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NETSUITE’S�OUTSOURCED MANUFACTURING

Wendy Emerson, NetSuite Administrator

Inert Corp

in partnership with the Boston NetSuite User Group

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OUTSOURCED MANUFACTURING

Outsourced manufacturing is used to send your raw materials to a vendor for assembly into a finished good
This assembly physically takes place at a vendor’s facility
It is not the same as Contract Manufacturing where your vendor sources all materials
NetSuite’s outsource manufacturing features allows you to manage your inventory, purchase order, work order, and assembly build through a single transaction series
Correct use of the outsourced manufacturing feature allows you track inventory, costs, and demand for both components and finished goods
This slide deck will walk through the steps necessary to enable NetSuite's advanced manufacturing feature, create a purchase order, and receive your finished goods

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USING OUTSOURCED MANUFACTURING

NetSuite’s Outsourced Manufacturing feature leverages NetSuite’s standard forms and transactions BUT
There are several ways it overrides preferences and functions when using an Outsourced Purchase Order
Accuracy in setup of records and transactions is essential
A checklist is vital to ensure no skipped steps – create your own internal documentation for your users!
Only the Outsourced Purchase Order Form is specially labeled for Outsourcing – all other records and transaction forms are standard

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BEFORE YOU BEGIN

This demonstration enters transactions manually through NetSuite’s UI and assumes the user is comfortable navigating NetSuite and entering records and transactions
There are no integrations, scripts, or workflows

Some forms are lightly customized, reflecting Inert’s actual NetSuite environment, but all fields that are part of the outsourced manufacturing demo are native NetSuite fields

This process was demonstrated using the Administrator role
Integrations, scripts, workflows or permissions may prevent you from following the instructions as presented
Follow the orange links to Oracle’s NetSuite documentation for more detail

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CONFIGURE YOUR NETSUITE ENVIRONMENT

Outsourced manufacturing is a native NetSuite feature
To utilize, you must enable:

Purchase Orders
Advanced Receiving
Assembly Items
Advanced Bills of Materials
Work Orders
Multi-Location Inventory
Outsourced Manufacturing

Follow the link to oracle’s documentation for instructions on enabling features as future slides assume the listed features are enabled, configured, and functional

Setting up Outsourced Manufacturing

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CHECKLIST FOR OUTSOURCED MANUFACTURING�

Configuration	Set Up	Manufacturing
Enable Outsourced PO transaction form No other forms specifically for “Outsourcing” Outsourcing tab exposed Vendor Entry Form Work Order Transaction Form	Location (with bin) Vendor Outsourcing Item Assembly Item BOM Revision w/ Outsourcing Charge	Enter an outsourced purchase order or work order Transfer inventory to vendor warehouse Fulfill from originating warehouse Receive at vendor warehouse Receive finished goods Item receipt creates Assembly Build Completes the work order Transfers Inventory

These are the steps this slide deck will guide you through.

These are initial configuration steps to be completed once per NetSuite account

These steps need to be repeated as you add new assemblies and/or vendors

Follow these steps every time you want to place an outsourced order

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OUTSOURCED PURCHASE ORDER FORM

Customizations > Forms > Transaction Forms

Search for “Outsourced Purchase Order”
If your company does not have a custom outsourced purchase order form, and you cannot see a “Standard Outsourced Purchase Order” form, check for inactive forms
If you still cannot location the Standard Outsourced Purchase Order form, contact your NetSuite Administrator or NetSuite Support – this demo will not be helpful
Ensure you review the linked forms
You should also review your work order form to ensure the outsourcing tab is set to “Show.”

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CHECKLIST FOR OUTSOURCED MANUFACTURING�

✅Configuration	Set Up	Manufacturing
Enable Outsourced PO transaction form No other forms specifically for “Outsourcing” Outsourcing tab exposed Vendor Entry Form Work Order Transaction Form	Location (with bin) Vendor Outsourcing Item Assembly Item BOM Revision w/ Outsourcing Charge	Enter an outsourced purchase order or work order Transfer inventory to vendor warehouse Fulfill from originating warehouse Receive at vendor warehouse Receive finished goods Item receipt creates Assembly Build Completes the work order Transfers Inventory

These are the steps this slide deck will guide you through.

These are initial configuration steps to be completed once per NetSuite account

These steps need to be repeated as you add new assemblies and/or vendors

Follow these steps every time you want to place an outsourced order

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LOCATIONS & VENDORS

Your vendor functions as an extension of your business, so you create a location in NetSuite which will be used on records and transactions

Create a warehouse for your vendor using

Be sure you enter the vendor’s address on the location page

Create at least one bin in your outsourced location

Then you link this location to the vendor

Create a vendor record or Edit an existing vendor record

Go to the OUTSOURCED MANUFACTURING tab and select the outsourced location
Save and exit

Creating Locations

Linking a Vendor

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LOCATION

You MUST have use bins enabled
you MUST enter your vendor’s address
We have also created one bin – you will see this bin in future steps

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CHECKLIST FOR OUTSOURCED MANUFACTURING�

✅Configuration	Set Up	Manufacturing
Enable Outsourced PO transaction form No other forms specifically for “Outsourcing” Outsourcing tab exposed Vendor Entry Form Work Order Transaction Form	Location (with bin) Vendor Outsourcing Item Assembly Item BOM Revision w/ Outsourcing Charge	Enter an outsourced purchase order or work order Transfer inventory to vendor warehouse Fulfill from originating warehouse Receive at vendor warehouse Receive finished goods Item receipt creates Assembly Build Completes the work order Transfers Inventory

These are the steps this slide deck will guide you through.

These are initial configuration steps to be completed once per NetSuite account

These steps need to be repeated as you add new assemblies and/or vendors

Follow these steps every time you want to place an outsourced order

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VENDOR

Add or edit the vendor and on the Outsourced Manufacturing tab, select the Outsourced Location

If you do not see the manufacturing tab, go to Customization > Forms > Entry Forms and review the SUBTABS

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CHECKLIST FOR OUTSOURCED MANUFACTURING�

✅Configuration	Set Up	Manufacturing
Enable Outsourced PO transaction form No other forms specifically for “Outsourcing” Outsourcing tab exposed Vendor Entry Form Work Order Transaction Form	Location (with bin) Vendor Outsourcing Item Assembly Item BOM Revision w/ Outsourcing Charge	Enter an outsourced purchase order or work order Transfer inventory to vendor warehouse Fulfill from originating warehouse Receive at vendor warehouse Receive finished goods Item receipt creates Assembly Build Completes the work order Transfers Inventory

These are the steps this slide deck will guide you through.

These are initial configuration steps to be completed once per NetSuite account

These steps need to be repeated as you add new assemblies and/or vendors

Follow these steps every time you want to place an outsourced order

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OUTSOURCED MANUFACTURING ITEM

Can be Other Charge for Purchase or Service For Purchase
This is the fee you pay the vendor; set up your item as appropriate with the following caveats:

Set the purchase price to the cost of making ONE BASE UNIT of your assembly Item

divide the vendor’s fee if you are required to purchase in multiples greater than 1

You must select OUTSOURCING CHARGE as the cost category – this is what drives the NetSuite outsourcing functionality

If you skip this step you will have to start over with a new item record - the outsourcing charge is only available at initial creation

When you select Outsourcing Charge, the Can Be Fulfilled/Received box on the Preferences subtab is checked and cannot be cleared.
There will be no Unit of Measurement, because the UOM is controlled by the Assembly Item record.��WARNING: If your UOM fields are marked Mandatory, you will not be able to save because there is no UOM and NetSuite will put you in an error loop

Creating an Outsourced Manufacturing Item

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OUTSOURCED MANUFACTURING ITEM

Set your purchase price to the cost of one BASE UNIT of your Assembly Item

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COST CATEGORY

If the Outsourcing Charge is not available, ensure it is setup and active in your Cost Category list
Setup > Accounting > Accounting Lists > Cost Category
Best practice is to always check “Show Inactive” in case you have already have it set up but disabled

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CHECKLIST FOR OUTSOURCED MANUFACTURING�

✅Configuration	Set Up	Manufacturing
Enable Outsourced PO transaction form No other forms specifically for “Outsourcing” Outsourcing tab exposed Vendor Entry Form Work Order Transaction Form	Location (with bin) Vendor Outsourcing Item Assembly Item BOM Revision w/ Outsourcing Charge	Enter an outsourced purchase order or work order Transfer inventory to vendor warehouse Fulfill from originating warehouse Receive at vendor warehouse Receive finished goods Item receipt creates Assembly Build Completes the work order Transfers Inventory

These are the steps this slide deck will guide you through.

These are initial configuration steps to be completed once per NetSuite account

These steps need to be repeated as you add new assemblies and/or vendors

Follow these steps every time you want to place an outsourced order

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ASSEMBLY ITEM & BOM

Create your Assembly Item or edit and existing item
You may follow your company’s standard item setup up except that you must USE BINS, even if you normally would not
Create the Bill of Materials and the Revision

You MUST add the Outsourced Item (Outsourcing Charge) to the Revision

After you have created your BOM and Revision, return to your Assembly Item and add the BOM to the Assembly using the Manufacturing tab

Creating Item Records

Creating a Bill of Materials

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OUR EXAMPLE ITEM – HEPA FILTERS

Inert has a hepa filter assembled by outsourced manufacturing.
The hepa filter consists of an aluminum top and bottom which is sent to a vendor, who glues those to a filter element.
These hepa filters are used in the production of Inert’s gloveboxes, and sold directly to customers as replacement part for their existing systems

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ASSEMBLY ITEM – UOM & BINS

Remember that your Base Unit of Measure is the only UOM available for Outsourced Manufacturing

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ASSEMBLY ITEM – OTHER TABS

The Vendor tab is fully filled out with the Purchase Price set to one base unit of the assembly (in our example, a single HEPA filter costs $100)
Preferred Bins have been set for our main warehouse and the vendor’s warehouse

A BOM has been added on the Manufacturing tab

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ASSEMBLY ITEM - BOM

You must select either Master Default or Default for Location
If you do not set one of those two options, your process will fail at a later step

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BILL OF MATERIALS

Nothing special or different is needed for your Bill of Materials

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BOM REVISION

You must add the Outsourcing charge to the Revision
NetSuite sources the outsourcing charge from the BOM Revision – if you do not add it to the revision you will not be able to complete your PO
your outsourcing charge qty should always be one (1)

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CHECKLIST FOR OUTSOURCED MANUFACTURING�

✅Configuration	Set Up	Manufacturing
Enable Outsourced PO transaction form No other forms specifically for “Outsourcing” Outsourcing tab exposed Vendor Entry Form Work Order Transaction Form	Location (with bin) Vendor Outsourcing Item Assembly Item BOM Revision w/ Outsourcing Charge	Enter an outsourced purchase order or work order Transfer inventory to vendor warehouse Fulfill from originating warehouse Receive at vendor warehouse Receive finished goods Item receipt creates Assembly Build Completes the work order Transfers Inventory

These are the steps this slide deck will guide you through.

These are initial configuration steps to be completed once per NetSuite account

These steps need to be repeated as you add new assemblies and/or vendors

Follow these steps every time you want to place an outsourced order

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WORK ORDER�

Enter a work order
Select the outsourced location
Select the BOM and Revision
Notice that the outsourcing charge does not appear on the work order BOM – this is correct.
Go to the Outsourcing tab

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WORK ORDER - OUTSOURCING�

Complete all sections
Your work order location must match your outsourced location as defined on your vendor record

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WORK ORDER - OUTSOURCING�

The outsourcing charge drops off the BOM and moves to the outsourcing tab
The purchase order will source the outsourcing charge from here
If you have more than one outsourcing charge you can change the item here, without altering your assembly item’s BOM revision

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WORK ORDER – LINKED PO�

After saving your work order, you will have the option to created a linked PO

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LINKED PURCHASE ORDER�

If you use the create linked PO button, your PO is ready
The next slide will show you how to create a po first, then a work order
All steps are identical after the PO is created

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PURCHASE ORDER�

Starting from a Purchase Order – select your outsourced purchase order form
NetSuite will auto fill the location, sourcing from your assembly item record
Creating a PO first is needed if you want to place an order different assembly items on one PO, and create multiple linked Work Orders
For example, Inert orders two types of HEPA filters from Camfil

For this demo we will be showing only a single item PO

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PURCHASE ORDER�

Enter your assembly item.
NetSuite sources all fields from your assembly item record and the BOM attached to the assembly item record
After you save, a lined work order is created automatically
All steps are identical after the PO is created

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CHECKLIST FOR OUTSOURCED MANUFACTURING�

✅Configuration	Set Up	Manufacturing
Enable Outsourced PO transaction form No other forms specifically for “Outsourcing” Outsourcing tab exposed Vendor Entry Form Work Order Transaction Form	Location (with bin) Vendor Outsourcing Item Assembly Item BOM Revision w/ Outsourcing Charge	Enter an outsourced purchase order or work order Transfer inventory to vendor warehouse Fulfill from originating warehouse Receive at vendor warehouse Receive finished goods Item receipt creates Assembly Build Completes the work order Transfers Inventory

These are the steps this slide deck will guide you through.

These are initial configuration steps to be completed once per NetSuite account

These steps need to be repeated as you add new assemblies and/or vendors

Follow these steps every time you want to place an outsourced order

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TRANSFER ORDER�

Create a transfer order to ship component from your warehouse to your vendor
The TO is not a linked transaction!

Inert uses the memo line to record the po and work order numbers

There are others ways to move inventory in NetSuite, but this demo uses a transfer order.

You could also drop ship components from another vendor

All steps are identical once you have inventory in the vendor location, no matter how it gets there

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TRANSFER ORDER – ITEM FULFILLMENT�

After creating your transfer order, you must fulfill it
The Item Fulfillment is the point at which your component inventory leaves your warehouse
But it does not ENTER the vendor location until you receive the transfer order

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CHECKLIST FOR OUTSOURCED MANUFACTURING�

✅Configuration	Set Up	Manufacturing
Enable Outsourced PO transaction form No other forms specifically for “Outsourcing” Outsourcing tab exposed Vendor Entry Form Work Order Transaction Form	Location (with bin) Vendor Outsourcing Item Assembly Item BOM Revision w/ Outsourcing Charge	Enter an outsourced purchase order or work order Transfer inventory to vendor warehouse Fulfill from originating warehouse Receive at vendor warehouse Receive finished goods Item receipt creates Assembly Build Completes the work order Transfers Inventory

These are the steps this slide deck will guide you through.

These are initial configuration steps to be completed once per NetSuite account

These steps need to be repeated as you add new assemblies and/or vendors

Follow these steps every time you want to place an outsourced order

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TRANSFER ORDER – ITEM RECEIPT�

After Fulfilling your transfer order, you must RECEIVE it
The inventory must be received for the components to be available during the assembly build process
Return to your transfer order and hit receive
This opens the item receipt but beware – there are two failure points here

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TRANSFER ORDER – ITEM RECEIPT�

Update your “To” Location to the vendor warehouse
Your inventory detail is not configured

I know it looks like it is configured – it is not configured
Open and configure your inventory detail

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TRANSFER ORDER – ITEM RECEIPT�

I know it looks like it is configured – it is not configured
Open and configure your inventory detail

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TRANSFER ORDER – ITEM RECEIPT�

The green check boxes show because the quantity and status is filled
There is no bin
Even though our environment has enabled the preference “Use Preferred Bins on Item Receipt” there is no bin
You must add a bin on the item receipt
If you don’t the inventory will not be available when you use the assembly build helper�

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TRANSFER ORDER – ITEM FULFILLMENT�

When your transfer order is in received status, you are done
No action need until your goods arrive at your warehouse

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CHECKLIST FOR OUTSOURCED MANUFACTURING�

✅Configuration	Set Up	Manufacturing
Enable Outsourced PO transaction form No other forms specifically for “Outsourcing” Outsourcing tab exposed Vendor Entry Form Work Order Transaction Form	Location (with bin) Vendor Outsourcing Item Assembly Item BOM Revision w/ Outsourcing Charge	Enter an outsourced purchase order or work order Transfer inventory to vendor warehouse Fulfill from originating warehouse Receive at vendor warehouse Receive finished goods Item receipt creates Assembly Build Completes the work order Transfers Inventory

These are the steps this slide deck will guide you through.

These are initial configuration steps to be completed once per NetSuite account

These steps need to be repeated as you add new assemblies and/or vendors

Follow these steps every time you want to place an outsourced order

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WORK ORDER�

Your work order should be correct with item, warehouse and BOM.
Note the outsourcing charge does not appear on the work order
The process of outsourcing re-locates the outsourcing charge from the BOM to the PO
This will happen regardless of which is created first: PO or Work Order
It’s why adding the outsourcing charge to the BOM is required for NetSuite’s outsourcing process

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PURCHASE ORDER – ITEM RECEIPT�

Step 1: Update your Receiving location to the warehouse where the goods are physically going to be put away�

Step 2: Enter the inventory detail using the Assembly Build Helper

�

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ITEM RECEIPT – ASSEMBLY BUILD HELPER�

The assembly build helper does 3 things at once:
Creates your assembly build
Closes your work order
Creates the inventory detail on the item receipt
First, you configured the inventory details for the assembly build
Since your items were assembled at your vendor, its logical you must add inventory detail in the vendor warehouse

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ITEM RECEIPT – ASSEMBLY BUILD HELPER�

Second, configure the inventory details for the components used in the assembly build
If you don’t see the components or the bin, check your item receipt
Configure an inventory detail for each line of the BOM

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PURCHASE ORDER – ASSEMBLY BUILD HELPER�

After you have configured both inventory details, hit Save.
You will return to the item receipt screen where you need to save again

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PURCHASE ORDER – ASSEMBLY BUILD HELPER�

When you save your item receipt, an inventory transfer is automatically completed
This is why you must update your item receipt location to your main warehouse at the beginning of the item receipt process

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PURCHASE ORDER – READY TO BILL�

If you have successfully completed all steps your PO will be in pending bill status and you will have no open transactions
Note that this item receipt by-passes the put away bin and the automatic inventory transfer will put the inventory into its preferred bin
Validate that your received inventory is in the bin you want it to be in!

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CHECKLIST FOR OUTSOURCED MANUFACTURING�

✅Configuration	Set Up	Manufacturing
Enable Outsourced PO transaction form No other forms specifically for “Outsourcing” Outsourcing tab exposed Vendor Entry Form Work Order Transaction Form	Location (with bin) Vendor Outsourcing Item Assembly Item BOM Revision w/ Outsourcing Charge	Enter an outsourced purchase order or work order Transfer inventory to vendor warehouse Fulfill from originating warehouse Receive at vendor warehouse Receive finished goods Item receipt creates Assembly Build Completes the work order Transfers Inventory

These are the steps this slide deck will guide you through.

These are initial configuration steps to be completed once per NetSuite account

These steps need to be repeated as you add new assemblies and/or vendors

Follow these steps every time you want to place an outsourced order

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THANK YOU

For more information on Inert visit our website
Comments or corrections to this presentation may be sent to Wendy

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