Manufacturing is the process of building finished goods from raw materials, a.k.a Bill Of Material (BOM). The manufacturing module offers you great flexibility and control over assembling and disassembling finished goods.
The manufacturing module helps you manage your BOM products and their components. This article explores the important concepts you need to be familiar with to work with the manufacturing module in Stock&Buy.
The manufacturing module gives you great control over your BOM inventory via the assembly and disassembly production orders.
Bill Of Materials
A bill of materials, also referred to as (BOM) is a comprehensive list of the raw materials or parts that contribute to building a finished product. Each line of the BOM specifies the component name along with the number of units used in the production process. A BOM is sometimes referred to as a product structure, assembly component list or production recipe.
For example, a computer screen manufacturer wants to build 100 screens. The manufacturer needs a bill of materials that includes all the components that make up the screen. These components are the circuitry, a screen, a power supply, buttons to adjust screen settings, and casing that holds all of these components including the quantities required of each component and their cost.
A well-defined BOM helps organizations:
- Accurate materials and finished goods cost
- Better raw material replenishment
- Precise inventory control and raw material tracking
- Maintain accurate production record
- Accurate tracking of waste
Read more about creating and updating bill of materials here.
Bundles vs Bill Of Materials
Stock&Buy offers different types of product structures to offer you maximum flexibility when you manage your inventory. As of now, Stock&Buy has support for simple variations, bundled variations, and bill of material products.
Simple variations are products that are simple. These are not composed of any other components. Such products are usually purchased and sold as they are.
Bundled variations, on the other hand, are composed of other simple variations. The system maintains the bundle stock levels and updates them whenever the component parts’ stock levels change. Bundled variations are useful when selling products in single units and/or in packs.
Bill Of Materials (BOM) is similar to bundled variations. As described in the previous section, BOM variants are composed of simple variations. Unlike bundles, BOM variants stock levels are not automatically computed from the components’ stock levels. BOM stock levels can only be updated via Production Orders
Production Order – refers to an order issued by a company to produce a specific quantity of a product at a particular time frame. Production orders usually come in two categories.
- Assembly orders: these are production orders where a finished product is assembled from its parts as defined in its corresponding BOM.
- Disassembly orders: these are production orders where a finished product is dismantled into its parts as defined in its corresponding BOM.
Production orders are covered in detail here.
Accounting is an essential part of the Manufacturing industry. Having the ability to track the actual cost of a production job is crucial in making decisions that will make your business profitable.
Stock&Buy automatically keeps track of your product cost using the moving average valuation method. When you mark a production order as completed, the system will automatically update both the finished good and the component parts moving average cost values.
The production cost management is covered in details here.