We do outsource manufacturing. let's say we are se...
# generalj
Jackie Yang
12/23/2024, 10:52 PMWe do outsource manufacturing. let's say we are selling chips to a retailers. The retailers orders in pallets. So 720 bags of chips are on the pallet and then the pallet consists of top and bottom lid, and a gps tracker. So what happens is that our 3PL will get an order for 720 bags of chips. The retailer can not order in any other quantity than the pallet quantity. The 3PL knows that these 720 bags of chips make a pallet so they go and build the pallet to ship out. In this scenario I would think it's just in time inventory since the warehouse isn't creating these pallets ahead of time just for when the order is sent to them. The question I have is how do others handle this scenario in NetSuite. I just see constant fulfillment issues. The 3pl might ship out the pallet but it's up to our supply team to go build that pallet in NetSuite so theres inventory? Is the normal answer that the supply chain team just needs to keep on top of entering in this data as it's made? I feel like the outsource manufacturing part is what adds a layer of complexity. Any insight to how others are handling this will be helpful!
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mesper
12/24/2024, 10:50 AMIs the order coming directly to the 3PL, not to your Netsuite instance and then to your 3PL?
Why do your supply team build the pallet?
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Jackie Yang
12/26/2024, 3:50 PM@mesper The order comes into NetSuite as a sales order then the sales order is sent to our 3PL. The 3pl knows that they have to build the pallet so when they get that order, they would know to build the pallet. They would then send us the shipment confirmation which creates the item fulfillment in NetSuite. The item fulfillment won't be able to be created in NetSuite because the finished product needs to be "built" in NetSuite
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Kman
12/26/2024, 5:19 PM1. Are the pallet top and bottom, and the GPS trackers set up as inventory items or non inventory items?
2. can you confirm the Sales order just says 720 bags? How do you receive the sales order from the customer?
3. How do you communicate the order to the warehouse? EDI/ other?
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Jackie Yang
12/26/2024, 7:35 PM@Kman
1. Top lids, bottom lids, and gps tracker are set up as inventory items
2. Sales order current set up would just say 720 bags, but if we need to, could change it to be 1 pallet instead
3. Order to NetSuite comes in via EDI and then order to the warehouse is NetSuite to 3PL via celigo
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Kman
12/26/2024, 7:38 PMCan you confirm if you a sending an 856 to customer after fulfillment?
Kman
12/26/2024, 7:51 PM@Jackie Yang 1&2 are where you issue lies (imho).
Your issue is -
Everything (chips, pallet top/ bottom, and gps tracker) is setup as inventory items. So when a customer orders a pallet (720 units), you need to consume the “consumables” (pallet bottom and lid, and gps tracker) for each pallet, but you aren’t invoicing the customer for the consumables (which is common). And you don’t have a full Pallet set up as an inventory item (which is common too)
There’s one of several options you can do to simplify things for urself -
Option 1.
If you can convert the consumables to non inventory items, then you can create a “Kit Inventory Item” say Item KIT720GPS (which does not require assembly) which consists of following bill of materials -
Chips - 720 (inventory)
Top - 1 (non inventory)
Bottom -1 (non inventory)
GPS Tracker - 1 (non inventory)
Basically you are creating a “Kit” for 1 pallet which includes everything that goes with the pallet.
Customer order comes in - 1 Pallet. (I would get the customer (or your EDI translator) to switch to Unit of measure of Pallet, and link it to item KIT720GPS in NetSuite.
Then your 3 PL gets the order (for same Kit item), they build and fulfill the order.
Warehouse should be able to send you a confirmation through Celigo that will “assembly and fulfill” the order in NetSuite directly. This way your supply chain team doesn’t need to manually do anything.
Kman
12/26/2024, 8:00 PMOption 2 - maybe cumbersome but still doable.
Create a NetSuite Inventory Item (say PALLET720INV) with following Bill of materials -
Chips- 720 (inventory)
Top - 1 (inventory)
Bottom - 1 (inventory)
GPS TRACKER - 1 (inventory)
Get customer to switch to ordering in Pallets. Link that item in EDI translation to link to item PALLET720INV in NetSuite.
Have your 3PL create a “Make to Order“ inventory item in their warehouse that has the same Bill of materials.
When you receive a sales order for PALLET720INV, and send the same to the 3PL. The warehouse assembles and ships the item to customer. Warehouse sends you a “Build” to trigger assembly build in NetSuite, and then marks the customer order as fulfilled.
This one is a bit more cumbersome and your 3PL needs to be savvy with Celigo and their WMS needs to be able to handle this.
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Jackie Yang
12/26/2024, 8:16 PM@Kman How the customer orders doesn't really matter. We have ways via EDI to map what they order to a different item in our system as well as convert the units within our system as needed and then we send back to them what they ordered.
Regarding changing components to non-inventory. We have to track inventory, that's why those components were set up as inventory rather than non-inventory. The other concern with the kit process is that doesn't capture COGS correctly. Those pallet components should be rolling up to the average cost it takes to build a pallet like that
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Kman
12/26/2024, 9:44 PMSo maybe option 2 will be your better bet.
I would imagine COGS will be correct as long as you’ve included all the materials (components) and labor, regardless of kit item or inventory assembly item.
Also your 3PL should be able to trigger assembly builds from their end with Celigo. Ive done This before for much more complex assembly builds (interestingly we had a similar inventory issue and we tracked inventory for non-inventory items as well as inventory in NetSuite).
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j
James Roth
12/27/2024, 10:23 PMHi Jackie, I agree with Kman's second option/suggestion. If you need to track the Top/Bottom/GPS as inventory, have you already chatted with the 3PL about this situation and their capabilities? You could explore a NetSuite-to-NetSuite Flow, triggering a webhook, or a NetSuite Script to help you with building, fulfilling and accounting for the items, instead of performing this task manually. Let your Celigo Account Manager know if you would like to set up a call!
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