How to Automate the “First Expired, First Out” Inventory Method Using NetSuite ERP

Image credit: Alex Jeongco

If you are a business that uses NetSuite and is involved in the sale of pharmaceuticals, food or beverages, this article will help alleviate any problems you might have with expiring products in your inventory.

Customer Challenge

Inventory shrinkage is the number one issue faced by businesses dealing with products with short shelf life. This category of products includes fresh food, soft drinks, shelf stable dry food, and health and beauty aids.

Expired products result in direct loss of profit in an already low margin industry. In addition, the negative impact on the environment is quite substantial, as these expired products are often disposed at landfills.

Pharmaceutical or food & beverages businesses that running NetSuite are often unable to systematically prioritize the picking of first-expired products during the fulfillment process. At best, the prioritization and selection is done through a tedious, manual process that is both time consuming and prone to errors.

Following our automation process, you will learn how to implement the FEFO (First Expired, First Out) technique in NetSuite ERP.

The Solution

Lot Management Feature: Lot items track the purchase, stock, and sale of a group or quantity of items by assigning a specific number to the group or quantity. For example, a food distributor can track goods by assigning a lot number and expiration date to a group of perishable products.

As products are purchased and sold, lot-numbered item records track the quantity of items and the specific cost for each lot. Using the lot-numbering feature, we can easily search for the item in the inventory.

According to the standard process of fulfilling the lot-numbered items, users need to manually search for the first-expiring lot and choose the items from that lot.

To overcome this problem, we have automated this process through a custom NetSuite solution.

Approach for the NetSuite Custom Solution : On the Sales Order record (only for approved Sales Orders), we will provide a custom “Fulfill” button in view mode.

After clicking on the fulfill button, we will run a backend Suitelet script to search for the lot that is expiring first. A Fulfillment will then be created, taking items from that lot.

If that lot doesn’t have sufficient items ordered by the customer, then the system will search for the next lot that expires next.

Example:

Lots — Expiration Dates
LotA — 16/12/2020
LotB — 21/10/2020
LotC — 13/6/2021

While fulfilling the Sales Order, the system will automatically take items from LotB because it’s expiring first.

Execution Flow: Standard Fulfillment Process

1. Click on standard fulfill button on Sales Order
2. Open the inventory detail box of lot numbered items
3. Check for the lot which is expiring first
4. Select the first expiring lot
5. Submit the inventory detail

Enhanced Fulfillment Process with FEFO

1. Click on the custom fulfill button on sales order
2. Item Fulfillment will generate automatically with the order of first expiring lots

Benefits After Implementation

1. No need to put time to search for the expiring products
2. You can efficiently fulfill the order
3. No waste of items due to expiration date
4. Real-time tracking of expiring products