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15.9.1 Non-Stocking Manufacturing Reps

When the customer places an order:

·         Enter a PO to manufacturing (Your cost)

·         Enter a sales order to you customer (your cost plus commission)

When manufacturing ships to the customer

·         Enter a false receiver from the manufacturing

·         Enter a false invoice to the customer

When manufacturing sends commission check

Enter general ledger transact, debit Checking credit Business Income

When the salesman is paid

Enter a general ledger transact, debiting sales commissions and crediting checking

15.9.2 Outside Manufacturing, Method 1 (Convert parts to assemblies)

Use pc/MRP's Configuration Module to set Invoice/Receiving Modules increment and decrement onhand quantities.

Construct the BOMs include both your part numbers and the outside assembly labor. Enter the labor as a part number into inventory but fill in the Labor/Assy/Labor field as "L".

When finished products are to be assembled by an outside mfg
Place a PO for the outside assembly labor PN

When the finished products are received:
Receive the finished assemblies under the outside assembly labor #
Use the Convert Parts to Assemblies Option to change the individual parts into finished assemblies.

For example, if your business consisted of purchasing raw tweezers, having them Teflon coated by an outside manufacturing operation, and then reselling them as a Teflon coated tweezers, you would enter the raw tweezers into inventory as one part number, 00-000-0001 and the Teflon coating outside labor cost per tweezers as another part number, 00-000-0002. You would then enter a BOM, 00-000-0003 for the Teflon coated tweezers, which would consist of part numbers 00-000-0001 and 00-000-0002. Rolling up costs in inventory or Exploding BOM 00-000-0003 would total up and load the cost of the finished tweezers into inventory.

Purchasing and receiving x amount of raw tweezers would result in an onhand quantity of x raw tweezers, 00-000-0001.

Purchasing would then issue a PO for x amount of labor, PN 00-000-0002 and send the raw tweezers to the outside manufacturer. When the finished tweezers are returned, they would be received as PN 00-000-0002 since this part is classified as labor and not a part no change in the on hand quantity would occur.

Use the "Convert Parts to Assemblies" Option in Stock Room Module to convert these parts into x amount of finished Teflon coated tweezers 00-000-0003

15.9.3 Outside Manufacturing, Method 2 (Create work orders/issue parts)

This method makes 3 assumptions:

pc/MRP's Inventory Adjustment Method, Configuration, Settings and Utilities Method Option 4 is set  to A.

pc/MRP’s Accounting Method , Configuration, Settings and Utilities Method Option 10 is set  to Perpetual.

You are actively running pc/MRP’s Cost Roll Up Function to keep the assembly costs up to date.

 

Create an “Outside Labor” Part Number, to cover the cost of assembly labor and material supplied by the vendor. 

 

Create a  BOM for the finished sub-assembly, include the component parts you supply the vendor and the  “Outside Labor” Part Number.

 

Create a PO for the  Outside Labor Part Number.

 

Create a work order for the job if you are building to stock or an order entry sales order for the job if you are building to a customer order.

 

Use pc/MRP’s Stockroom Module to Issue the sales/work order to manufacturing.   This will move the component parts from on hand into WIP.  

 

Give the component parts and the PO to the vendor.

 

When the finished products are received:

 

Use pc/MRP’s Receiving Module to receive the PO for the Outside Labor.   pc/MRP will debit Inventory and credit Accounts Payable when accounting enters an I type accounting transaction or the receiver is exported over to QuickBooks.

 

Use pc/MRP’s Stockroom Module to Receive back the completed sub-assembly.  This will decrease qty in WIP and will increase the on hand quantity of the finished sub-assemblies.

  
If you created a sales order for a customer, invoice the sales order.   This will decrease the quantity of the finished assembly.    pc/MRP will debit COGS and credit Inventory when accounting enters an “O” type transaction against the invoice or the invoice is exported to QuickBooks.

 

If you were to run a purchasing consolidation report, select exclude work orders if these parts are being built for existing sales orders.


15.9.4 Outside Manufacturing, Method 3 (Requires pc/MRP for Windows 6.49 AB or higher)

Use pc/MRP's Configuration Module to set Invoice/Receiving Modules increment and decrement onhand quantities (Inventory adjustment method = A)

Issue a PO for the assembly to be built by an outside manufacturer. With pc/MRP for Windows version 6.49 AB or higher, receiving assemblies will trigger the prompt, "Item you are receiving is an assembly, Increase the onhand quantity of the assembly or Convert parts to assemblies ?". If you press, "Convert parts" the onhand quantity of the assemblies will be increased and the related parts in stock will be decreased based on the assemblies BOM. If you press, "Increase", the onhand quantity of the assemblies will be increased. This method has the disadvantage of incorrectly lowering the average cost of the assembly. If you use this method, you must use standard costs to value your inventory.

15.9.5 Consignment Inventory

One method to handle consignment and your own inventory, would be to assign the first 4 characters of a part number to identify the company who owns the part. You would then set the product code portion of the part number to 4 characters. The remaining characters in the part number would identify the part number.

For example:

If the name of your company is Jurong Manufacturing

If the name of one of your customers that provides you with consignment parts, is ABC

You could use the configuration menu, option 29, to define the product code size as 4 characters.

You could use the configuration menu, to define the total length of your part number to 10 characters

You and other customers use and inventory a 5-ohm 1/4 watt resister.

You could assign your part number for the 5-ohm resister as JUR-000055 with a cost of 25 cents apiece

You would then assign ABC's part number for the same 5-ohm resistor as ABC-000055 with a cost of 0 cents apiece

The above method has the following advantages:

Inventory can be printed out for a specified customer (All inventory for a specified product code)

Customer's inventory could be tracked throughout the system by placing POs for customer inventory ($0.00 unit cost). This can then be received by receiving and issued by manufacturing to help track of inventory movements.

When you purchase inventory that you are footing the bill for, you would purchase the JUR- part, which has a real cost which will not foul up your inventory valuation, as the JUR- parts would contain real unit costs and the customer parts would contain $0.00 unit costs.

If you did need to borrow parts to complete a job you would know the equivalent part numbers automatically.


15.9.6 Return Material Authorizations, RMAs

pc/MRP’s current method to handle RMA(s).

 

  1. Initially, enter one or more RMA part numbers into pc/MRP’s Inventory Module as an Assembly Type part number (e.g. 999999 & description RMA) with a unit cost of $0.00 or higher.   If you were to enter the original part number on a sales order, pc/MRP’s Infinite Bucket Module would schedule you to buy and build the original assembly from scratch.   If there is a rebuild kit required for the RMA part number, enter it into the BOM Module under the RMA number, otherwise leave the BOM empty.
  2. When a customer wishes to return an item, create a $0.00 or higher sales order for the RMA part number.   If there is no BOM, edit the sales order, click on the Item Info Tab and enter a Y in the issued to manufacturing text box.
  3. When the part arrives, If the item is serialized, enter a new detailed only adjusting (J) record for that serial number(s).  A SLN detail adjusting record is created.
  4. Entering a $0.00 PO and Receiver for the original part number would decrease the average cost and increase the quantity of the original part number.  If you were to enter a PO and Receiver for an RMA, it should be for an RMA part number, not the original part number. 
  1. Use pc/MRP’s Stockroom Module to issue parts to the sales order.   If there is no BOM, use the Stockroom’s L Type Issue Option to issue parts to that sales order.  If there is a BOM, use the Stockroom’s I Type Issue Option to issue parts to that sales order and the L Type Option to issue additional parts.

 NOTE: Time spent repairing the item can be entered into pc/MRP’s Employee Time Sheet Module.

  1. After the repair is complete use the Stockroom’s R Type Option to return the completed assemblies back from manufacturing.      
  2. Use pc/MRP’s Invoice Module to print out an  invoice and shipper for $0.00 or higher.   This will close the original sales order and decrease the qty of RMA part numbers you have in stock.   If the item is serialized, enter a new detailed only adjusting (J) record for that serial number(s). (Product part#)
  3. If the invoice is greater than $0.00,   Accounting would enter an O type transaction to  post the invoice. (Charging for fixing, e.g. labor & parts)

 

DEBIT A/R $0.00 or amount of charge.
DEBIT COGS or RMA cost of goods sold for the $ amount of the parts.

CREDIT Business Income $0.00
CREDIT Inventory for $ amount of parts

pc/MRP’s Stockroom and Employee Time Sheet Module would provide time and material costs for each the RMA sales order .  pc/MRP’s Accounting Reports, Cost of Sales Report, would provide combined material and time costs for RMA sales orders.

You can set the stockroom’s issue L type transactions to automatically insert a Y into the sales order’s Issued To Manufacturing Field, by creating a file named LISSUPWO.FLG in the pc/MRP Directory.   We do not recommend creating this file as it prevents a safety check against people accidentally entering L type transactions and no initial I type transactions for standard sales and work orders .   

15.9.7 Issuing Tools to Manufacturing

One method to handle tools would be to use the stockroom to do an "L" type issue to issue the tool(s) to a sales or work order. However, you must remember to do a "U", return unused parts to inventory, before your do the "R" to receive the completed assembly or your tools will be consumed in the build.

15.9.8 Advanced Replacement for Customer Return

An advanced replacement is when a customer requests a part prior to sending in the same part for repair or replacement.

 

1.      Create generic or specific RMA partnumber(s) for $0.00 cost

2.      Create a PO for the RMA partnumber, not the actual partnumber, at $0.00 to the Customer returning the part.

3.      Create a SO for the actual partnumber to the customer at current price or $0, on account and carry so that an invoice is created. Enter the serial number if needed. Do not post invoice if there is a dollar amount on it!

4.      Receive the PO for the RMA partnumber from customer into a stores area noting serial number if needed.

5.      If the invoice has a dollar amount, enter a credit memo against the received items and post the invoice and credit memo.

6.      Create a WO for the RMA partnumber.

7.      Use a Stockroom ‘L’ type transaction for the parts needed to repair the RMA partnumber, or an ‘L’ type transaction if a Repair Kit is used.

8.      Create a Stockroom ‘R’ type transaction to receive back the RMA partnumber.

9.      If the part is repaired, do a Stockroom ‘A’ type transaction to increase the onhand quantity of the ‘real’ partnumber sent to the customer in step 3. If the RMA partnumber is scrapped and you have a scrap stores area, the ‘A’ type description for the real partnumber should increase the Scrap area quantity. If no scrap area, do not do an ‘A’ type transaction.