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Key Takeaways

  • Integrated SCM systems significantly reduce inventory carrying costs compared to manual processes
  • Properly configured systems experience fewer stockouts through automated tracking and replenishment
  • Significantly faster procurement processing through automated purchase orders
  • Multi-location inventory management significantly improves accuracy
  • Improved forecast accuracy within first year of demand planning implementation

Understanding NetSuite SCM Architecture Before Implementation

NetSuite's supply chain management integrates inventory, purchasing, manufacturing, and logistics into a unified system that tracks products from suppliers through to customers. Unlike disconnected tools that create data silos, NetSuite SCM connects inventory data across locations with purchasing requirements and sales forecasts in real-time.

Core SCM Modules in NetSuite

The foundation consists of four interconnected modules:

  • Inventory Management: Tracks stock levels, movements, and valuations across locations
  • Purchasing: Manages vendor relationships, purchase orders, and receiving
  • Demand Planning: Forecasts requirements based on historical data and trends
  • Warehouse Management: Controls bin locations, picking, packing, and shipping

When properly configured, these modules automatically calculate reorder points based on historical usage, lead times, and safety stock levels to generate suggested purchase orders—eliminating the spreadsheet math that eats up your procurement team's time.

How NetSuite SCM Integrates with Financials

Every inventory movement in NetSuite creates corresponding financial transactions. When you receive inventory against a purchase order, the system updates both your warehouse stock and your accounts payable balance. When you fulfill a sales order, NetSuite reduces inventory and records COGS. Revenue is typically recognized upon invoicing, though this can be configured based on your accounting preferences—all without duplicate data entry.

This integration means your financial statements always reflect actual inventory positions. No more month-end surprises when physical counts don't match your books.

Configuring NetSuite Inventory Management Foundation Settings

Inventory configuration determines how NetSuite tracks, values, and reports on your stock—making these settings among the most critical decisions in your implementation.

Setting Up Item Records and Classifications

NetSuite offers multiple item types, each serving specific business needs:

  • Inventory Items: Physical products you buy, stock, and sell
  • Non-Inventory Items: Products you sell but don't stock (drop-ship, special order)
  • Assembly Items: Products you build from component parts
  • Kit Items: Bundled products sold together
  • Lot Numbered Items: Products tracked by batch (food, pharmaceuticals)
  • Serialized Items: Products with unique identifiers (electronics, equipment)

Start by creating item records at Lists → Accounting → Items → New. Critical fields include:

  • Item Name/Number: Your internal SKU
  • Display Name: What customers see
  • Type: Select appropriate item type
  • Costing Method: Set at item level (covered below)
  • Asset Account: GL account for inventory value
  • COGS Account: Cost of goods sold account
  • Income Account: Revenue recognition account

For wholesale distributors managing thousands of SKUs, consider using NetSuite CSV imports to bulk-create item records rather than manual entry.

Choosing Your Inventory Costing Method

NetSuite supports multiple costing methods including FIFO, Average Cost, and Standard Cost. Depending on your account configuration, LIFO may also be available. This choice impacts financial reporting permanently:

FIFO (First In, First Out)

  • Values inventory based on oldest purchase costs
  • Best for perishable goods or products with clear aging
  • Provides higher inventory values during inflationary periods
  • Most common method for distribution businesses

Average Cost

  • Calculates weighted average across all units
  • Simplifies reporting with consistent unit costs
  • Recommended for commoditized products
  • Reduces variance from price fluctuations

Standard Cost

  • Uses predetermined cost regardless of purchase price
  • Requires variance tracking for actual costs
  • Common in manufacturing with established production costs
  • More complex setup and maintenance

Organizations with multi-location operations see significant improvement in inventory accuracy when costing methods align with actual business processes rather than accounting convenience.

Configuring Locations and Bins

Navigate to Setup → Company → Locations → New to create warehouse locations. Each location requires:

  • Location Name: Your warehouse identifier
  • Address: Physical address for compliance
  • Make Inventory Available: Check to enable stocking
  • Include in Supply Planning: For demand planning calculations

After creating locations, enable bin tracking at Setup → Company → Enable Features → Items & Inventory → Bins. Then configure bins at Lists → Accounting → Bins with:

  • Bin Number: Physical location identifier (A1, B2, etc.)
  • Location: Associated warehouse
  • Zone: Optional grouping (Receiving, Picking, etc.)

Proper bin setup provides the foundation for NetSuite WMS mobile scanning and directed putaway workflows that increase warehouse efficiency.

Setting Up Multi-Location Inventory and NetSuite WMS

Multi-location inventory management becomes essential when you operate multiple warehouses, retail locations, or distribution centers.

Creating Warehouse Locations in NetSuite

Each warehouse needs its own location record with specific settings:

  1. Navigate to Setup → Company → Locations → New
  2. Complete required fields:
  3. Name (match physical location)
  4. Subsidiary (if using OneWorld)
  5. Address (for shipping calculations)
  6. Time Zone (for scheduling)
  7. Enable inventory options:
  8. Make Inventory Available
  9. Include in Supply Planning
  10. Use Bins (if applicable)
  11. Set default accounts for location-specific financials

For businesses with multiple retail locations, create separate location records for each store to track inventory availability accurately for customer fulfillment.

Configuring Bin and Zone Structures

Warehouse zones organize your physical space into logical areas:

  • Receiving Zone: Where inventory arrives
  • Reserve Zone: Bulk storage areas
  • Picking Zone: Active picking locations
  • Packing Zone: Order assembly areas
  • Shipping Zone: Staged outbound orders

After WMS is installed, define warehouse zones (Receiving, Reserve, Picking, etc.) in WMS setup (for example, Warehouse → Zones), then assign bins to those zones to drive putaway and pick path logic.

Enabling Mobile WMS Features

NetSuite's mobile warehouse management transforms handheld devices into data collection tools:

  • Mobile Item Lookup: Scan barcodes to view inventory details
  • Mobile Receiving: Record receipts directly from loading dock
  • Mobile Picking: Directed pick paths for order fulfillment
  • Mobile Cycle Count: Perform inventory counts without paper
  • Inventory Transfer: Move stock between bins and locations

Install and configure the NetSuite WMS SuiteApp (requires licensing). After installation, configure WMS locations, bins, and mobile processes per the WMS setup guide. Mobile WMS integration helps businesses significantly reduce stockouts through improved inventory accuracy.

Configuring the Purchasing Module and Vendor Records

Purchasing configuration determines how you procure inventory, manage vendor relationships, and control spending.

Setting Up Vendor Master Data

Create vendor records at Lists → Relationships → Vendors → New with these critical fields:

  • Vendor Name: Legal business name
  • Company Name: DBA if different
  • Payment Terms: Net 30, Net 60, etc.
  • Currency: For international suppliers
  • Tax ID: For 1099 reporting
  • Credit Limit: Optional spending control
  • Primary Contact: Purchasing contact details

Complete the Financial tab with:

  • Accounts Payable Account: GL account for vendor bills
  • Terms: Payment terms (overrides default)
  • Tax Item: Default tax treatment

For each item you purchase from this vendor, configure vendor-specific pricing on the item record's Purchasing tab.

Configuring Purchase Order Templates

Customize purchase order formats at Customization → Forms → Transaction Forms:

  1. Select Standard Purchase Order form
  2. Customize to add custom fields or modify layout
  3. Set as Preferred for automatic selection
  4. Configure email templates for automatic PO transmission

Organizations implementing automated purchase orders report significantly faster procurement processing compared to manual workflows.

Establishing Vendor Price Levels

NetSuite supports quantity-based vendor pricing. On each item record:

  1. Navigate to the Purchasing subtab
  2. Click Edit next to vendor line
  3. Add quantity breaks with corresponding costs
  4. Set preferred vendor for automatic PO creation

Example pricing structure:

  • 1-99 units: $10.00 each
  • 100-499 units: $9.50 each
  • 500+ units: $9.00 each

The system automatically applies the correct price based on order quantity, ensuring you always get the best available rate.

Implementing Reorder Points and Automated Replenishment

Automated replenishment eliminates manual inventory monitoring while preventing both stockouts and overstock situations.

Setting Reorder Points by Location

Critical inventory planning settings live on each item record under the Inventory tab:

  • Reorder Point: Stock level triggering replenishment
  • Preferred Stock Level: Target inventory quantity
  • Lead Time: Days from order to receipt
  • Safety Stock Level: Buffer for demand variability

For multi-location operations, enable location-specific settings at Setup → Company → General Preferences → Items/Inventory by checking Use Lead Time and Safety Stock per Location. This single setting enables businesses to see improved forecast accuracy.

Configuring Preferred Stock Levels

Calculate preferred stock levels using this formula:

Preferred Stock Level \= (Average Daily Usage × Lead Time) + Safety Stock

Example calculation:

  • Average daily usage: 10 units
  • Lead time: 14 days
  • Safety stock: 30 units (3 days buffer)
  • Preferred stock level: (10 × 14) + 30 \= 170 units

Set reorder point at 70-80% of preferred stock level to trigger replenishment before hitting safety stock.

Automating Purchase Requisitions

Use Transactions → Purchases → Reorder Items for basic replenishment suggestions or the Supply Planning Workbench (with Demand Planning) to review and act on planned orders based on:

  • Items below reorder point
  • Preferred vendor assignments
  • Economic order quantities
  • Lead time requirements
  • Open sales orders creating demand

The system consolidates recommendations by vendor, allowing one-click conversion to purchase orders. This automation enables organizations to achieve significantly faster procurement processing.

Configuring Receiving, Putaway, and Inventory Adjustments

Inbound inventory processes require careful configuration to maintain accuracy and enable three-way matching.

Setting Up Receiving Workflows

Standard receiving follows this sequence:

  1. Purchase Order created and transmitted to vendor
  2. Item Receipt recorded when goods arrive (updates inventory)
  3. Vendor Bill entered for payment processing (three-way match)

Enable automatic three-way matching at Setup → Accounting → Accounting Preferences → Order Management by checking:

  • Require Bill to be Matched to Item Receipt
  • Warn if Bill Quantity Exceeds Receipt Quantity

These controls prevent payment for undelivered goods and catch vendor billing errors before payment.

Implementing Cycle Count Schedules

Rather than annual physical counts, implement ongoing cycle counts:

  • ABC Classification: Count A items monthly, B items quarterly, C items annually
  • Location Rotation: Different warehouse zones each week
  • Problem Areas: Increase frequency for high-variance locations
  • Mobile Counting: Use handheld devices for efficiency

Organizations maintaining accurate inventory records report improved customer satisfaction through reduced fulfillment errors.

Setting Up Classes, Departments, and Subsidiaries for SCM Tracking

Organizational segments enable multi-dimensional reporting for inventory and purchasing analysis.

Configuring Segmentation for Inventory Tracking

NetSuite supports four primary segmentation types:

  • Locations: Physical warehouses or stores
  • Departments: Business units or cost centers
  • Classes: Product lines, divisions, or profit centers

Enable these at Setup → Company → Enable Features → Company. Our detailed guide on configuring Classes and Departments explains advanced segmentation strategies.

Setting Up Line-Level Department Assignments

For businesses needing granular tracking, enable line-level segmentation at Setup → Company → General Preferences → General by checking:

  • Use Department on Line Level
  • Use Class on Line Level

This allows a single purchase order to span multiple departments or classes, critical for centralized purchasing with decentralized operations. You can then report inventory costs by department even when purchasing occurs centrally.

Integrating Supply Chain Management Software with E-commerce

Real-time inventory sync between your ERP and webstore prevents overselling while enabling accurate available-to-promise calculations.

Connecting NetSuite Inventory to Your Webstore

SuiteCommerce provides native e-commerce built directly on NetSuite:

  • Real-time inventory: Shows actual stock across all locations
  • Available-to-Promise (ATP): Calculates available stock considering open orders
  • Location-based fulfillment: Routes orders to nearest warehouse
  • Backorder management: Handles partial fulfillments automatically

For businesses on other e-commerce platforms, BigCommerce integration can integrate with NetSuite using Oracle’s NetSuite Connector connectivity through the official connector, syncing:

  • Inventory quantities (configurable sync frequency)
  • Product data (descriptions, images, pricing)
  • Orders (bi-directional sync)
  • Fulfillment status (tracking numbers to customers)

Organizations implementing proper e-commerce integration eliminate the double-entry that creates inventory accuracy issues.

Configuring Fulfillment Location Logic

Configure automatic location selection at Setup →Accounting → Shipping Preferences:

  • Ship from nearest location: Minimizes shipping costs
  • Ship from location with stock: Prevents backorders
  • Preferred fulfillment locations: By customer or region
  • Location priority rules: Custom logic for complex scenarios

This automation ensures e-commerce orders flow to optimal fulfillment locations without manual routing.

Building NetSuite Saved Searches for SCM Reporting

Reporting and analytics transform raw inventory data into actionable business intelligence.

Creating Inventory Availability Searches

Build a basic inventory availability search:

  1. Navigate to Lists → Search → Saved Searches → New
  2. Select Item as search type
  3. Add criteria:
  4. Inventory Available: greater than 0
  5. Location: (select relevant warehouses)
  6. Type: Inventory Item
  7. Add results columns:
  8. Item Name
  9. Location
  10. Quantity Available
  11. Quantity On Order
  12. Reorder Point
  13. Days Until Reorder

Save and use as a dashboard KPI or scheduled email report. Our comprehensive Saved Searches guide covers advanced formulas and reporting techniques.

Building Vendor Performance Dashboards

Track vendor reliability with searches measuring:

  • On-Time Delivery Rate: Receipts vs. promised dates
  • Quality Issues: Inventory adjustments by vendor
  • Price Variance: Actual costs vs. standard costs
  • Lead Time Accuracy: Promised vs. actual delivery time

These metrics identify vendor performance trends before they impact operations, enabling better pricing through consolidated purchasing power.

Common NetSuite SCM Implementation Challenges and Solutions

Even with proper configuration, implementation challenges arise that require proactive management.

Preparing Your Data for SCM Migration

Data migration represents the highest-risk phase of implementation:

  • Clean existing data: Remove duplicate vendors, obsolete items, inaccurate costs
  • Validate item records: Verify costing methods, GL accounts, units of measure
  • Test in sandbox: Use NetSuite's test environment before production migration
  • Phased cutover: Migrate by product line or location rather than all-at-once

Organizations following structured migration approaches typically experience smoother implementations with fewer issues than ad-hoc approaches.

Training Teams on New Inventory Workflows

User adoption determines implementation success:

  • Role-based training: Purchasing users need different skills than warehouse staff
  • Hands-on practice: Sandbox environment for safe learning
  • Quick reference guides: One-page workflows for common tasks
  • Super-user network: Champions in each department supporting peers

Phased implementations typically achieve higher user adoption rates than big-bang approaches, as users can master core features before adding complexity.

Post-Setup Optimization: Workflows and Automation for SCM

Initial configuration provides the foundation, but automation delivers the efficiency gains.

Automating Purchase Order Approvals

Create approval workflows using SuiteFlow:

  1. Navigate to Customization → Workflow → Workflows → New
  2. Select Purchase Order as record type
  3. Configure workflow:
  4. Trigger: On Create or Edit
  5. Condition: Amount exceeds approval threshold
  6. Action: Send approval request to appropriate manager
  7. Post-Approval: Set status to Pending Receipt

This automation ensures purchasing controls without slowing procurement. Learn detailed workflow creation techniques in our step-by-step guide.

Creating Inventory Alert Workflows

Set up automated alerts for critical inventory situations:

  • Low Stock Alerts: Email when quantity drops below reorder point
  • Excess Inventory Warnings: Flag items above preferred stock level
  • Slow-Moving Notifications: Alert when turnover drops below threshold
  • Expiry Reminders: Warn about approaching expiration dates (lot-tracked items)

These proactive notifications prevent the stockout and overstock situations that plague manual inventory management.

Why Anchor Group Makes NetSuite SCM Implementation Seamless

Setting up NetSuite's supply chain features correctly the first time saves months of frustration and thousands in rework costs. While NetSuite documentation provides the technical "what," successful implementations require the "why" and "how" that only comes from experience.

Anchor Group's consultants bring specific advantages to SCM projects:

Industry-Specific Expertise

  • Wholesale distribution procurement and fulfillment patterns
  • Manufacturing work orders, BOMs, and WIP integration with inventory
  • Retail multi-location inventory and POS integration

Proven Configuration Approach

  • Foundational setup following NetSuite best practices
  • Location-specific lead time and safety stock optimization
  • Automated replenishment tuned to actual demand patterns
  • Workflow automation that eliminates manual processes

Practical Implementation Support

  • Data migration from legacy systems with zero data loss
  • Phased approach preventing operational disruption
  • Role-based user training on actual business workflows
  • Post-go-live optimization based on real performance data

We nerd out over finding better, smarter ways to configure your inventory automation and custom workflows so they actually support your business goals instead of forcing you into someone else's process.

Ready to transform your inventory chaos into automated efficiency? Contact Anchor Group to discuss your NetSuite SCM implementation.

Frequently Asked Questions

What NetSuite modules are required for full SCM functionality?

At minimum, you need the Inventory and Purchasing modules enabled. For multi-location operations, add Advanced Inventory Management. Manufacturing businesses require work order and assembly modules. Most implementations see full value when core modules are properly configured before adding advanced features. E-commerce businesses benefit from adding SuiteCommerce or implementing the BigCommerce connector for real-time inventory sync.

Can NetSuite WMS work with barcode scanners and mobile devices?

Yes, NetSuite's mobile WMS functionality supports handheld barcode scanners and mobile devices through the browser-based mobile interface. After enabling Advanced Inventory Management, users access mobile functions at Transactions → Inventory → Mobile Inventory Management. The system supports directed receiving, putaway, picking, and cycle counting without requiring separate software installations. Organizations implementing mobile WMS typically see improved inventory accuracy within the first quarter.

What's the difference between locations, bins, and zones in NetSuite inventory?

Locations represent physical warehouses or stores where inventory is stocked. Bins are specific storage positions within a location (like shelf A1 or pallet B15). Zones group related bins into functional areas like Receiving, Reserve, or Picking zones. Think of it as: Location \= building, Zone \= room, Bin \= specific shelf. Proper configuration of all three levels enables the directed putaway and picking workflows that reduce warehouse labor costs while improving accuracy.

How does NetSuite handle multi-location inventory transfers?

Create transfer orders at Transactions → Inventory → Transfer Orders to move stock between locations. The system creates two transactions: removal from the source location and addition to the destination location. For businesses with frequent transfers, configure automated workflows that generate transfer orders when one location drops below reorder point while another location has excess stock—optimizing inventory distribution across your network.