Let us assume you purchased NetSuite; found the right partner to help you with the implementation; rallied all the troops, and you are now ready to configure NetSuite (see the following articles). We want to make you aware of the proper configuration sequence that will speed up the implementation process, eliminate delays, and with that any need for rework.
1. COA and Financial Segmentation Design
The first thing you will do with any ERP implementation is to review your Chart of Accounts (COA). The goal is to simplify it and make it more manageable.
It is probable that in your legacy (accounting or EPR) system, you had to create a separate expense account to post every individual expense. It is also possible that your chart is very segmented and that you use account codes that you must memorize and enter manually when you book your transactions. All of this is going away in NetSuite as its COA design was meant to keep the chart manageable and straightforward. As an example, in most cases, you do not need to create a new revenue account for all the revenue channels you track. Instead, you will leverage NetSuite’s ‘class’ segment to do this. In addition to classes, you will discover additional native financial segments: subsidiaries, locations, departments. These segments, when tagged on your transactions, make your financial reporting multi-dimensional. Instead of forcing your users to remember codes, you need to make sure that all your segments are defaulting correctly on all of the relevant records. The combination of GL Accounts and segments will result in flexible and scalable financial reports.
2. Item Master / Design to Build
Next, you need to design your Item Master (SKU’s). NetSuite is a direct posting system that does not use batching. There is no sub-ledger (with few exceptions), and the system will post to GL through its transactions. With that said, 90% of transactions that post to GL in NetSuite, do it through item records. Depending on the item type, each item will have a different set of GL Accounts that you can map to.
You need to understand the differences between each item type and its GL effect in combination with specific transactions. With that in mind, you must design your items correctly so that both the cost and the revenue is recorded in alignment with your business practices. Effectively, you cannot run your business in NetSuite without a proper configuration of your Items / SKU’s / Services.
Depending on the complexity of your processes, you may also need to:
- Create Unit of Measure (UOM) Schedules
- Configure Bins
- Set-up Reorder Points
- Set-up Billing Schedules / Revenue Recognition
3. Entities / Relationships
We refer to ‘Customers,’ ‘Vendors,’ and ‘Partners’ in NetSuite as entities. They are so significant that If you do not set them up properly in the system, you will not be able to complete any of your sales or purchasing transactions.
During this stage of configuration, you will need to think of possible customer scenarios such as: parent > child (customer > sub-customer) relationship between customers, multiple currencies that you may transact with these customers/vendors and finally how your various subsidiaries interact with the same customer / a vendor. Last but not the least, don’t forget about partners or agents with whom you may not directly transact but whom you may choose to tag on various transactions for commissions or other reporting needs.
4. Procurement / Manufacturing
After you have configured your items, and you have set up some suppliers from whom you can procure your product or raw material, it is time to configure purchasing.
Here you need to make sure you familiarize yourself with the basic (procure to pay) process and how the item configuration may affect your transactional flow. Never forget, most of the transaction flows will stem from the item record. As an example, an item can be a ‘special’ or a ‘drop-ship item.’ In the case of a drop-ship item, when it is added to the Sales Order and after the order is saved and approved, the system will automatically create a Purchase Order from the SO line. Moreover, each item type is configured differently, and mostly an item type cannot be changed once saved except in some cases.
Therefore, you need to be very careful during the item setup, and you must test various transactional scenarios to ensure that the items were configured correctly.
Other things to consider:
- Order Items Screen. Based on the item configuration, this screen will automate the product procurement.
- Review all Supply Chain Management features, including:
- Inbound Shipments / Container Management
- Supply Snapshots / Supply Chain Tower
- Supply Allocations
- For production / manufacturing companies, review:
- Simple and advanced BOM functionality
- Revision control
- Build points and Mass WO Creation screen
- Inventory Management transactions and controls to master:
- Bin and Multi-location Management
- Inventory Transfers
- Inventory Costing and Inventory Reports
5. Order to Cash
Now that the inventory is in the system, your team must learn how to manage the demand. It is our experience that the best way to configure the sales module is to detail out all of your sales scenarios. You must think of your B2C and B2B channels and how the system will be configured to accommodate and handle these very different businesses. Make sure that you think of all of the ways you sell your product/service and try to make your ERP application a system of record where all of your sales will be recorded and tracked.
Next, review your fulfillment process and consider leveraging NetSuite’s WMS or any third party's WMS solutions that integrate natively with the system. In case you use a 3rd party fulfillment center / 3PL, give yourselves enough time to integrate with these platforms. Most of these solutions have archaic interfaces that may not be easily transformed into a file that NetSuite’s API’s can consume. Similarly, if you have special EDI needs, make sure you bring these up with your implementation partner as soon as possible.
On the A/R side, review various billing / invoicing options native to NetSuite. NetSuite’s robust templating framework will likely suit all of your needs but ensure you start familiarizing your team with the HTML / PDF templates as early as you can. Lastly, if applicable, consider various solutions that NetSuite offers free of charges, such as deduction and rebate management.
After Procure to Pay and Order to Cash, familiarize your team with all the accounting processes from Amortization and Expense Allocation to Fixed Asset Management and Bank Reconciliations. As NetSuite is in its core an accounting platform, its accounting processes are streamlined and simple to learn.
7. Roles and Dashboards
Modern ERP systems such as NetSuite are designed to provide a streamlined way of segregating the duties of individual users. This is accomplished through custom-tailored permissions that are associated with each role, which are, in turn, given to different users. Our advice is for you to start building roles and dashboards as you are configuring the system. This way, you will be able to test each role/dashboard in each functional area early enough in the process. This will ultimately make the training and the adoption much simpler.
Now that you have configured most of the system, you can focus your attention on reports. You will find that NetSuite offers many pre-built reports that will suit most of your needs. Nevertheless, should there be anything that is missing, with the data that you have generated during your configuration and NetSuite’s easy-to-use reporting tools (saved searches, reports, workbooks), this task should be a breeze.
We hope that this guideline and its recommendations were helpful to you and your team. If you have any questions and if you need any assistance with your implementation, feel free to reach out to us for help! Also, don’t forget to share any ideas or discoveries that you have made during your implementation in the comments section below.