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NetSuite Supply & Demand Planning Explained

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October 17, 2022

NetSuite Demand Planning is a tool with capabilities in both demand and supply planning. It helps with balancing supply and demand in such a way as to deliver the optimal combination of cost control, service level and lead time accuracy.

With inventory management and demand planning techniques in combination with predictive analytics and a powerful scheduling engine, NetSuite Supply and Demand Planning empowers businesses to make decisions based on data and keep products available without regular issues with excess inventory.

 

NetSuite Supply & Demand Planning Benefits at a Glance

 

  • Do away with obsolete inventory.
  • Increase accuracy of forecasting.
  • Minimise costs associated with inventory carrying.
  • Ensure maximum availability of all products.
  • Eliminate production delays caused by materials being unavailable.
  • Implement planning rules and order pegging for optimal ordering.

 

Demand Planning

 

NetSuite Demand Planning is effective at predicting future inventory needs based on several factors like seasonality, historical demand, sales forecasts and/or open opportunities. The process of demand planning includes demand calculation, generation of plans, supply calculations and subsequent planning and the execution of purchase orders, work orders and transfer orders.

By pinpointing the correct moment to reorder items and the necessary quantities, stock levels can be optimised, forecasts can be more accurate and supply chain planning can be enhanced. With NetSuite Demand Planning, you always have the correct amount of stock available to fill orders while keeping overstock to a minimum.

 

Item Setup

 

The planning process cannot work without first defining the parameters that impact each item. This highlights the item as being available for demand planning or establishes an alternate source item for anything with no sales history.

It also establishes the category and distribution network that might apply if you are utilising the distribution resource planning (DRP) tool to transfer inventory from one location to another. Additional parameters can also be set, impacting either the method for evaluating demand or the way planned orders are generated.

 

Forecasting

 

In the process of demand planning, you can evaluate and present demand in various different ways, such as:

 

  • Moving Average: the moving average of historical demand can be used to calculate the average required stock level to project future stock levels based on that overall average.
  • Linear Regression: previous demand can be leveraged to project future inventory based on the least/ordinary-square regression method.
  • Sales Forecast: if NetSuite is used for sales operations, you can utilise forward-looking sales forecast data like opportunities/estimates to make predictions about future inventory demand.
  • Seasonal Average: previous demand can be used to assess seasonal inventory flow trends to project upcoming seasonal trends to define stock requirements.

 

Multi-Location Inventory

 

Gain the ability to easily define numerous inventory locations with visibility in real-time. You can use a hierarchical structure for organising locations, with the ability to define countries for global businesses. During planning, the system can be configured to automatically generate transfer orders between locations as required.

 

Allocation Exceptions Management

 

To respond to VIP customers and supply chain shortages, you can access and review all supply and order allocation sources to ensure high-priority sales orders are shipped in completion and on schedule. To keep the impact on other orders to a minimum, the platform provides intelligent recommendations for supply reallocations with the intention of taking resources from numerous unallocated orders and ensuring priority orders are fulfilled first.

Alternate recommendations can also be generated. The goal is to reduce the time it takes to find, review and execute reallocations, automatically realigning supplies to the orders that are affected.

 

Supply Planning

 

NetSuite Supply Planning determines the best way to fulfil the requirements laid out in the demand plan. The aim is to find a balance between supply and demand that enables your organisation’s service and financial objectives.

With supply plans, you get the automatic creation of a recommended schedule for the purchasing and/or manufacturing of items, with a list of the recommended purchase and work orders based on expected demand and lead times. This will mean there will always be products on hand to fulfil customer orders when they come.

NetSuite Supply Planning is based on demand plans, using them to generate purchase, work and transfer orders. This way, products are always available as customers want them, and three planning methodologies are applied to achieve this.

 

Reorder Points

 

With Reorder Points, NetSuite is able to generate a purchase, work or transfer order to replenish inventory to a designated stock level whenever it drops below a minimum threshold you define. This is referred to as the reorder point. You can set this to calculate automatically, prompting NetSuite to factor in historical data values like:

 

  • Lead time from suppliers.
  • Item demand from sales.
  • Company-defined safety stock.

 

This data will be applied to determine an intelligent, data-driven reorder point.

 

Time-Phased Planning

 

With NetSuite Time-Phased Planning, you can plan demand as soon as the repurchasing cycle is defined. With suppliers who always deliver on the same day of the week, it is wise to factor this material in based on the cycle of its delivery. In this instance, NetSuite can calculate the supply needed to cover demand in the current cycle, meaning the order and delivery can happen simultaneously. Reorder will not be possible until the following delivery date.

 

Material Requirements Planning (MRP)

 

NetSuite MRP provides visibility into inventory requirements for meeting demand, allowing you to optimise your inventory levels and production schedules. This is a standard method for balancing supply and demand and NetSuite MRP streamlines the production process by determining what components, sub-assemblies and raw materials are needed, along with when finished goods must be assembled based on demand and the bill of materials (BOM).

Supply planning insight and efficiency are increased with NetSuite MRP, so businesses can efficiently manage inventory, create production schedules and deliver the correct products on time and on budget.

 

Planning for What-If Scenarios

 

What-if analysis is available to enhance insights into how to use inventory. With scenario planning, you can assess multiple outcomes and identify opportunities to expedite delivery. NetSuite MRP enables the establishment of supply planning criteria, factoring in things like included items, planning horizon, planning rules and locations at plan level against item level.

This facilitates the creation of multiple hypothetical plans and the simulation of what-if scenarios to comprehend how certain changes will impact inventory levels and the ability to meet demand.

 

Planners Workbench

 

This highlights situations that require attention, enabling the prevention of shortages and excess supplies. The focus is on actions, aggregation, exceptions and execution, enabling planners to:

 

  • Monitor, strengthen or release orders for aggregation and approval.
  • Review and accept action/exception messages, both individually or in bulk.
  • Gain visibility into allocating demand to supply.

 

Analysis is presented in a logical layout to support decision-making. NetSuite MRP provides pegging support for drilling into supply and demand for items across locations.

 

Allocation of Supplies

 

The supply allocation feature enables the allocation of both received inventory and anticipated inventory on work, purchase or transfer orders. You can also allocate inventory that’s due on an inbound shipment, which is essentially a cluster of purchase orders managed on the basis of an individual shipment. This enables customer service reps to validate supply and highlight how soon an order could be filled.

 

Allocation Exceptions Management

 

Where shortages and VIP customers are a factor, you can review sources of supply and order allocations to ensure high-priority sales are the first to be fulfilled. The system provides intelligent reallocation recommendations to minimise the impact on other orders, so resources will be taken from multiple unallocated orders to fulfil those priority ones first.

Reallocation recommendations generated by the system save time on finding, reviewing and executing reallocations. After a recommendation is accepted, the system realigns supplies to the affected orders automatically. However, if you do not accept generated recommendations, a new set of allocation recommendations can be generated. These can be evaluated until a solution is defined, after which the system will return you to the order.

 

Conclusion

 

Supply and demand seems like an easy concept in theory. Make sure you have enough stock to fulfill customer orders, but don’t hold more stock than there is demand for as it will reduce cash flow. Simple right?

Although undoubtedly a simple enough concept, in reality things can become hard to manage. With many organisations having multiple suppliers through different supply chains and those suppliers having their own internal supply and demand issues things can get messy and costly. An entire manufacturing process can come to a grinding halt if just one component part required for assembly is missing.

NetSuite Supply & Demand Planning aims and delivers in taking pain out of these processes. Its intuitive features allow businesses a way to keep everything on track, keeping both their customers and suppliers satisfied.

 

Why choose Eventura to deliver your NetSuite ERP Project?

 

As an official NetSuite solution provider, we have successfully delivered countless NetSuite implementations. Our expert team of business analysts, developers, consultants, technicians and support staff can guide you through your entire project, from initial scoping through to implementation and on-going support.

We believe that NetSuite offers its customers a comprehensive suite of products that can digitally transform their businesses, replacing a range of disparate systems and softwares with one unified solution to business management.

If you would like to speak to one of our NetSuite experts, you can request a free call back here.

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