Manufacturing Features

NetSuite ERP includes optional Routing and Work Centre features fully integrated with other NetSuite element. These features enable the scheduling and recording of manufacturing operational activities against a complex work order that requires multiple teams of employees, or work centres.

In 2016 NetSuite manufacturing was enhanced by the acquisition of IQity, which is described in this page.

It can record quantity assembly completions, team resource costs, and process overhead costs against individual work order operations.

The Operational Planner or Production Manager can benefit from improved efficiency for planning:

      • Set up a routing record that defines multiple steps required to build a complex assembly.
      • Assign default scheduling parameters against each step.
      • Use backward scheduling to establish a supply plan based on manufacturing scheduling requirements.
      • The Production Manager can refine the tracking of shop floor activities using the following:
      • Assign work centre groups to operation steps to facilitate scheduling.
      • Record progress of activities such as completion and component issue against multiple tasks or one task at a time
      • Record actual machine and labour times against anticipated times.

The Cost Accountant can identify opportunity areas:

      • Assign labour and machine overheads against completion activities.
      • Develop a costing template for standard rates used in multiple routings.
      • Track cost variances between actual and standard at a per service item and cost category level

Manufacturing Items

NetSuite can help track your inventory throughout the manufacturing process. Item records used in the manufacturing process include Groups, Kit/Packages and Assemblies.

  • Groups An item group is a unit composed of items from your inventory. A group is sold as one unit, but has several member components. A group is dependent on its components’ prices. A group is sold as one unit, but has several member components. Item group components can be inventory items, assemblies, kits, and service items.
  • Kit/Packages A kit/package is a unit composed of items from your inventory. A kit is sold as one unit, but has several member components. Kit components can be inventory items, assemblies, kits, and service items. Each time a kit is sold, inventory records are updated for the individual members of the kit. One difference between kits and groups is that the price of a kit is not dependent on its components’ prices and can be assigned several price levels.
  • Assemblies An assembly item is an inventory item made of several components, but identified as a single item. Assemblies are manufactured by combining raw materials you stock. Stock is tracked separately for the assembly item and for each member component.

Once an assembly item is built, it is processed like an individual inventory item for tracking Cost of Goods Sold (COGS). The asset/COGS value of each built assembly item can be the total value of the assembly’s member items, or another value assigned on the item record. This value functions like the assembly item’s purchase price for COGS calculations. Assemblies can also be unbuilt to increase the inventory of raw materials.

The components required for an assembly may change over time due to engineering changes, vendor supply, availability or specific seasonal requirements. NetSuite’s BOM member control helps ensure that the right components are included in assembly builds at the right time. It can help plan for the utilization and purchase of components which are effective or obsolete within specific time frames. NetSuite determines if a component is valid for an assembly at any point in time based on the effective and obsolete date.

Routing

A manufacturing routing is a template that contains a list of steps required to build an assembly item. Each step is in a sequential order necessary to complete the operational sequence for completing the assembly.

A routing record can be selected on a work order to direct the completion of the assembly. The routing determines the work centre, cost template, labour resources and machine resources that will be utilized during the assembly.

Routings are unique for each assembly item, but routings may be shared across multiple locations.

The Show Planned Capacity on Work Orders preference help manage work order planning. This preference lets production managers and planners monitor planned completion times for work order builds against work centre capacity. This allows NetSuite to create planned time entries automatically when processing manufacturing work orders.

When this preference is enabled, work orders display the duration of each operation and the associated work centre. This aggregated planned time data can be accessed to determine if the resource capacity is enough to meet these needs, enabling more efficient manufacturing planning.

When this preference is enabled, planned time is automatically recalculated after each completion.

Costing

NetSuite supports the creation of eight cost categories to use with Manufacturing Routing. These cost categories help define expenditures associated with a work order. These can be direct e.g. Labour Setup, Labour Run, Machine Setup and Machine Run or Overheads e.g. Labour Setup Overhead Labour Run Overhead, Machine Setup Overhead or Machine Run Overhead.

The Standard Costing feature calculates the assembly cost by incorporating the labour and machine costs based on the default routing. If no default routings are defined, NetSuite uses the first routing created as the default routing to calculate the assembly cost.

Planned Standard cost is a consolidation of cost based on the component and cost category.

For subassemblies, each of the cost categories are rolled up to the next level in the Bill of Materials (BOM) hierarchy. The differentiation between the cost categories of this level and lower levels in the roll up results are based on the items associated with the rollup.

The cost of each step in a routing is calculated as total setup and run time by the rate per unit of time per cost category and per operation sequence.

Values for assets and expenses associated with a routing work order are posted to the designated Work In Process (WIP) account during the assembly process.

Values are added to the WIP account based on time logged against operation tasks or quantity produced in a run. Once the assembly process is complete, the values are removed from the WIP account and added to the Asset for Assembly account.

A manufacturing cost template is a list of rates that can be associated with completing a specific operation. The template defines the activities that occur and related costs to be recorded each time this step is completed. Using a manufacturing cost template streamlines tracking assembly process costs by making it easier to know which rates and accounts are commonly used for each step in an assembly process.

Work Centres

A work centre is a group of people that perform a specific step in the manufacturing process which can be assigned to cover specific steps in the manufacturing process.

Work Centre Calendars

For each individual work centre, you can create a work calendar specific to the needs of that work centre that represents the times the centre is available to process work orders. Specified work centre calendars enable you to manufacture products efficiently within time and resource constraints.

The work centre calendar information allows for real time visibility into total scheduling capacity, as well as intelligent manufacturing routing that calculates the processing time.

Demand Planning

Demand Planning is an optional additional feature. The supply planning method used depends on whether or not a default routing is identified

  • Without a Default Routing the supply plan calculates the order date (or release date) based on the due date less quantity times build time without reference to any calendar or resource requirements.
  • With a Default Routing the supply plan considers the default routing and associated work calendar for scheduling purposes. It calculates the cumulative lead time across all operation sequences using the formula Total time x Total Hours per day calculated by backward scheduling from the due date. Taking into account the associated work calendar for days available as well as holidays.

Changes can be made to the associated work calendar or to the routing record and the supply plan regenerated thus order dates are modified to reflect the new requirements and still meet the due date deadline.

Production Scheduling Methods

NetSuite supply plan processing for an assembly that has a routing defined depends on the setting for the Generate Work Order in Supply Plan preference. It may be chosen not to be generated or generated using backwards or forward scheduling.
When using Demand Planning to generate supply work orders NetSuite can calculate production requirements based on forward or backwards scheduling. These calculations assess the time, materials, and resources required to complete an order and set a start or end date for the production run accordingly.

The two methods available are as follows:

  • Forward Scheduling This requires a production start date (which defaults to the current date) and NetSuite calculates the time, materials, and resources required to complete all necessary operations to finish the task. The production end date is determined based on these calculations.
  • Backward Scheduling This requires a production end date, which is the date when items need to be completed. Then, based on data from the associated routing, as well as the related work centre calendar, NetSuite calculates the time, materials, and resources required to complete all necessary operations.

Manufacturing Routing Completions and Time Entry

For work orders that use manufacturing routings, you will need to enter time and completions against the operation tasks. By entering time and completions, you are able to track progress of the assembly process and monitor associated scheduling and costs.

Operations

The following is held for each operation task:

  • Operation Sequence
  • Operation Name
  • Predecessor
  • Start Date
  • End Date
  • Input Quantity
  • Completed Quantity
  • Setup Time (Min)
  • Run Rate (Min/Unit)

The operations overlap function can be used to schedule overlapping manufacturing operations. Overlapping of manufacturing operations can reduce work order lead times and allow more efficient utilization of manufacturing resources. When operations are setup to overlap, work order operations can be processed in a staggered method through the production cycle rather than one at a time.

NetSuite can automatically calculate the optimal Lag Amount, which is the shortest possible lead time for each work order.

When a work order is scheduled, NetSuite calculates the Optimal (Minimal) Lag Amount and Maximal Lag Amount for each operation that has a preceding operation and has a defined lag type. Then, NetSuite does not allow the lag amount to be defined outside of this range.

As a supply plan generates supply plan lines for assemblies or work orders, calculations account for lag related settings on the assembly routing. NetSuite verifies that the defined lag amounts fall in the valid range between the Optimal (Minimal) Lag Amount and Maximal Lag Amount. If not, the supply plan is automatically adjusted.

For any work order with a status of Pending Build, changes to operation tasks on the order can be made.

When a setup time or run time is entered on the task record, these times are planned estimates and are used for scheduling. It is only after completion time is entered against a task is the actual time updated in the Actual Hours field.

If no routing is selected, NetSuite calculates the Start and End dates for the order based on work order lead times defined on the assembly record.

The Manufacturing Operations Tasks list can be viewed to see which centres have completed tasks that are predecessors for other tasks to be worked on. Also, after completions are entered for tasks, scheduling is updated for labour and machines to reflect calculations based on the new entries. If work is completed earlier than anticipated, subsequent tasks are moved up and start and end dates are scheduled to be earlier. Likewise, if a completion shows that work is falling behind, subsequent tasks are moved out and start and end dates are scheduled to be later.

Routing Work Order Completions

Once an assembly task has been completed, record a completion against the operation. The completion logs time and activities against the operation. Updating records to keep information current in the work order records enables you to track costs and expenditures up to the current point in time.

You can enter a completion in three ways:

  • Enter a Completion from a Work Order
  • Enter a Completion on a Task Record
  • Bulk enter completions

Once you have entered an operation task completion, you can see the effects of the completion on the general ledger. The general ledger Impact page shows the overheads and labour expenses recorded against the WIP account.

When you enter the final required task work for an assembly as completed, saving the completion records the items as put into inventory. If you view the general ledger Impact page, note that the value is removed from the WIP account and added to the inventory account.

Completion Validation Preference

You can set a preference to validate that routing operation sequences are always followed in accordance with the work order. NetSuite uses this validation to ensure that the correct quantity is completed for each operational step before permitting the work order to continue being processed.

This validation can restrict the completed quantity amount entered on a work order completion for a particular operation. Such verification helps prevent problems due to out-of-sequence processing.

For orders completed across multiple days or shifts, partial quantities can be logged over time.

For an operation, if the labour run time is larger than the machine run time then the labour run time is used as the actual hours. The default values that show for machine run and labour run times can be modified to accommodate individual run times.

Once the appropriate time values have been determined, the amount shows in the Actual Hours field on the operation task record
Based on the actual hours recorded, NetSuite adjusts the schedule of subsequent tasks to provide a realistic view for completions.