How to Add Labor Codes to Work Orders in NetSuite Advanced Manufacturing

Key Takeaways

• One case study reported an 18% labor cost reduction after implementing automated scheduling features with labor codes
• A basic labor code setup can often be completed in under an hour by experienced NetSuite administrators
• Implementing a unified system helps eliminate errors—disconnected platforms can increase re-keying and handoff errors; the impact varies by process and data quality
• Advanced Manufacturing SuiteApp runs approximately $599/month for full labor code functionality
• In one case study, a company reported 95% inventory accuracy improvement when labor codes drove real-time work order completions

Understanding Labor Costing in NetSuite Manufacturing

Labor costing tracks the actual time and expense of human work applied to manufactured products. In NetSuite's WIP and Routings framework, labor codes serve as the bridge between your workforce qualifications and production requirements.

When you create a labor code—like "CNC Machinist Level 2"—you're defining both the skill needed for specific operations AND the labor category that tracks time and costs. During work order execution, operators clock in and out using these codes, either manually or via mobile barcode scanning, which automatically posts labor hours to the correct cost categories.

Why This Matters for Your Bottom Line:

• Actual vs. Estimated Costs: Labor codes capture real production time instead of routing estimates, improving COGS accuracy
• Skill-Based Task Assignment: Only qualified operators can badge into critical operations, preventing costly skill mismatches
• Real-Time Variance Alerts: Compare actual labor against standards before month-end surprises hit your P\&L

The system compares actual labor hours tracked via labor codes against routing standards to calculate labor efficiency and cost variances—giving production managers actionable data while work orders are still in progress.

Prerequisites for Labor Code Implementation in NetSuite

Before creating your first labor code, your NetSuite environment needs specific features enabled and configured. Missing any of these prerequisites will cause labor codes to fail silently or not appear in expected dropdown menus.

Required NetSuite Features:

• Manufacturing Work In Process: Look for this option under Setup > Company > Enable Features > Items & Inventory subtab
• Manufacturing Routing and Work Center: Same location, must be enabled alongside WIP
• Advanced Manufacturing SuiteApp: Required for full labor code functionality including mobile data collection

Configuration Requirements:

• Work Centers Created: Labor codes associate with work centers via routings—you need at least one defined in your work center list
• Manufacturing Routings: Labor codes attach to routing operations—basic routing templates required before labor codes become functional
• Location Setup: Each labor code applies to specific locations—multi-location manufacturers must create labor codes per site

Access Permissions:

• Administrator access to create and edit labor codes in Advanced Manufacturing
• Custom roles need work order transaction permissions and custom record access to Advanced Manufacturing labor records
• Production operators need appropriate role permissions for badge-in/out via Manufacturing Mobile

If you're unsure whether your NetSuite implementation has these features enabled, check with your administrator or implementation partner before proceeding.

Configuring Labor Items and Resources for Work Orders

Labor codes connect to your work orders through a specific hierarchy: Planning Skill Codes describe the operation's labor needs, while Labor Codes identify the specific worker qualification level within that skill category.

Setting Up the Skill Code Structure:

1. Planning Skill Codes: Broad categories like "Welding," "CNC Machining," or "Quality Inspection"
2. Labor Codes: Specific qualification levels within each skill—"Certified Welder," "Apprentice Welder," "QA Inspector Level 2"
3. Labor Scanning Codes: Optional barcode values for mobile scanner badge-in/out (no spaces or special characters)

Key Configuration Fields:

• Location: Select the manufacturing location this labor code applies to
• Cost Type & Base Rate: For reporting purposes—actual costs come from employee rates or work center settings
• Description: Full description for reporting clarity and operator reference

The Oracle documentation confirms that one skill code can have multiple labor codes at different proficiency levels, allowing granular tracking while maintaining simplified reporting rollups.

Step-by-Step: Adding Labor Codes to NetSuite Work Orders

The implementation follows a three-step sequence: create labor codes, link them to routing operations, then configure work order completion settings.

Step 1: Create Labor Codes

Navigate to Advanced Manufacturing and look for the Labor Codes setup option, then create new codes and complete these fields:

• Location: Select your manufacturing site
• Planning Skill Code: Select or create the skill category
• Labor Code: Enter the descriptive name (e.g., "Certified Welder")
• Labor Scanning Code: Enter barcode value for mobile scanning
• Description: Add full description for clarity

Time Required: 5 minutes per labor code

Step 2: Link Labor Codes to Manufacturing Routings

Access your manufacturing routing list and select the routing you want to configure:

1. Click on the specific operation step (e.g., "Operation 10 - Machining")
2. Look for the Labor Requirement subtab
3. Add a new labor record
4. Configure:
5. Skill Code: Must match labor codes from Step 1
6. Head Count: Number of workers needed simultaneously
7. Allocation Method: Fixed Minutes, Fixed Hours, or Percentage of Cycle
8. Labor Required: Numeric value based on selected method

When work orders are created from this routing, labor codes automatically associate with work order operations.

Time Required: 10 minutes per operation

Step 3: Configure Work Order Completion Settings

Access Advanced Manufacturing location setup and edit your location:

1. Go to the Work Order Completions subtab
2. Set Labor Setup Method to "Use Labor Records" to enable labor code-based tracking
3. Select your Labor Setup Labor Code from the dropdown
4. Set Labor Run Method to "Use Labor Records" for badge-in/out tracking

This configuration ensures work order completions pull labor hours from labor code badge-in/out records instead of routing estimates.

Time Required: 20-30 minutes for initial configuration

Tracking Labor Time Against Work Orders

Once configured, operators can clock time using these methods:

• Mobile Badge Scanning: Operators scan their badge ID at operation start/stop
• Web Interface: Manual labor entry through work order completion forms
• Work Bench: Production supervisors can enter time through the Advanced Manufacturing Work Bench

Work order completion settings determine how Advanced Manufacturing uses labor records when creating manufacturing transactions and reporting labor during completions

Optimizing Work Order Routing with Labor Codes

The true power of labor codes emerges when integrated with your routing structure. Each routing operation can specify required skills and track actual labor against planned standards.

Defining Labor for Each Routing Step

For each operation in your routing, consider:

• Setup Time: Initial preparation before production begins—often requires senior-level labor codes
• Run Time: Active production time—may use different labor codes based on operation complexity
• Machine vs. Labor Split: Operations where machines run independently require different labor allocation than hands-on assembly

The Allocation Method you select determines how labor requirements scale:

• Fixed Minutes: Labor required \= exact minutes regardless of quantity
• Fixed Hours: For long operations requiring consistent oversight
• Percentage of Cycle: Labor scales with operation duration—10% means labor required equals 10% of total operation time

Impact of Labor on Production Schedule

When labor codes integrate with Advanced Manufacturing's scheduling engine, the system can:

• Identify operations where certified operators are unavailable
• Flag capacity constraints based on skilled labor availability
• Calculate realistic completion dates considering labor bottlenecks

This creates a closed-loop system connecting production planning with actual shop floor execution.

Reporting and Analyzing Labor Costs in NetSuite

Labor codes generate data that feeds directly into NetSuite's reporting framework. Building effective reports requires understanding what data is captured and where it resides.

Available Data Points:

• Actual labor hours by labor code and operation
• Standard labor hours from routing definitions
• Labor cost variance (actual minus standard)
• Efficiency percentages by work center, labor code, or operator

Creating Custom Reports for Labor Performance

Use NetSuite Saved Searches to build labor performance dashboards:

1. Work Order Labor Variance Report: Compare actual hours to routing standards
2. Labor Efficiency by Skill Code: Identify which operations consistently exceed estimates
3. Cost Variance Trending: Track improvement or decline over time

For advanced analysis, SuiteQL queries can extract labor data across multiple work orders for statistical analysis—identifying patterns that simple reports might miss.

Production managers should establish action thresholds. For example, labor variance exceeding 15% triggers immediate review, allowing intervention while work orders remain active rather than discovering problems at month-end close.

Troubleshooting Common Labor Code Issues

Even properly configured labor codes encounter issues. Here are the most frequent problems and their solutions:

Labor codes don't appear in dropdown

• Cause: Work center name mismatch
• Solution: Verify Work Centers in Advanced Manufacturing and standard NetSuite have identical names (case-sensitive)

Mobile scanning not capturing labor

• Cause: Missing configuration
• Solution: Confirm Manufacturing Mobile SuiteApp installed, Labor Scanning Code populated, Badge IDs configured

Labor variance showing $0

• Cause: No routing baseline
• Solution: Routing operations must have labor setup time AND run rate defined

"Issued Step" column blank

• Cause: Work order timing
• Solution: These columns only populate when work order first created—finalize routings before generating work orders

Costs posting to wrong GL account

• Cause: Cost template issue
• Solution: Check Manufacturing Cost Template assigned to routing operation

Critical Warning: The "Issued Step" and "Auto-Issue" columns only populate when work orders are first created, not when edited later. This means you must finalize your routings before generating work orders, or you'll need to delete and recreate affected orders.

Best Practices for Managing Labor Codes and Work Orders

Successful implementations follow consistent patterns. Apply these practices from day one to avoid rework later.

Naming Conventions:

• Use department-skill-level structure: "ASSY-L2" for Assembly Level 2, "WELD-CERT" for Certified Welder
• Enables alphabetical sorting and quick identification in dropdown menus
• Limit initial labor codes to 8-15—too many creates operator confusion

Configuration Standards:

• Set Labor Allocation to Percentage of Cycle for variable-length operations
• Enable "Process Actual Labor Time" in Manufacturing Mobile preferences for true real-time tracking
• Start with "Use Labor Records" method from day one if you plan to use it eventually—switching mid-year creates comparison problems

Ongoing Maintenance:

• Review labor variance reports monthly with established action thresholds
• Update routing labor standards quarterly based on actual performance
• Archive inactive labor codes annually to prevent dropdown clutter

Leveraging NetSuite Workflows for Efficiency

Consider building automated workflows that:

• Alert production managers when labor variance exceeds thresholds
• Automatically flag work orders requiring supervisor review
• Send notifications when certified operators aren't scheduled for critical operations

These automations maximize efficiency by catching problems before they compound across multiple work orders.

Advanced Labor Costing Scenarios and Customizations

Beyond basic implementation, NetSuite supports sophisticated labor tracking scenarios for complex manufacturing environments.

Complex Routing Requirements:

• Multi-Resource Scheduling: Operations requiring multiple labor codes simultaneously
• Indirect Labor Allocation: Overhead costs distributed across work orders
• Overtime Rules: Different rates for standard versus overtime hours

Custom Extensions:

• SuiteScript-based integrations with external time-tracking systems
• Custom workflows for labor variance alerts based on business-specific thresholds
• Modified travelers with barcode fields, custom instructions, or QR codes

For regulated industries like medical device manufacturing, labor codes provide the traceability required for FDA compliance—proving which certified operators performed critical operations on each batch.

Integrating with External Time Tracking Systems

If your organization uses third-party time tracking, the SuiteTalk API enables integration. Employee time entries map to NetSuite labor codes via REST/SOAP web services, allowing:

• Centralized timekeeping with manufacturing-specific labor allocation
• Payroll integration alongside shop floor tracking
• Single source of truth across HR and manufacturing systems

Why Anchor Group Is Your NetSuite Manufacturing Partner

Implementing labor codes sounds straightforward on paper, but the devil hides in configuration details—work center name mismatches, routing timing issues, and mobile scanning troubleshooting that can derail even experienced NetSuite administrators.

Anchor Group brings deep NetSuite manufacturing expertise to these challenges. As an Oracle NetSuite Alliance Partner with specific experience in work orders, BOMs, WIP, routing, and labor costing, our consultants have solved the exact problems you're likely to encounter.

What Sets Anchor Group Apart:

• Manufacturing Focus: We've helped manufacturers implement everything from basic assembly builds to complex routing configurations with labor codes
• Hands-On Implementation: Our team doesn't just advise—we configure, test, and train your staff on labor code workflows
• 35+ Pre-Built Apps: If standard functionality falls short, we likely have an extension that bridges the gap
• Midwestern Reliability: Working with us feels like calling your neighbor for help—straightforward, practical, and no-nonsense

Whether you're implementing labor codes for the first time or troubleshooting an existing configuration that isn't delivering expected results, Anchor Group's NetSuite services team can help.

Not sure where to start? Our free 30-minute consultation lets you discuss your manufacturing challenges with a NetSuite expert—no commitment required.

Frequently Asked Questions

What is a labor code in NetSuite Advanced Manufacturing?

A labor code is a skill-based identifier that links qualified workers to specific manufacturing operations. It defines both the skill required (e.g., "Welding") and the qualification level (e.g., "Certified Welder"), enabling accurate labor cost tracking and ensuring only properly trained personnel perform specialized tasks on work orders.

How do labor codes impact the overall cost of a manufactured item?

Labor codes capture actual production time instead of routing estimates, improving COGS accuracy. When operators badge in/out using labor codes, the system posts actual hours × labor rates directly to work orders. This actual vs. standard comparison enables variance analysis that identifies operations consistently exceeding cost estimates.

Can I automate the assignment of labor codes to work orders in NetSuite?

Yes. When you configure the Labor Requirement subtab on routing operations and set work order completion settings to "Use Labor Records," labor codes automatically associate with work orders created from those routings. Operators then badge against the appropriate labor code during execution, with time posting automatically to the work order.

What reporting tools are available in NetSuite to analyze labor costs efficiently?

NetSuite provides multiple reporting options for labor cost analysis. Saved Searches can compare actual labor hours to routing standards across work orders. SuiteAnalytics workbooks enable trend analysis over time. For complex queries, SuiteQL allows SQL-style data extraction from labor code records and work order transactions.

What are common pitfalls when implementing labor codes and how can they be avoided?

The most common issues include work center name mismatches between Advanced Manufacturing and standard NetSuite (must be case-sensitive identical), generating work orders before finalizing routings (causes blank "Issued Step" columns), and missing routing baseline data (causes $0 variance calculations). Avoid these by validating work center naming consistency, completing routing configuration before work order creation, and ensuring all operations have defined labor setup time and run rates.