Distribution and Demand Planning

If your company handles distribution of assemblies, you can use Demand Planning to assist in your production and distribution.

Important:

Did you know that the NetSuite Supply Planning (MRP) solution replaces Time-Phased Planning, with more features and better performance?

New customers should use the new Supply Planning (MRP) solution. Existing customers should develop a plan to move from Time-Phased Planning to the new solution.

Demand Planning is available for assemblies only when you use the Advanced Inventory Management and Work Orders features. For more information, see Setting Up Demand Planning.

Supply Plans and Assembly Items

When you use Demand Planning for assemblies, you can use a supply plan as a list of daily ordering recommendations. A supply plans is generated based on the following:

outstanding purchase orders, work orders, and transfer orders
safety stock
item demand
existing sales orders or forecasts from a demand plan

For more information, see Creating Item Supply Plans.

When you calculate supply plans for an assembly, the supply for all related components in the assembly's Bill of Materials is also evaluated. If a work order is suggested for an assembly, NetSuite evaluates determines if additional work orders for sub-assemblies or purchase orders for component items. Work orders that prompt component consumption of materials are evaluated for additional supply requirements of components. This is true when the demand source for sub-assemblies and components is set to Entered and Planned Orders.

Supply Source for Assemblies

If you use the Allow Purchases for Assemblies preference, you can determine whether to purchase or build needed assemblies on supply plans. This depends on the setting for the Supply Source field on the item record. For more information, see about the Supply Source field in Entering Purchasing and Inventory Information on Items.

Assembly Replenishment Strategies

Distributors that sell assembly items can choose an inventory replenishment model that is an appropriate strategy to fit their needs. Two common methods discussed below are the Build to Stock method and Build to Order method. Both of these strategies are supported using the NetSuite Demand Planning feature.

For example, Smith Computers and Jones Computers are companies that sell similar systems, but they each use different supply chain strategies.

Build to Stock

Smith Computers sells their product at retail stores and they use a Build to Stock supply strategy.

When a customer comes in to make a purchase, the Smith Computers product is readily available at the store. There is no wait time. Customers pay for the product at the retail location and take it home immediately.

In the Build to Stock model, Smith Computers determines replenishment ordering requirements for components based on the forecast demand of the item’s final assembly. This forecast demand of the final assembly is in the demand plan.

The graphic below shows that the Smith Laptop Assembly item is comprised of component items that have supply sources of both Buy and Build.

To deploy a Build to Stock model, the following are suggested demand source selections for each item in the Bill of Materials structure.

Note:

Recommendations for subcomponents anticipate that you will be selling these components to customers.

Build to Order

Jones Computers sells their product to customers through their website and they use a Build to Order supply strategy.

With a Build to Order model, Jones computers are not readily available to consumers during sales order entry. Only after a customer places an order for a product, Jones assembles the item that will be delivered to the customer.

The Jones strategy does not require keeping large quantities of stock on hand, and having surplus stock is rare. Therefore, money is not tied up in idle inventory on shelves. However, customers must wait the two-week lead time necessary to build the product before they receive it.

Jones determines replenishment ordering requirements for components based on the forecast of existing sales for the item.

The following shows the member items in a Jones Laptop Assembly. When a customer places an order for a Jones Laptop Assembly, demand for these items increases.

To deploy a Build to Order model, the following are rsuggested demand source selections for each item in the Bill of Materials structure.

Note:

Recommendations for subcomponents anticipate that you will be selling these components to customers.

Distribution Resource Planning

The Distribution Resource Planning feature is available to facilitate resource planning across multiple locations and subsidiaries within a network. You can transfer items and materials between warehouses, factories, and retail stores when you establish networks to encompass locations that contribute to meeting demand. For more information, see Distribution Resource Planning.

Supply Plans and Assembly Items

Supply Source for Assemblies

Assembly Replenishment Strategies

Build to Stock

Build to Order

Distribution Resource Planning

Related Topics