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Level 1

Raw Material Inventory Tracking.

We are a full custom commercial cabinet shop using QB Premier 2015.  Currently we purchase raw materials for a given job as we go and apply the cost to the appropriate customer:job at that point.  All items are set as non-inventory items.  We are looking to move to actual inventory of raw material we use regularly.  Currently most of these are non-inventory items that we actually have inventory of.  When we fabricate finished goods these materials get used and "lost" into Shop Supplies which throws off all the job costing.  As we are custom "assemblies" might be similar but never the same, so I don't think using assemblies will work.  Additionally we are under lump sum contract for all our work so finished assemblies aren't sold as such.  We don't inventory any assemblies we produce as required for specific contracts.  We would never indicate the price of any given item on an invoice, just a percentage of the total contract completed to date.  We want to be able to assign the cost of raw materials to a customer:job as we produce finished goods and obviously remove the items from inventory at that time.  We are interested in accurate job costing and better inventory control.  I was hoping to create barcodes for raw materials that we could put on the bins where materials are stored.  Would want the guys to be able to scan a barcode and enter a quantity and a customer:job as materials are actually being used. Advice?

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Best answer 12-10-2018

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Level 15

Really, my help here is already being Voted Down as Not H...

Really, my help here is already being Voted Down as Not Helpful? As a peer user who contributes here voluntarily, that really makes my day. Thanks!

View solution in original post

8 Comments
Level 15

Really, my help here is already being Voted Down as Not H...

Really, my help here is already being Voted Down as Not Helpful? As a peer user who contributes here voluntarily, that really makes my day. Thanks!

View solution in original post

Level 1

I hit the wrong button by accident......

I hit the wrong button by accident......
Level 15

"Currently we purchase raw materials for a given job as w...

"Currently we purchase raw materials for a given job as we go and apply the cost to the appropriate customer:job at that point.  All items are set as non-inventory items."

Good.

"We are looking to move to actual inventory of raw material we use regularly.  Currently most of these are non-inventory items that we actually have inventory of."

Sure, you can do this.

"When we fabricate finished goods these materials get used and "lost" into Shop Supplies which throws off all the job costing.  As we are custom "assemblies" might be similar but never the same, so I don't think using assemblies will work."

You don't need Assemblies. You can relive inventory such as Supplies and job track that adjustment.

"Additionally we are under lump sum contract for all our work so finished assemblies aren't sold as such."

Great.

"We don't inventory any assemblies we produce as required for specific contracts."

This is not even applicable to Custom shops unless you have standard components subassembly, such as Casework.

"We would never indicate the price of any given item on an invoice, just a percentage of the total contract completed to date."

I think you are describing Progress Invoicing, done from the Estimate. This is new topic, now.

"We want to be able to assign the cost of raw materials to a customer:job as we produce finished goods"

As you Order custom materials and Relieve Inventory.

"and obviously remove the items from inventory at that time."

Right.

"We are interested in accurate job costing and better inventory control."

Yes, all of this is in QB desktop PC programs.

"I was hoping to create barcodes for raw materials that we could put on the bins where materials are stored.  Would want the guys to be able to scan a barcode and enter a quantity and a customer:job as materials are actually being used. Advice?"

Are you using QB Enterprise? Pro and Premier do what you are asking, but they don't have bar code functionality.

You didn't select a specific program for your topic. What year, which program?

Level 1

We are using 2015 Premier.  Billing, progress draws, isn'...

We are using 2015 Premier.  Billing, progress draws, isn't an issue for us have that all set up and working well. I know all of the inventory control is possible but the question is an issue of practicality.  Am I to sit for hours going thru hand written lists of materials used for jobs and adjusting inventory accordingly?? i am trying to find a more integrated solution.  we get very accurate materials lists from our engineering package.  could we use this to create a BOM for a specific Customer:job thus reducing inventory??  we could treat everything as a inventoried item if that would work.  The only manual adjustment would be if actuals are different than predicted materials used.  Could export CSV from engineering package and import into QB to avoid doing everything twice.
Level 15

"Am I to sit for hours going thru hand written lists of m...

"Am I to sit for hours going thru hand written lists of materials used for jobs and adjusting inventory accordingly??"

Well, you cannot report what you are not tracking. It would be one adjustment screen per Job Name listing all items used, since the offset of the adjustment is to One Job at a time. Please see my attachment.

"i am trying to find a more integrated solution.  we get very accurate materials lists from our engineering package.  could we use this to create a BOM for a specific Customer:job thus reducing inventory??"

That would be the list for Relieving inventory. Or, you have the option of Group Item = not something you prebuild and have on hand (assemblies = new finished product ready to sell) but "BOM" that you then sell. You can select NOT the let the customer see the list. I am supporting a client right now that does this, in that the Inventory items listed in the group are priced at 0 (not really sold, just used) and the first or final item is the Noninventory Part or Service item that is the actual Sold item and priced.

"we could treat everything as a inventoried item if that would work."

This isn't an issue of "Could." That is how people make a mess of the financial data.

Either the individual item or thing IS or IS NOT stocked, counted, tracked and reordered, and IS the EXACT same thing, every time. That defines Inventory. If you need to Count and manage recurring components, that defines Inventory Management. That is why the function exists.

Everything else you are asking can be a mix of Service, Other Charges, Inventory AND noninventory activities. You do in the QB data file what matches your Reality.

"The only manual adjustment would be if actuals are different than predicted materials used."

Of course. Or, if there is Waste from "end pieces."

"Could export CSV from engineering package and import into QB to avoid doing everything twice."

Nope, not for these functions.

Level 1

So this is the issue I'm really having.  Must report vari...

So this is the issue I'm really having.  Must report various values to the bank quarterly.  Need to show the value of inventory=raw materials, finished goods which are technically inventory until I invoice for them at which point they are AR.  It is completely impractical for me to adjust inventory for the volume of work we have on the go.  It is almost as impractical to create a group item if we can't somehow integrate with our engineering software.  We are talking hundreds of items per job with multiple jobs running always.  Impossible.  I think i will have to look for a non-QB solution.  Thanks for your help though.
Level 3

Re: Raw Material Inventory Tracking.

Hi there,  

If creating your raw material inventory as final products and bundling it isn’t an option, have you considered looking into the QuickBooks App Store for a solution for tracking your raw material?  

Using an app like Katana, a smart manufacturing software, allows you to use a unique auto-booking engine to autonomously tracks inventory in real-time, automatically distributing available material and finished products to fulfill orders.   

And when it comes to raw materials tracking, Katana will tell you if you have enough materials to start production and how much you’re missing. 

Finally, Connecting Katana and QuickBooks Online keeps your orders synchronized in both systems. Prevent situations where figures in different software's do not match. Your whole team will benefit, and your accountant will love it. 

Level 2

Re: So this is the issue I'm really having. Must report vari...

Hi morgan2,

 

Technically speaking, what you are reffering to are MRP and MES systems, Manufacturing Requirements Planning and Manufacturing Execution Systems, which are designed for something like you are after.

 

You are absolutely correct that manually trying to catch up and adjust is impractical.

 

Having a real-time overview of your raw materials, WIP, and finished goods, is the domain of manufacturing software, not an accounting package. Typically, this does require a dedicated production planner and shop workers to report their progress in real-time, so that materials move from Raw materials to WIP, from WIP to Finished goods, and to COGS from there on, when transactions happen in reality.

 

So, usually it works like this, that the MRP-MES / manufacturing ERP software is used for the operations side of the business (sales, stock, procurement, manufacturing process control), and the software reports all related financial transactions automatically (e.g. raw materials, wip, finished goods transactions) and documents (Invoices, POs/Bills) to the QB package, where accounting and financial management takes place.

 

Some packages integrate with QB desktop or hosted versions, others with QBO.

 

I don't know the size of your company, but on-premise MRP systems can be quite expensive (starting from $10-20k) and complex for a small company. Web-based MRP systems, in the QBO app store, for example MRPeasy and others, can be quite affordable and straightforward.

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