The approaches outlined above are based on the assumption that you own the lowest level parts and are just sending them to the vendor for processing. So you aren’t buying the parts from the vendor, you are just paying them for the assembly service. There isn’t a tie between the parts and a PO at all. The bill you pay is for the service of doing the assembly – you can work that in to the BOM costs, but they aren’t a part.

If you are not buying the parts and giving them to the vendor, if they are building the parts, then you don’t own them ahead of time, and we are talking about an entirely different scenario

Also–as for the reconciliation of payments to vendors related to builds–How would you suggest structuring the manual process for matching payments to vendors who perform specific steps/work with respect to the assembly build process? Does using a the assembly build essentially replace the method of receiving items with a bill against a PO and creating a payable for hte vendor?

Thanks again.

In a very general sense, I’d say you are heading the right direction. Based on the minimal info that you have provided.

The choice of approach depends on what kind of information you want to get out of the system AND how much manpower you have to run it. I can’t really say which applies to your situation the best, at this point.

Reconciling PO’s with assemblies built this way is tough – it generally is a manual process as QB doesn’t really give you the detailed info. You can see amounts on pending builds vs amounts on open PO, but they aren’t tied directly.

First thanks for all of your efforts—your articles are extremely helpful!

I am an experienced QB Manufacturing & Wholesale user helping a start-up client set up their QB accurately. In my past experience, I’ve never had to use the assembly function in QB so this is a new space for me. After reading your article comparing Groups vs. Assemblies, I’m confident we need to go with an assembly build as the foundation for our inventory management process as ultimately we sell a finished good and we need the ability to reliably track the qty and transactions of that finished good.

Our situation is this: we are not a manufacturer per se because we outsource the entire manufacturing process. For our core product, we direct the work of 3 suppliers that each perform different steps in production process to complete our finished good. We own some of the raw materials (or components) used in their manufacturing process and they own some of the others while charging us service fees for their work

This is a summary of the approach I think would be best suited for this company:
1. Track inventory levels of all of the components that we own that are being stored at our suppliers’ warehouses by setting up the component items as inventory parts and the finished goods as assembly items. Will need to use one of the two approaches you outlined above to facilitate this tracking.
2. Track inventory levels of all of our finished goods being held at our facility by completing “Builds” for these assembly items once we receive the finished goods.
3. When setting up our finished goods as Assembly items, we will create BOM that includes all material costs (which we are responsible for) and manufacturing charges we will pay to our suppliers for their services
4. Reconcile payments made to our suppliers with PO’s issued to them (not sure how to do this).

I’m not sure if I’ve given you enough info to assess this or not, but I have several questions:

1. Does this approach sound like the best route to you?
2. Which of the two approaches you outlined in this article would your recommend for us?
3. Could you explain how the process should work to reconcile POs and payments to our vendors with the assembly builds?
4. Any other suggestions?

Thanks so much.

-Nick

may i know is it work with my idea:

do the subcontract with two bill entries:

1. one for Subcontractor and it’s charges only
2. another one for Combine Finished Good

in 1:
create a Bill as simple,
enter Expense tab, enter the Sub-contract charges over there.

E.g:
Vendor = SubContract-vendor
AP Total = 50

Expense Tab:
Account = SubContract Fee
Amount = 50

for 2:
Vendor = BOM
AP Total = 0

Expense Tab:
Account = SubContract Fee
Amount = -50

Item Tab:
Item Qty Cost Total
Mat1 -1 1 -1
Mat2 -1 1 -1
Mat3 -1 1 -1

FG1 1 53 53

is this ok?

Hopefully you had a backup before you made the change?

In any case, if you are seeing this and you didn’t do any of the things I mentioned, then what you need to do is to make the original item “inactive” and create a new inventory assembly item. You can rename the “inactive” item and give the new assembly item the old name. Then you aren’t affecting any transactions. However, make sure that you transfer the value/quantity of the parts, if they have an on hand balance, into the new assembly part.

The assembly option will definitely get the inventory quantities right but what would be the best way to get the value add charge from the vendor recorded?

In you example the inventory is sent to the vendor and then when the inventory is received I run the build. But the vendor has also charged me a fee for the service which I would also like to include in the cost as well as pay the vendor.

I did not see where the BOM option handled that piece.

Thanks,
Dan