This article is relevant if you are a distribution company managing complex supply chains with products manufactured overseas for distribution in or out of your country.
Background
The traditional reliance on spreadsheets like Excel or Google Sheets to track inventory logistics is both inefficient and prone to errors. We see it in nearly every new client NetSuite implementation. As businesses grow, many consider implementing Supply Chain Management Software (SCMS) to streamline operations. NetSuite’s Inbound Shipment records are a common go-to tool. However, during implementation, users often encounter significant limitations with the native functionality. While NetSuite gets things very right nearly every time, they do miss the mark at times (e.g., the incentive compensation module is a very good example).
To address challenges advocating for properly modeling real-world problems, we developed the Prolecto Freight Container solution, which has been available to our clients since 2016 — predating NetSuite’s Inbound Shipment record. Over the years, the tool has consistently proven to be a superior alternative. More recently, a client sought help to evaluate alternatives to NetSuite Inbound Shipments as they were having multiple challenges getting to work in their Wine import and distribution business. Coupled with our expertise and leadership in NetSuite solutions, we brought them best practices to help overcome their logistics and supply chain hurdles by focusing first on business and then on NetSuite and platform capacities.
Key Challenges with NetSuite Inbound Shipments
Complexity in Setup and Use
Getting started with the record structure will lead first-time implementers on a journey full of questions and obstacles.
- Steep Learning Curve: the inbound shipment process can be cumbersome to implement and use effectively, with users often struggling to navigate its complexity.
- Inadequate Documentation: the documentation provided by NetSuite lacks the depth necessary for understanding and optimizing the feature, leaving many users confused and reliant on trial-and-error or external guidance. The reality is that the flows in this space demand nuanced understanding, and little guidance is available on recommended approaches.
Non-Native Behavior and Lack of Flexibility
- Limited Workflow Flexibility: the record’s rigid structure often fails to accommodate diverse and dynamic business workflows, causing inefficiencies in operations. One has to often “do it one way” or you are forced to use workarounds.
- Troublesome Take Ownership Functions: the “taking ownership” functionality can be difficult to execute. We have found many clients simply avoid using it altogether due to its complexity. By contrast, the built-in transfer order approach naturally generates in-transit inventory that inherently supports ownership tracking. It’s a matter of modeling the challenge correctly.
- Restrictions on Over/Under Receiving: the system does not allow for variances in receiving inventory, forcing businesses into rigid processes that may not reflect reality. The idea is to have maximum capacity to account for real-world situations. Have a look at this 2020 solution to gain insight into the specific challenge.
- Software Development Challenges: SuiteScript and workflow development for Inbound Shipments are notably clunky, requiring disproportionate effort to implement even customizations. Sure, you will get through it, but you will be perplexed in software maintenance by weird record operations that behave differently from other native NetSuite logic operations.
Integration and Customization Gaps
Related to the Software Development Challenges noted above, when you attempt to fit the record into your operation, you will find that you fight with overly complex matters.
- Integration Challenges: good luck connecting the inbound shipment feature to other systems or processes, such as a third-party fulfillment company or warehouse management system. If you want control, you will pay a price in wonder and nuanced development challenges.
- Insufficient Customization Options: a limited ability to tailor the feature for specific business needs restricts its usefulness for organizations with unique logistics requirements. Like many records in NetSuite, some elements are not extensible.
Landed Cost Allocation Limitations
Landed costs are becoming a more demanding challenge in a world where tariffs are growing. A topic all in itself; if you can’t get the trigger on the proper business event, you are in a compromised situation.
Lack of Support for Merge-in-Transit (MIT)
Inadequate Support for PO Payment Triggers
The Prolecto Freight Container Solution Models the Real World and is Intuitively Flexible
Implementation Leadership
- Best Practices: deep knowledge of inventory logistics best practices, ensuring efficient operations and compliance.
- Tailored Planning: because we think business first, we bring strategic decision-making that balances the trade-offs between NetSuite’s native approach and our tailored solution.
- Time Savings: we avoid the pitfalls and roadblocks common during implementation by leveraging proven methodologies. We help our clients navigate these implementations, understanding what they will face before they embark.
- Operational Training: hands-on guidance to help clients achieve operational efficiency with the solution. The idea is that we can shape the solution to optimize preference for each of our clients’ internal staff competencies.
- Cutover Planning: comprehensive preparation for seamless adoption of the new system. Getting in sync when there are many orders in play demands strong analytic capacity and driven commitments.
Tailored Implementation
We are the antithesis of NetSuite’s SuiteSuccess; no pretense. Inbound inventory logistics are rarely simple and demand truth-telling and solution modeling. The key is to optimize for efficiency to drive a scalable operation.
- Sensitivity to Real Flows: the solution is designed to align with the realities of inventory logistics, reflecting the actual movement of goods. It is adapted to fit as it is meant to be an accelerator fitted for use, not a forced product.
- Financial Considerations: the approach considers the financial implications at each stage of the flow, supporting accurate reporting and cost management. We believe well designed operational practices with sensitivity for the accounting model will produce greater organizational management harmony.
Virtual Manufacturer’s Warehouse and Inventory Transfer
The key is to recognize that we need an origin shipping point and a final destination point for goods movement.
- Virtual Warehouse Setup: we establish a virtual warehouse to represent goods ready for shipment from the manufacturer. Here, we use logical versus physical structures to help capture key business events especially the point where a supplier gives up property rights and/or turns over distribution responsibilities to carrier agencies.
- Transfer Order In-Transit Tracking: NetSuite’s transfer order feature does a fine job to move goods from the virtual warehouse to the destination warehouse, ensuring complete visibility into in-transit inventory. The key is to drive this record and its related structures in an efficient and natural manner.
Freight Container and Cargo Vessel Tracking
With the NetSuite Transfer Order as the key record to drive the solution, we need supporting/helping/planning records.
- Container-Level Records: a custom freight container record is tracked individually, with statuses like “At Origin Port,” “At Sea,” “At Landing Port,” or “In Transit to Destination.” This record models the organizing element that is holding all items in transit supported by the Transfer Order.
- Cargo Vessel Records: by grouping multiple freight containers under a single cargo vessel record, we can update container status in a single operation.
- Delivery Date Alignment: Using dates around planned/expected delivery dates aligned with purchase order timelines and landing schedules with tracking of actual dates allows for historical performance assessments and better reliability predictions.
Freight Forwarder Container Tracking with Landed Costs
Since the solution has not one but two inventory receipt events (at the origin point and destination point), we have more opportunities to produce better financial modeling for landed cost accruals and related inventory capitalization.
- Final Mile Tracking: we can track freight containers from port arrival to their final warehouse destinations. If we need to chain together a series of providers, we can use Transfer Orders are the proper modeling for hand offs.
- Automated Landed Costs: we can automatically capitalize estimated landed costs into inventory value upon receipts at the proper moment, ensuring accurate inventory costing by allocating using more natural elements. Prolecto has many landed cost libraries serving as superior alternatives NetSuite’s Landed Cost templates.
Inventory Logistics Visibility
We push beyond NetSuite’s saved search and canned reports. NetSuite SuiteAnalystics is almost there — but not quite. We solved this for our clients by providing our license-free Query Renderer Engine to get at exact reporting/dashboard requirements.
- Consolidated Data: integrates information from purchase orders (and even linked Sales Orders), item receipts, transfer orders, and more, providing end-to-end visibility into inventory logistics.
- Forecasting and Planning: with proper modeling, we enable item availability forecasting and cash flow planning with real-time insights into inventory movement.
Drop Ship and Direct Import Support
Easier API Integration
Watch a Freight Container video for an Alternative NetSuite Inbound Shipment Solution
Implement the Prolecto Freight Container Solution
The Prolecto Freight Containers solution illustrates the power of carefully modeling business problems and strategically leveraging NetSuite’s native capabilities while avoiding some of its weaker structures. This approach delivers high-quality solutions that help organizations lower inventory logistics costs and scale their operations effectively. What’s different about our commercial model is that we do not charge for the software. Instead, we are committed to delivering superior NetSuite professional services, and thus, we gain a competitive advantage by focusing on the end goal — the streamlined operation. Here is a link to the Accelerator Template.
With nearly a decade of experience implementing and refining this specific solution, we bring best practices and expert leadership to every engagement. By guiding clients through requirements analysis, implementation, and ongoing support, we ensure solid deliverables that align with their unique challenges and business goals.
If you found this article relevant and wish to stay updated on new articles as we post them, feel free to subscribe here. If you’re ready to explore how the Prolecto Freight Containers solution can transform your supply chain operations, let’s have a conversation.
Hi Marty,
It’s such a critical area for many business, and it doesn’t get the attention it deserves, so it’s great to see this thorough approach in action.
I think the main challenge that NetSuite have internally when trying to further develop this area, is that there are so many touch points with other areas of functionality that need to be allowed for. You’ve addressed many in your article, but I suspect based on individual client circumstances there are a number of additional areas that would need customization to support this approach:
– 3 way matching would no longer be available given the PO is receipted unseen.
– A similar problem that the native inbound shipment has will arise on receipt if there are variances between the inbound shipment / freight container and the physical goods received. I imagine you would be required to receive the container in full in all circumstance due to the behavior of the transfer order, and make any adjustments separately?
– Often it is useful to create the inbound shipment prior to the change of ownership taking place, as it can be useful as part of the planning process to identify what goods are intended to be shipped on what dates. It seems that the requirement to receive the PO to bring it onto the inbound shipment would preclude the ability to do this, as this would bring inventory onto our balance sheet that we don’t yet own.
– Similarly, if we want to use inbound shipments for inventory where the change of ownership does not happen until the goods are received, or particularly if we have a combination of some PO’s that have EXW terms and others that have DAP terms in the same container, allowing for this may be difficult.
– Upon receipt, the physical products will be marked with the PO as opposed to the TO, so shop floor staff may have difficulty finding the correct transaction to receive against. There is the risk that if partial lines have been shipped, the receiving officer may receive against the quantity that remains open on the PO, instead of the matching TO, which becomes difficult to keep reconciled. This is especially true if the containers are only used for a subset of inventory purchases, rather than all inventory purchases.
– It seems like it would be difficult to use the WMS receiving process in conjunction with the container record, meaning any native label printing, image capture, etc. as part of the WMS receiving process would be lost. The native inbound shipments can be received on the WMS.
– It would be important that the native location field on the PO remains set to the final destination warehouse, such that MRP / Supply Allocation etc. are working off correct data. This would also be important for the returns process to behave appropriately. It seems that you have already solved for this by adding custom location fields to your logic.
This is by no means intended as a list of criticisms (in fact I think your solution is excellent and a big step forward for many businesses) but rather a means to open discussion on related processes.
Hello Jarrod,
Thank you, you bring up good considerations. A couple of comments:
I respect that most clients are trying to get Inbound Shipments working because it is the “goto” offer. Thus, we usually help our clients carefully prepare for these inbound logistics as engagements often take a some more time than what most people originally estimate.
PS, you look like the kind of analyst that would thrive on our team. Just saying…
Marty