Advanced Inventory Management in NetSuite

Posted by CuriousRubik on 12 Jun, 2018

Advanced Inventory Management helps us to notify the quantity available in the inventory within each location. Also, it helps us to know the quantity to purchase from the vendor to keep our inventory available in the locations.

Process Flow:


If the quantity reaches from preferred stock level to Reorder Point. Netsuite suggest you to make order in the order items page.

  • If order is created purchase order will be created and In the lead time items will be received, quantity will be reaches to preferred stock level.
  • If creation of order or receiving items has any delay, then safety stock level will be used.

To Enable this Feature: Setup > Company > Enable features > Enable Advanced inventory management

  • To use Advanced Inventory Management we need to setup Item Record
  • Advanced Inventory Management Process can use only for Inventory and Assembly Items.

To Create Item Records: Goto > Lists > Accounting > Items >New

Creating Item Record


  • Item Name/Number: Enter the Name or Number to create the item.
  • Display Name/Code: Enter the Name or Code to display the Item.
  • Units Type: Describe the Item in units. (Ex: Weight, Length)
  • Stock Units:  Select the Unit type to keep inventory stock in units. (Ex: Kilogram, Meter)
  • Purchase Units: Select the Unit type to Purchase the item from vendor. (Ex: Kilogram, Meter)
  • Sale Units: Select the Unit type to Sale the item to the customers. (Ex: Kilogram, Meter)

Purchasing/Inventory Tab:

To use Advanced Inventory management these are the fields to define

  •  Lead Time: IN Days, Auto Calculate
  •  Preferred Stock Level: IN Days, Auto Calculate
  •  Reorder Multiple
  •  Reorder Point:  Auto Calculate
  •  Safety Stock Level: Quantity,  Days
  •  Seasonal Demand
  •  Expected Demand Change

Lead Time : Lead time is the average number of days between ordering item from the vendor and receiving it.

  • Manual: If the Auto-Calculate box is cleared we can enter the expected lead time in this field else the default value from the Set Up Inventory Management page is used.
  • Auto Calculate: Check the Auto-Calculate box for NetSuite to calculate the lead time based on the most recent order history of this item. This is calculated by taking the number of days between the order entry and receipt on the three most recent purchase orders, and dividing by three If there are multiple receipts for the item against the same purchase order, the calculation is made using the difference between the purchase order and the last receipt

Preferred Stock level: This is the minimum quantity to maintain in stock of an item in the locations.

  • Auto Calculation: Select the Auto-Calculate box for NetSuite to calculate the preferred stock level based on demand for the item. When auto-calculate is selected, user must enter the preferred stock level in days, not units. When the preferred stock level is entered in days, this is a measure of how many days worth of stock you want to have when the order is received. The preferred stock level is calculated as (daily demand * preferred stock level in days)
  • Manual: Clear the Auto-Calculate box to manually enter the preferred stock quantity. If stocked quantity is low, the item quantity may run out frequently which affects customer service. The preferred stock level set here is used to calculate the quantity of items to be ordered on the Order Items page.

Reorder Multiple: Enter the quantity you prefer to order for this item each time. Then, In the Order Items page Netsuite suggests ordering a quantity of this item that is always a multiple of the number you enter here.

Reorder Point: The Reorder Point is the quantity level at which you need to reorder or build more of this item

  • Manual: Clear the Auto-Calculate box if you want to manually enter the point at which to reorder or build more of this item.
  • Auto Calculate: Check the Auto-Calculate box if you want NetSuite to calculate the reorder point based on demand for the item over time. The reorder point depends on the safety stock definition and is calculated as follows:
    • Without safety stock defined:  Reorder point = (average lead time days * demand)
    • With safety stock defined in days: Reorder point = [(average lead time days + safety stock days) * demand]
    • With safety stock quantity defined: Reorder point = [(average lead time days * demand) + safety stock quantity)

Safety Stock Level: The amount of stock you want to keep on hand, for variations in demand. The safety stock amount you enter is used to auto-calculate the reorder point of an item. Safety stock can be a quantity or a number of days. To define safety stock as a quantity, enter a value. To define safety stock as a number of days, enter a value in the field next to Days .When the safety stock is entered in days.

The safety stock level is calculated as (daily demand * safety stock level in days)

Seasonal Demand: Seasonal demand is the demand for the item whose sales increased more in an particular month of year. It calculates past one year data whose demand more in an month. Check the box if you want NetSuite to calculate seasonal demand for the item.

Expected Demand Change: Enter the expected demand change for the item in record level, So entered demand change will be applicable for the seasonal demand month. If we are not defining in the item level it will calculate reorder point from the Setup Inventory Management page.

Order Items:


We can find the orders suggested by the netsuite as per the inventory management setup under each record. To convert the orders into purchase orders select the vendor and check the lines you want to order and submit. Netsuite will group the vendor and will create the purchase orders.

Topics: NetSuite, Netsuiteblog, netsuite technical blog

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