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NetSuite's 2020.1 - Outsourced Manufacturing

NetSuite enables customers to outsource their manufacturing efforts to vendors. Customers can outsource from either a purchase order or from a work order.

This blog is a brief introduction to NetSuite's 2020.1 Outsourced Manufacturing feature.

"The release of NetSuite 2020.1 Outsourced Manufacturing helps customers to manage their sub-contracted manufacturing processes by purchasing outsourced assembly production from vendors. Thie feature enables NetSuite to automatically consume production components and then, after production, transfer them to a specified location. Automating Outsourced Manufacturing synchronizes NetSuite procurement and production transactions."

- Oracle NetSuite

Key Features & Benefits

Outsourced Manufacturing automates the following features & benefits:

  • Creating subcontracting orders for assemblies

  • Managing ordering components for subcontracted production

  • Simulating the manufacturing sub-contractor production

  • Transferring half-finished assemblies to other sub-contractors

  • Drop-shipping the assembly to the customer, or shipping it to the brand owner's warehouses

  • Reduces logistics management effort

  • Reduces transactional effort in an outsourced manufacturing business model

  • Gain better viability into cost comparisons especially if you have multiple CMs

  • Increased efficiencies in transactional flow for customers that contract based off of conversion cost

Setting it up

Before the Outsourced Manufacturing feature can be enabled, an administrator must enable prerequisite features, if they are not already enabled. After the prerequisite features are enabled, an administrator can then enable Outsourced Manufacturing.

The following is a list of the prerequisite features:

  • Purchase Orders - Transactions subtab, Basic Features section

  • Advanced Receiving - Transactions subtab, Shipping & Receiving section

  • Multi-Location Inventory - Items & Inventory subtab, Inventory section

  • Assembly Items - Items & Inventory subtab, Inventory section

  • Advanced Bill of Materials - Items & Inventory subtab, Inventory section

  • Work Orders - Items & Inventory subtab, Inventory section

To start using the OutSourced Manufacturing feature, set up the Outsourced manufacturing items, BOM, vendors, locations, and bins.

  1. Outsourced manufacturing items are the goods and services you sell to customers that have been produced in cooperation with your outsourcing vendor. You need to define the charge item used in the purchasing transaction.

  2. Setup outsourcing location to help drive the process.

  3. If you are using bins, the outsourced assembly needs to have preferred bins set up for each of the required locations.

  4. Setup your vendors who will outsource manufacturing for you and select an outsourcing location where the items will be received

After the above setup is done, NetSuite enables you to outsource their manufacturing efforts to vendors who will outsource manufacturing for you. You may do this from either a purchase order or from a work order if you rely on supply planning or are in a manufacturing environment.

NetSuite also provides "Outsourced Manufacturing Consolidator" that lists all pending work orders which enable customers to learn work order-specific information, such as:

  • Last Successful Run

  • Next Scheduled Run

  • Pending Work Orders

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