June 12, 2008
Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine
NetSuite BOSes Its Way into Manufacturing
Software-as-a-service (SaaS) vendor NetSuite today released NetSuite for Manufacturers, its latest vertical suite. Built on a similar model to NetSuite Wholesale/Distribution Edition, the new integration features assembly, work order, and bill of materials functions that are expected to appeal to the light manufacturing segment.
The company is positioning its new product against manufacturing mainstay SAP, citing what it calls "the prolonged delay of SAP’s Business ByDesign product roll-out," referring to the on-demand SMB suite SAP announced in September 2007. NetSuite is also scheduled to ring the closing bell at the New York Stock Exchange Friday, and host an Analyst Day there.
Features and functions in NetSuite for Manufacturers include:
- Assembly Management – extended specifically for light manufacturers, enabling companies to more effectively manage component quantities and multi-level assemblies;
- Work Orders – manage the build process for production work orders to replenish standing inventory levels of finished goods or special order work orders built to exact specifications for a particular customer;
- Bill of Materials (BOM) – covers the components required for a single assembly plus all the components required by a particular work order (assembly instructions can also be included in the printable BOM in PDF format); and
- Demand-Based Inventory Replenishment – dynamically set reorder points and preferred stock-levels for both components of assemblies as well as finished goods based on a variety of factors including average lead time, historical or seasonal sales demand, and number of days from supply to stock.
More than one industry analyst thinks this is a wise play for the San Mateo, Calif.–based vendor. "NetSuite has been offering vertical suites for the wholesale/distribution industry for a while with a proven track record," said Bruce Richardson, chief research officer of AMR Research, in a statement. "Manufacturers have been longing for SaaS offerings to build better overall total cost-of-ownership. Until this release from NetSuite, there haven't been any broad SaaS product offerings that include financials, CRM, e-commerce and manufacturing. The on-demand suite approach—pioneered by NetSuite—could prove to be a major market accelerator."
"NetSuite has proven it has a good product," agrees Denis Pombriant, founder and managing principal of Beagle Research Group. The company’s targeting of SAP is timely, in his opinion, as it’s easy to point to delays as a sign of difficulty, and "SAP is trying to roll out a big solution with a large number of moving parts."
NetSuite isn’t relying solely on its own efforts to reach into the manufacturing industry; today’s announcements include details on four ISV partners who are delivering solutions built on NetSuite Business Operating System (NS-BOS), the company’s development platform.
"NetSuite is recognizing the opprtunity in on-demand for serving themanufacturing industry. Many businesses have been either waiting forSAP or struggling with something else, they cobbled togetherthemselves," says Rebecca Wettemann, vice president of research at Nucleus Research. "Thepartners bring more feet on the street, and also create a lot ofopportunity for cross-selling. Many of their customers are still usingspread sheets for a lot of their needs, and that means there's an entrypoint for NetSuite."
The partners’ products include:
- Omnify Software – Product Lifecycle Management (PLM) solution that provides a single, secure location to manage component data, BOM, engineering change, documentation, project, quality/CAPA, training records, and compliance information.
- Configure One – Guided selling for manufacturing companies who produce highly configurable or customized products, such as in assemble-to-order or engineer-to-order environments. The solution prevents the selection of incompatible options, enabling a guided-selling process with images and help links while allowing the dynamic creation of BOMs based on pre-defined rules.
- SuiteCommerce – Online product configurator, allowing manufacturers to let their customers self-service order more complex products online. In addition, SuiteCommerce delivers a set of NS-BOS based advanced e-commerce capabilities, including product reviews and integrated Google Analytics.
- SPS Commerce – B2B integration & EDI outsourcing services for seamless connections to supply-chain trading partners. NetSuite solutions, including NetSuite for Manufacturers, are pre-wired for SPS' network of more than 1,200 trading partner relationships. SPS integrates trading partner information with NetSuite's order management, fulfillment, and promised delivery dates to the customer.
"NetSuite is doing a lot of smart things, and being judicious about where they put their effort in manufacturing," Pombriant says. "A lot of companies have tried top break in here by way of ERP, including Microsoft and Sage. There’s room in this market for [NetSuite’s] brand of on-demand."
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