Oracle NetSuite Solution Provider

Organizations that buy in bulk and deal with items
of variable weight are integrating NetSuite ERP with
an industry-specific application to effectively and
efficiently manage their catch weight requirements.

When the weight of a product that’s been procured,
sold or shipped can’t be neatly categorized into
traditional buckets like ounces, pounds, blocks or
cases—and when trading partners rely on different
measures of quantifying those amounts—catch
weight helps even out those differences.

Used primarily by companies in the food and
beverage industry plus many wholesale distribution
facilities, catch weight utilizes inventory units (i.e.
the unit of measure used when products are sold,
picked and shipped) and catch weight units (the
unit of measure used when items are weighed out
and invoiced for). Blending the two measures, catch
weight closes the gap between the price paid for
bulk items and the price that customers pay for
those goods.

Most enterprise resource planning (ERP)
platforms lack catch weight functionality, which
makes management of this important process
cumbersome, error-prone and manually intensive.
It can also throw inventory counts out of whack and
lead to inaccurate invoicing, financial loss and sales
tax issues.

This white paper highlights the challenges
companies face in this area and reveals how
an integrated catch weight application bundle
transforms NetSuite ERP into an even more
versatile enterprise application for companies that
use catch weight in their day-to-day operations.

In food manufacturing and distribution, a 24-unit
case of 32-ounce ketchup bottles is easy to pick,
pack and price. Buyers know that when they place
an order for 10 cases of product that they’re going
to get 240 bottles of ketchup priced at a certain
cost-per-ounce or per-bottle. There’s no mystery
to these calculations, which all trading partners will
use both up and down the supply chain.

When food and other products that vary in size
can’t be lumped into standard units of measure,
catch weight—a term that basically means
“approximate weight”—steps in to help to minimize
those complexities. A company that manufactures
cheese, for instance, produces blocks of product
that all weigh different amounts. Because each
block has a unique weight, the manufacturers,
distributors and retailers that are buying in bulk
need a more flexible means of weighing and pricing
the goods for sale.

For example, the company that makes sandwiches
for grocery stores, mini marts and other food retail
outlets needs to know exactly how much meat,
cheese and produce go into every one of those
sandwiches. Because it buys those goods in bulk—
and because no two shipments of raw materials are
alike—the company uses catch weight to determine
exactly how much to order from its meat supplier.
That supplier sells the meat in cases or on pallets, so
there’s no clear alignment between the amount the
sandwich-maker needs and how much it has to order.

Two large slabs of ham, for instance, may have
completely different weights. The company making
the sandwiches and procuring the ham needs
to know the total price-per-pound and the cost
of a case of ham. The problem is that once the
items are picked and put into boxes, the “case”
won’t necessarily weigh the same as it did when
the original price was quoted. That’s where catch
weight steps in and bridges the gap. Using catch
weight, the supplier can bill its customer for the

“When the goods are purchased,
the company cares only about
how many cases it ordered and
received, but when the invoice
arrives, that company gets priced
by the pound. Catch weight helps
to clear up the confusion and get
everyone on the same page.”
_{Michael Anderson, Functional Consultant,
Suite Professionals}

exact weight of the items that are in the case
(versus the “estimated” weight).

This helps ensure precision, supports good
inventory management processes and helps the
buyer price its end products more accurately. It also
helps companies place the right order volumes with
their suppliers and leverage quantity discounts for
those orders.

Here’s the Solution

Working with food and beverage companies and
wholesale distributors that have annual revenues of
$10 million and up, Suite Professionals developed a
SuiteApp that gives NetSuite ERP extensive catch
weight functionality. With decades of experience
in wholesale distribution, this NetSuite Solution
Partner came up with the idea after realizing that
a direct link between catch weight and financials
would help companies overcome persistent catch
weight challenges.

Using Suite Professionals’ Variable Unit By Pound
and NetSuite ERP, manufacturers and distributors
that buy and sell products by weight can ditch their
manual processes, Excel spreadsheets, calculators
and basic financial programs like QuickBooks in

favor of a complete, integrated solution designed
with them in mind. Here’s how it works:

• Product are compiled into a case or some other type of outer packaging used for shipping.
• The packages are weighed and the exact product weight is captured.
• The buyer pays only for the value of the product itself, regardless of how it’s packaged or shipped.

In most cases, Suite Professionals is replacing
proprietary applications that companies have built
to manage their catch weight and other needs (e.g.
custom food labeling). “A lot of processes used
by food and beverage companies don’t come
native in most ERP systems,” said Anderson. The
same companies usually turn to QuickBooks for
accounting and in doing so only complicate matters
with a disconnected, disjointed technology setup.
“They’re using custom applications that can’t
handle financials, that manage just one aspect of
their operations and/or can only manage static
product weight values,” Anderson continued.

In absence of a system that can handle variable
weights, these companies waste time and money.
Their error rates are high, they get overcharged for

product that they never procured and they wind up
paying too much in sales tax for those goods. This, in
turn, results in incorrect inventory levels, stock-outs,
overstocks and other costly business challenges.

Doing the Math

Because it’s integrated directly into NetSuite
ERP, Variable Unit By Pound requires no external
applications, multiple logins or additional steps.
The typical implementation takes less than 100
days for wholesale distributors and about 120 days
for food and beverage companies (depending on
the complexities of those companies’ systems).
“For someone that already has NetSuite in place,”
said Basinger, “it takes about 10 hours total to get
Variable Unit By Pound up and running.”

“Everything is maintained within
NetSuite, it’s easy to use and very
low maintenance.”
_{Tyler Basinger, Co-President, Suite Professionals}

Don’t let the ease-of-use and fast implementations
fool you: Variable Unit By Pound is a sophisticated
system built specifically for NetSuite ERP. Where
the platform already allows users to set up a unit
of measure by the pound, and then order and sell
product by the pound, Variable Unit By Pound
extends that functionality and does the math for
users that are placing orders for cases, pallets or
any other outside packing unit.

“Our solution alleviates those pain points and
puts hours back into our customers’ days,” said
Anderson. “All they have to do is set up the table
and an ‘additional feature’ on the item record.
The application takes care of everything else, and
across all applicable transactions.” That means the
same solution can be used across assembles and
other transaction types—a key point that not many
other applications can boast.

“A lot of the apps in this solution area are usually
restricted to certain transaction types; ours isn’t,”
said Anderson, a former NetSuite associate
who has handled many ERP implementations
for a variety of food, beverage and wholesale
distribution companies. Through this experience, he
encountered a large number of organizations that
had to circumvent their ERP system’s capabilities in
order to gain industry-specific functionality.

With Variable Unit By Pound, Suite Professionals
was determined to align a company’s enterprise
system and its catch weight capabilities. It
succeeded in that goal. “With our application,” said
Anderson, “companies can actually take advantage
of NetSuite ERP’s native capabilities, not work
around them.”

Don’t Just Fly Blind

Some industry sectors use straightforward inventory
management and billing processes, but others face
unique challenges when attempting to figure out
the differences between the average weight of an
item and the actual weight of that product. Because
of this, companies that work with food, beverages
and other variable-weight shipments rely heavily on
catch weight to ensure effective sourcing, inventory
management and costing.

Unfortunately, managing catch weight manually or
with disparate systems not linked to financials can
quickly eat up valuable resources. In the absence
of an integrated solution, companies can find
themselves “flying blind” as the attempt to align
variable and standard product weights in a way that
makes sense.

By implementing an industry-specific application
with cloud ERP, companies can vastly improve
their inventory accuracy, procurement activities
and invoicing activities. In a world that’s more
focused than ever on supply sources and potential
disruptions—particularly in the food and beverage
sector—companies get the reliable forecasting,
inventory and supply chain management tools they
need to be able to operate efficiently and profitably.