Some industry sectors use straightforward inventory management and billing processes, 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.
Below we explore the challenges of managing catch weight and provide an integrated solution - an industry-specific application to help companies vastly improve their inventory accuracy, procurement activities and invoicing activities.
What is catch weight?
When the weight of a product that’s been procured, sold or shipped can’t be neatly categorised 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 utilises 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.
What other problems does catch weight solve?
In food manufacturing and distribution, a 24-unit case of same-sized tomato sauce 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 tomato sauce priced at a certain cost-per-kilo 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 minimise those complexities.
Take for example, two large slabs of ham, which may have completely different weights. The company making the sandwiches and procuring the ham needs to know the total price-per-kilo 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.
Because each ham 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. That’s where catch weight steps in and bridges the gap. Using catch weight, the supplier can bill its customer for the exact weight of the items that are in the case (versus the “estimated” weight).
What’s the catch weight functionality solution?
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.
However, are integrating NetSuite ERP with an industry-specific application to effectively and efficiently manage their catch weight requirements.
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 favour of a complete, integrated solution designed with them in mind.
Here’s how it works:
- Products 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 labelling).
How can I integrate this functionality?
Because it’s integrated directly into NetSuite ERP, Variable Unit By Pound requires no external applications, multiple logins or additional steps.
A typical NetSuite 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. If you already have NetSuite in place, it can take around 10 hours to get Variable Unit By Pound up and running. Again depending on the system complexity.
Annexa is a leading NetSuite partner with extensive experience designing and implementing comprehensive and customised business systems, including payroll solutions, financial management, warehouse management and ecommerce solutions.