the out-of-the-box tools don’t work as hoped, we are faced with options:
- Automate Spreadsheet Planning: Initially, many opt to enhance their spreadsheet methods to support the ERP system. While this can be an effective short-term solution, it often lacks scalability and heavily depends on key staff, risking loss of institutional knowledge if they leave.
- Explore NetSuite’s Demand Planning Add-On: This module significantly enhances the basic NetSuite capabilities. However, our experience shows that it might still require customization to align with specific needs if the built-in algorithms are not fully satisfactory.
- Leverage Oracle’s Advanced Tools: With Oracle’s acquisition of NetSuite, additional tools such as Oracle Planning and Budgeting and Supply Chain Management have become available. These are not included in the core package and require careful planning and implementation.
- Consider Third-Party Tools like DemandCaster: These powerful tools provide an alternative to Oracle’s offerings but sit in the same orientation. When considering them, it’s important to weigh factors like implementation costs, ongoing fees, and total cost of ownership.
- Customize NetSuite Using Its Platform: As an alternative to adopting new tools and incurring additional costs, consider how to adapt NetSuite’s native algorithms to better serve your needs. This approach, focusing on careful listening and innovation, can unlock new possibilities within the existing system. This is where my firm’s capacity to carefully listen and innovate opens a new possibility.
Note for Manufacturing Organizations: While this article primarily addresses distribution companies, it’s worth noting that these processes fall under Materials Resource Planning (MRP) in manufacturing. MRP is inherently more complex due to the need to consider manufacturing capacities.
Optimizing NetSuite Order Items by Enhancing Reorder Point and Preferred Stock Level
Our client realized the limitations of their spreadsheet-based operations in managing purchase orders – the process was too slow and cumbersome. They wanted to move away from manually downloading sales data, existing purchase order data, and inventory levels to determine their going-forward purchase order requirements.
They identified five distinct approaches to supply planning, varying according to product category and other factors. Additionally, they acknowledged that their historical purchase order patterns were influencing future orders.
Even if the client went with new add-on software planning packages, they would have to “get their head into the game” to take these demand and supply patterns and drive them into the tools to get the purchase order suggestions they need. The journey is fraught with risk because it is difficult to make grounded assessments if the tools can produce the desired results until you effectively try through configuration and testing.
Our firm could not assess if the third-party tools could get the job done without carefully gathering requirements and pursuing a software selection project. However, through our discovery of their rules, we could see that if we were able to drive the reorder point and preferred stock level, we could reliably trust NetSuite’s built-in Order Items Purchase Order generator.
Developing a Custom SuiteLet for Reliable NetSuite Order Item Functionality
The most challenging aspect of this project was deciphering the client’s reorder rules, as they lacked clear descriptions of their approach. Our commitment was to thoroughly understand these rules. To confirm our understanding, we crafted SQL queries (primarily using SuiteQL due to its ability to bypass Saved Search data reach limitations) to ensure the client’s explanations were reflected in their actual data.
Eventually, we successfully decoded the five distinct reorder rules required to suggest new reorder points and preferred stock levels. We tested this by manually updating these values in NetSuite and observed if the native Order Items purchase order generator yielded the expected results.
To our satisfaction, the Order Items generator performed as desired! However, additional factors needed to be considered for refining the five rules. By adding a few simple custom fields to the item record, we captured the necessary variables to align with the inventory planner’s intentions.
With this groundwork complete, we could then apply other tools that we provide to our clients without licensing fees:
- Bulk Editor and Generator: As detailed in my 2020 article, See How to Craft Fast and Flexible NetSuite Bulk Record Generators, we offer tools to present and edit large amounts of data without license-charge. These tools allow for efficient and scalable NetSuite database updates.
- Rule Refinements: With the business rules now articulated in SQL, we can easily refine them as the business evolves and optimizes its purchase order strategies.
In essence, by adjusting two native item-level variables in NetSuite, we enabled the effective use of its native functionalities. Of course, the key to success with a large item catalog is integrating these changes into practical, user-friendly planning tools. Finally, considering all the flexibility in third-party planning tools, once you get the main algorithm working, those planning tools are effectively dormant capacity. The real work is in the first implementation.
Click on the images to see the basic architecture in full size and a screenshot of the tool.
Explore the NetSuite Reorder Point Dashboard Video
We named our utility the “Reorder Point Dashboard” as it provides planners with a centralized tool for their tasks. The main functionality involves comparing suggested reorder values against current ones to assess their viability. After reviewing the results from the underlying queries, planners can finalize their preferred values, which are used to update the inventory item database.
To understand how this works, watch the video (12:51) below or click the provided link to view the demonstration.
Maximizing NetSuite Investment Through Platform Innovations
This article exemplifies our dedication to assisting clients in maximizing the value of their NetSuite investment. Our approach involves comprehensively understanding the business requirements, exploring the native offerings of NetSuite, identifying any gaps in capabilities, and then evaluating whether integrating third-party tools will be beneficial. Because we have deep technical capacities and offer license-free intellectual property, we then consider whether developing a custom solution could yield a superior return on investment.
All of our existing intellectual property, accessible to our clients without licensing fees, was developed based on this philosophy. This strategy is the reason clients choose our firm to enhance their business processes, leveraging our knowledge of industry best practices facilitated by the NetSuite platform. We hold that the key element missing in most client scenarios is the human perspective that drives solutions. Our leadership role is to offer our expertise and proven technical skills to achieve meaningful accomplishments.
If you found this article relevant, feel free to sign up for notifications to new articles as I post them. If you are ready to tackle your NetSuite-driven supply plan, 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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