NetSuite for Manufacturing: Procurement, Inventory & Fulfillment Management

OpenTeQ Admin | Updated: Jun 14,2024
NetSuite for Manufacturing: Procurement, Inventory & Fulfillment Management

The purpose of a manufacturing supply chain is to ensure that a company produces the correct items at the right time and location to meet consumer demand while remaining cost-effective. This is no easy task, as client preferences change rapidly these days, and supply lines might be abruptly disrupted even faster. As a result, a supply chain must be highly adaptable, able to respond swiftly to changes in demand or supply conditions. However, including flexibility into supply chains frequently conflicts with efficiency, and so comes at a cost. To balance the competing demands for efficiency and flexibility, top-tier manufacturing supply chain managers employ technology to obtain greater visibility and control over the entire process.

What Is the Manufacturing Supply Chain?  

The typical manufacturing supply chain is a complicated web of interconnected processes that are frequently executed in parallel by different vendors in different geographic areas. It starts with product design and finishes with the product in the customer's hands. Along the journey, planners anticipate how much of the product customers will purchase, a procurement team obtains the necessary raw materials and components in the appropriate quantities, and a factory processes those materials into finished items that are warehoused until customer distribution. Inventory management is critical in a supply chain because it tracks the resources required for production — and then the finished goods — in real time, giving crucial data that ensures the entire process runs smoothly.  

12 Steps of the Supply Chain Manufacturing Process

Manufacturing supply chains are densely woven webs, no two of which are same. However, there is a consistent progression that a product goes through in the supply chain from beginning to conclusion. Some of the 12 steps mentioned below overlap, and each contributes to one or more of the others. Overall, they show a logical progression, with notes indicating where there is overlap and/or nonlinearity in the flow.  

1. Planning and Demand Forecasting  

This first phase in the manufacturing supply chain process includes several planning components that are all critical to the smooth and cost-effective operation of several following steps. This includes: 

Product design and engineering involve designers and engineers working together to build a product from concept to a precise blueprint that specifies the materials, techniques, and equipment required for manufacture.

Production engineering is the process by which engineers create efficient and cost-effective means of creating the product specified in the "blueprint." This comprises actions like selecting the appropriate machinery, identifying the raw materials and/or components required to manufacture the product, finding the optimal layout of the manufacturing floor, and establishing the best workflow. 

Production planning is where demand forecasting comes into play. Forecasts assist industrial planners in determining how much of each product to create, as well as when and how to produce it.  

Manufacturing scheduling is the process of determining detailed timetables for each stage of the manufacturing process. Good production scheduling ensures that raw materials/components are delivered on time, that work and workflow in the manufacturing plant are optimized, and that the essential resources (materials, machinery, and people) are allocated in the proper amounts so that the company's production line runs smoothly.

Given these aspects, it's clear that precise demand forecasting is critical to a manufacturing supply chain. Demand predictions help companies make budget decisions on anything from raw material purchases to investments in plant expansion, assembly line hires, and manufacturing equipment. Fast-growing enterprises may not have the budget to meet their growth potential if demand predictions are not accurate. Using advanced forecasting tools, routinely revising projections as new data becomes available, and methodically gathering required data (and ensuring that it is clean and appropriately formatted) are all critical practices that position businesses to make better-informed decisions later in the process.

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2. Supplier Selection and Sourcing 

Potential suppliers are examined based on price, quality, dependability, and ethical standards. The procurement team then negotiates contracts to obtain the best conditions, which include much more than just price. Price isn't always at the top of the list. Timing is often an important concern; imagine the frustration of a waterproof flashlight producer who has the housings, switches, bulbs, and so on ready to assemble but the rubber O-rings are late. Developing and keeping excellent supplier relationships is critical for managing manufacturing supply chains.  

Good supplier relationships can lead to more pricing, timeliness, and sales terms flexibility, as well as providing an invaluable safety net when the unexpected occurs. A recent Gartner poll confirmed this notion, indicating that 77% of chief supply chain officers were actively seeking to improve collaborative relationships with important customers and suppliers to prevent supply chain interruptions. This collaborative approach strives to acquire supply, shorten lead times, and minimize risk. However, it is also critical for manufacturers to diversify their source base. Dependence on a single source leaves a manufacturer vulnerable to anything that harms that provider. That is why keeping partnerships with multiple suppliers leads to a stronger supply network overall.

3. Receiving & Inspection  

The next step is to ensure the quality of the inputs to your manufacturing process. The objective here is to develop a systematic approach to quality control that is continuously used to prevent inferior materials from entering your manufacturing process, as well as to swiftly correct any differences between your purchase order and what you received. This ensures product quality, which is essential for buyer satisfaction.

4. Inventory Management

A manufacturing supply chain's core is an inventory management system that can track raw materials, components, subassemblies, and final goods throughout the entire process. This includes recognizing manufacturing inputs as soon as they are received, tracking them as they change at various stages of the manufacturing process, and recording their inclusion in finished products. 

Such a precise level of inventory management ensures that the proper resources are accessible at the right time at each stage of following production and assembly, warehousing, order fulfillment, and distribution, avoiding the financial dangers of overstocking or stockouts. And, if consumer complaints subsequently reveal a problem with a product, good inventory management allows a business to trace problematic components all the way back to its suppliers. To do all of this, effective inventory management employs real-time tracking software and, where applicable, just-in-time delivery tactics to maximize inventory levels and company cash flow. This can considerably boost the profitability of a manufacturing company. 

5. Production and assembly

This is where the manufacturing in a supply chain takes place. Raw materials are chopped, drilled, milled, or otherwise machined into functional components and subassemblies, which are subsequently assembled (often on an assembly line) to form the finished product. Alternatively, components and subassemblies are purchased from suppliers pre-formed and ready for final assembly. As a result, this phase functions similarly to the backbone of a manufacturing supply chain.  

Lean manufacturing is a method shown to be a game changer in increasing production and assembly efficiency. It works systematically to discover opportunities to eliminate waste as part of an iterative continuous improvement cycle. Lean manufacturing is especially well suited to enterprises with high product complexity and variability, such as automotive and electronics manufacturers or food processing companies.  

6. Quality assurance and control

A strong quality management program, which includes both quality assurance and quality control, is critical for manufacturing productivity. While quality control identifies problems in completed goods, quality assurance oversees the whole manufacturing process, from evaluating inputs as they arrive to ensuring that the facility follows its planned production procedures. In a strong quality program, a manufacturing company will 

  • Define what needs to be inspected and set quality standards based on the item's purpose.  

  • Set pass/fail criteria and document acceptable levels of variation so that quality inspections can be performed regularly.  

  • Determine the scope of the inspection, selecting between full or sample-based inspections depending on a range of characteristics, such as whether the product's input vendor is new or has demonstrated reliability over time, or whether the product is new or has been on the market for many years. 

  • Create and document a structured inspection procedure to maintain consistency, regardless of who does the inspection.  

  • Document processes for handling problems, defining when to do additional inspections, return items to suppliers, pause the assembly line, and so on.  

  • Periodically evaluate the program to identify areas for improvement. 

Manufacturers who combine all of these factors into their quality assurance and control systems can proactively solve inefficiencies, decrease waste, and, ultimately, improve customer satisfaction.  

7. Warehouses & Storage  

Finished products must be stored until they are delivered to a distributor, retailer, or final customer. However, good warehousing entails much more than simply creating a temporary location to put things. Efficient warehouse management optimizes storage space and storage conditions, allowing shipments to be chosen and transported properly and quickly when they arrive, while also saving money. A properly-managed warehouse can improve a company's operational efficiency, which immediately affects the bottom line, as well as aid to increase customer happiness. A warehouse management system (WMS) can help with this process by providing real-time tracking of items and automating various warehouse tasks. 

Furthermore, connecting a WMS with the company's inventory management system (IMS) allows the two systems to function together, creating a seamless link between finished items and data about their components and suppliers, on the one hand, and their final journey to the end consumer, on the other. In this way, integrating WMS and IMS can considerably increase the overall efficiency of a manufacturer's supply chain.

8. Order fulfillment.  

This is the stage in which customer orders are received, processed, packed, and sent. Speed and accuracy are the overriding elements to success at this stage. However, when viewed more generally and carefully, there are various order fulfillment strategies that can help an entire manufacturing organization. For example, implementing order fulfillment software as part of an enterprise resource planning (ERP) system allows for internal order processing integration with sales, accounts receivable, and other company divisions, as well as external supplier and partner integration. Such a system allows a company to create rules and triggers that can automate tasks beyond order fulfillment, such as refilling low inventory and confirming client deliveries.  

Other best practices include setting clear expectations with customers during the order process, integrating with inventory management software so that ordering systems know what stock is and isn't available, developing strong relationships with shipping partners, and developing good customer return policies and procedures. Good order management software provides visibility into the whole order fulfillment process, allowing organizations to track orders in real time and proactively address issues as they emerge.

9. Transportation & Logistics  

Although logistics is rightly positioned as the final phase in the industrial supply chain, it has the greatest reach in terms of overlap with the others. There are two types of logistics: inbound and outbound, with the former focusing on how supplies and other commodities are carried into a company and the latter on delivering goods to customers. Inbound logistics involves ordering, receiving, storing, transporting, and managing incoming supplies, whereas outgoing logistics entails packing finished products, shipping them, and delivering them.

When it comes to effective transportation and logistics, current technologies and old best practices are equally important. Meticulous planning is essential because it allows businesses to foresee potential challenges and develop contingency plans in case they arise. Maintaining strong ties with transportation partners is particularly vital since it allows firms to receive consistent, timely delivery and even negotiate lower costs. Automated logistics technologies improve efficiency by eliminating manual errors and freeing up people to perform more sophisticated jobs.  

10. Distribution & Retail  

The purpose of the previous step's outbound logistics is, of course, to transport a manufacturer's products through distribution and retail channels (if applicable) and to the end customer. Most manufacturers use several distribution channels, which are linked together via physical transportation networks as well as technology-based communications and tracking systems, all managed by a distribution management process.  

Finished items are often shipped first to a distributor or wholesaler, which has the infrastructure to purchase and manage huge volumes of products, including a network of consumer retail locations. Retailers, whether brick-and-mortar or online, display goods for customers to purchase. Distance, cost, and urgency all play a role in determining how items are transported from the manufacturer to the distributor and then to the store, whether by truck, ship, train, or airplane. 

Successful distribution is frequently dependent on the strength of a manufacturer's connections with its distribution partners, as well as the clarity of their written agreements, which should at the very least include price structures, delivery timetables, and return policies. Tracking systems that can offer real-time information on the location and status of commodities are essential. An ERP system with good accounts payable integration and modules for customer relationship management (CRM), inventory management, and warehouse management — all key components of a distribution management system — can improve manufacturers' operating efficiency by automating many aspects of distribution and retailing.

11. After-sales support and return management  

Too many small manufacturers treat customer inquiries and product returns as afterthoughts – if they consider them at all. In fact, a well-executed after-sales support and returns system is critical to a manufacturer's success since it directly impacts customer experience, defining brand loyalty, and encouraging repeat purchases. Excellent customer service begins with a clear return policy and many avenues for consumer involvement. Supporting customer service representatives with precise client account information, including real-time changes, is critical to providing a great customer experience.  

Handling returns necessitates setting rules for the disposition of returned products based on the reason for the return and the findings of subsequent quality control checks. Will it be refilled, returned for refurbishment, or recycled? Will customers (and any distributors or retailers) be refunded or credited? And how will funds be returned to the manufacturer, distributors/retailers, and customers? A solid, data-driven IT infrastructure capable of integrating services ranging from digital ordering to warehouse automation to CRM may make it much easier to manage these after-sales support and return issues.

12. Feedback and Continuous Improvement  

Finally, a manufacturing company that is equipped to gather and analyze customer and supplier feedback is best positioned for continuous improvement, product innovation, and a competitive advantage in the marketplace. Analyzing feedback can help manufacturers better understand their customers' requirements and expectations, allowing them to fine-tune their goods and processes and, in some cases, leading to significant innovations. Consider a kitchen appliance manufacturer whose customers express a wish to remotely monitor and operate their products. 

NetSuite can help you bridge gaps in your supply chain

In the complex, interwoven world of manufacturing supply chains, smooth transitions from one phase to the next are critical to success. However, attaining practical integration of all the various systems that comprise a manufacturing supply chain — from the factory floor to inventory management, warehouse management, customer relationship management, and supply chain management — is a daunting task. Or it would be, if it weren't for NetSuite's cloud-based ERP, a comprehensive manufacturing solution that brings all those systems "under one roof" and is already fully connected. NetSuite Inventory Management software, for example, may give manufacturers with real-time visibility into inventory levels at all stages of their supply chains. 

By implementing robust IT solutions like NetSuite for Manufacturers, manufacturers gain: 

  • Real-time data visibility: NetSuite Solutions for Manufacturing provide access to accurate and consistent data across the entire supply chain, allowing for faster decision-making when disruptions occur. 

  • Improved operational efficiency: Streamlining processes throughout the supply chain eliminates bottlenecks and reduces costs. NetSuite Services can help manufacturers optimize their operations to achieve maximum efficiency. 

  • Enhanced communication and collaboration: Stronger communication between all partners in the supply chain fosters better coordination and problem-solving. NetSuite Portals for Manufacturing can facilitate seamless communication and collaboration throughout the supply chain.  

In a global world of rapidly changing client preferences and frequent, often unexpected supply disruptions, manufacturing supply chains must be flexible. Though achieving supply chain flexibility is difficult, it is possible if businesses follow the 12 steps outlined above and successfully employ information technology to increase transparency and control over their whole production process.

Considering a NetSuite Implementation? 

If you're a manufacturer looking to optimize your supply chain and gain a competitive edge, NetSuite offers a powerful solution. NetSuite Implementation Consultants can help you assess your needs and develop a customized implementation plan. Certified NetSuite Partners can provide the expertise and experience to ensure a successful implementation. NetSuite Implementation Cost varies depending on the size and complexity of your business, but the potential return on investment can be significant. 

Conclusion 

In today's dynamic world, successful manufacturing hinges on a well-orchestrated supply chain. By following the twelve steps outlined above and leveraging the power of NetSuite for Manufacturing, manufacturers can achieve the flexibility needed to adapt to changing conditions while maintaining efficiency. This winning formula ensures they deliver the right products, at the right time, and at the right location, ultimately translating to satisfied customers and a thriving business. 

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