Introduction
The manufacturing process proper will always begin with a work order, which is an internal request to build/assemble a certain number and type of one or several inventory items. These items to-be-built could either be final products or intermediate components.
For instance, a furniture manufacturing company, has many furniture products each of which is itself assembled out of several further components, we could set up our manufacturing accounting so that the table top is an intermediate assembly that can be constructed on its own. Work orders can either stand on their own (for when you just want to build up inventory in-stock) or be attached to a specific sales order (for a build-on-demand operation). We can begin with a sales order so you can see how smoothly a sale can flow into the work order.
1.Sales Order
One of our retailers wants to order tables. We record this request by creating a sales order (Transactions > Sales > Enter Sales Order).
Step1: Select customer (for eg. Tables Inc). Step 2:Enter assembly items (these are the complete products you sell – here, a table in the Items subtab. These items need to be previously created for you to be able to add them to the sales order (Lists > Accounting > Items > New). Make sure you enter assembly items rather than another type of item, as assembly items are designed to lead into work orders. In the Item subtab, make sure that any of the items that you still need to assemble has a “Yes” in the “Create WO” column, as this will automatically create a work order for that assembly item .After you save the sales order, you need to get it approved by whoever in your organization has approval permission. (The approver just needs to click the “Approve” button at the top of the sales order record)
2.Work Order
Now that the sales order has been submitted, we need to build any assembly items (we don’t already have available to ship out). To initiate this manufacturing process we need a new work order. (Again, it is possible to skip the sales order step and go straight to the work order if you just want to build up inventory of assembly items that are not associated with any particular sales order. Go to Transactions > Manufacturing > Build Work Orders). Since we began with a sales order, though, we can just go to the Related Records subtab of the sales order record. You can set your preferences so that a work order for any items that still need to be assembled is automatically created upon approval of the sales order. Our work order says “Released,” which means that it has already been sent to the shop floor. Click on the date to drill down to the work order record. You will see that the work order record has a “Created From” field that links back to the sales order.
There are three numbers to pay special attention to here:
- Buildable. This is how many assembly items (i.e. finished products) you have the necessary components for. This may show zero even if you have all the necessary components on hand if all those components have already been committed (i.e. spoken for) by previous work orders.
- Built. This is the number of completed assembly items, ready to ship to the customer.
- Quantity. This is the number of assembly items the work order is asking be built, a number which comes directly from the sales order that initiated this work order. In our example, we don’t currently have enough uncommitted components to build a single table. Scrolling down to the bottom of the work order record, in the Items subtab, we see the components that make up each assembly item.
3.Purchase Orders
The way NetSuite handles purchasing is with a Purchase Order record, which is like the reverse of a sales order. You can create a new purchase order directly (Transactions > Purchases > Enter Purchase Orders), but since NetSuite calculated that we are out of an item we need, it already created the purchase order for us. Since we don’t have enough of a certain component to build our assembly items, we need to purchase or order those parts. To find this automatically generated purchase order, go to the work order record. In the Items subtab, on the line of the item that is out of stock, in the Transaction column, you should see “Spec. Ord.”
Click on the hyperlink to be taken to the purchase order. In the purchase order record you can enter the vendor from which you will purchase the missing component. If you already have the purchase price of the component associated with that component’s item record, it should autofill the Rate and Amount fields. You can add or delete items or change the quantity as desired. The Expected Receipt Date defaults to 14 days out unless you change it.
If you click “save and print,” NetSuite generates a pdf purchase order that you can mail or email to the vendor from which you are purchasing.
If we now go back to the work order record, you will see that the “Spec. Ord.” associated with the item you just ordered has changed to the transaction number of the purchase order. Click on that transaction number to be taken back to the purchase order.
4.Receiving a Purchase Order
When the purchased items arrive at your warehouse, you can update the purchase order record to indicate that they have been received.
5.Checking Updated Inventory and Item Commitment
In the work order, in the Items subtab, it now shows an updated quantity of committed items; the items you just purchased were automatically committed to this build and will not show as available for any other work orders (they may show up as “on hand, however”). Notice that, because we now have everything we need to build these 30 tables, it now displays “30” in the Buildable field.
6.Build Assembly Items
To mark the work order as complete, hit the “Create Build” button at the top of the work order. This will open an Assembly Build record that is associated with the work order: The assembly build record is how you tell NetSuite that you have built the assembly items in the work order. After you save the assembly build, inventory amounts will update to reflect the fact that you have used up the components in the build and that you now have 30 more completed assembly items (i.e. tables). To see this inventory shift from component parts to assemblies in accounting terms, go to the GL Impact subtab of the Assembly build. The value (in purchase cost to you, not the price you will sell the assembly item for) of each component remains the same whether it is assembled or not. At this point, the manufacturing process proper is complete (i.e. the tables we made are all assembled and ready to ship to customers).
7.Fulfilling Sales Orders
Since we began with a sales order, return to the sales order record that initiated the work order. In the Items subtab, the table should show the full quantity of ordered items under the “Committed” column. Your order is ready to fulfill! Hit the “Fulfill” button. Save the Item Fulfillment record that comes up. When your order ships you can hit the “Close” button on the sales order record to mark that order completed.
Conclusion
In this run-through, the basic process from sales order and supply procurement to manufacturing and order fulfillment is explained.