Consignment and assembling from inventory items

Once again, thanks for this amazing software. It’s really helpful!

I have three questions/issues with respect to inventory:

  • I use consignment for part of my business and need to account for inventory in-house as well as consigned items that are not yet sold that I deliver to stores. How can I account for inventory in different locations?

  • My company purchases several different items and then assembles them in-house into “kits”, which are then sold as such. However, these items are also sold individually.
    How can I account for the assembly of these kits within my inventory, or at the very least, the sale of the individual items at POS without making a mess of my sales invoices?

  • Why doesn’t a delivery note allow input of inventory items? It only allows “sales” items which doesn’t make sense to me.

  • Multi-warehouse feature hasn’t been implemented yet so you can’t do that unless you create separate inventory items for consignment but that seems rather messy.
  • This can be done by journal entry. You want to credit amounts/qty that goes in as an input. And debit amount/qty what goes out as an output. Check the example of how assembly of desktop computer from individual inventory on hand parts can be recorded as a journal entry.

  • I think this is oversight since delivery notes were implemented before inventory. Most people just copy existing invoice or quote to delivery note so it wasn’t really an issue until now. It is something I’m going to fix but it is part of a bigger clean up that is coming up soon.

I used the Journal Entry to credit and debit the inventory items.

If I make 50 kits, and credit the inventory items according to how many part items I use, I end up with bigger credits and cannot zero out my balance.

I don’t see how you can end up with bigger credit side. Can you show journal entry how you are posting it?

The key is to make sure debits equal credits. All the inventory/non-inventory input (credit) must be made to equal the output (debit).

I might implement new assembly module before end of this month that will allow you to assemble new inventory items without doing it through journal entries and therefore avoiding the necessity of working with debits/credits.

Hi Lubos,

If I account for the actual number of items to make ‘n’ number of kits, there’s no way my credits and debits can balance out and then reflect the real number of items in my inventory.
Obviously, I’m not an accountant, and in your example, for 600 computers, you credit 200 CPUs, and 20 keyboards, etc, not 600 CPUs for 600 computers. So I’m rather confused!
If this cannot be done, then I will wait for assembly (and also warehouses, for which consignment accounting would be easy! :wink: )

In my example, the output was 1 computer worth $600. The input was 1x CPU for $200, 1x keyboard for $20 etc…

In your example, if you have produced 65 starter kits, the number 65 must go to Qty column. The same goes for all input items.

Debit/credit is for the cost, not quantity. I think you should just wait for the special assembly module that will make this process more intuitive.

Duh! I get it… Doing that would be difficult for my company as our item costs change with each shipment.
I will definitely wait for the assembly module.

Thanks for your help!

Dear Lubos,

Loving the idea of an assembly module being added. Since you are working on it, I thought maybe I’d give some input as to what is making it a bit lengthy for me with the current method of assembly (exactly the same as what you described in your earlier post).

Here is a snap of what I do in my journal entry;

Its working out great, only, in my case I use “wheat” as my raw material and after ‘production’ it turns into various wheat milled products. I have to do some pretty annoying working on my cost of wheat, meaning, the amount of wheat (in kgs) that I utilize per production needs to have the cost of wheat on “First In First Out” basis.

It would be great if Manager could keep track of my wheat cost, such as, if I enter 50,000 kgs in quantity in the assembly module it should be able to give me the exact cost that I paid for that 50,000 kgs via various purchase orders all with different costs per kg, on a FIFO basis.

Lets say if I had 10 Purchase Orders totaling 75,000 kgs of wheat in the following manner;

Of this 75,000kgs, 15,000 kgs had previously been used up and now I needed to use a further 50,000kgs for production;

Now, I have to get the cost (using FIFO) for the currently required 50,000 kgs;

This is the cost I end up Crediting in my Journal Entry and then bifurcate the cost through various products following a production guide.

Since manager knows the exact cost of my inventory items and also knows when I end up utilizing them, it would be wonderful if in the assembly/production module it could GIVE the cost upon entering the Quantity rather than users having to provide it.

I hope you give it some thought.

Thanks for the write-up. We are both thinking the same. I will implement inventory assembling module early next month, that will resolve this issue.

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Epic! =D

Check the latest version (14.7.57), it contains new tab called Manufacturing orders which allows to assembly new inventory items from existing ones.

I tried the manufacturing, and I think it has a bug.

This is what I did:
I put together items into a kit, and then changed the amount via inventory (which is the only way to access a manufacturing order at this time- should be a record somewhere to access like a report or sales invoice through manufacturing tab). There were no other transactions (like a sales or purchase invoice)
Then I went to Summaries and saw this under inventory on hand:

But just so you know, I’m so over the moon now you’ve finally put out the manufacturing component - it will make my job much easier, and also know it will time a few tweaks before it’s perfect.

Great work!

One more note: I deleted the manufacturing order, and the numbers for Inventory on had are back to normal.

Yep, it was some rounding bug. Should be fixed in the latest version (14.7.64).

Hi, Lubos,

Thnx for the amazing software.

I have already updated the latest version (14.7.64), when I use the MANUFACTURING ORDER, I can’t edit the manufacturing code that I have created. You can see below

Please, help me to handle it. Thnx.

One more suggestion:

In the screenshot below you can see that
1x Bitters 120 ml final product should contain the following bill of materials:

I’ve created one more manufacturing order with 30x bitters 120 ml final products and it’s not multiplying the bill of materials with 30.

My inventory items won’t deduct as many as it should when I create 30 final products, it’s just deducting inventory as follows:

1x bitters crtn
50x bitters bottles
50x caps
50x labels
3.9x spirit

but actually it should deduct my inventory as follows:

30x bitter crtn
1500x bitters bottles
1500x caps
1500x labels
117x spirit

Am I doing anything wrong?

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I am excited to see work on a manufacturing module too - when it is finished I would love to understand the process and see a entry in the How to section of the forum. Just thought I would register my interest so that you know how valuable this would be for me and hopefully others not yet registering a post or interest in this thread.

Awesome work - thank you.

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Hi, Lubos, my problem in manufacturing order solved.

By the way, when we able to use sub account chart of account? And Group account such as Assets, Liability, Capital, COGS, Expenses, Income, Other Income and Other Expenses?

I am still waiting about the progress about it.

Thnx for amazing concept in accounting software.

You must input the total number of “bitter crtns” as 30, and then enter the amounts of the individual inventory parts.
Just as a suggestion to Lubos, there should be a register for the manufacture orders to make it easier to access and change them.
Also, being able to multiply quantities in a single line would also be extremely helpful (for example, I use 90 x .045 of a specific material to make one bottle).

Yeah, it should store the bill of materials and when ever we want to use that option it should be easy to create manufacturing order. And it should multiply the BOMs according to the final product