Two typical options for implementing Bill of Material into an accounting system:
- Full-blown MRP (Material Resource Planning) and Work Order system.
- After-the-fact Bill of Material module
Option 1- the full-blown solution- can cost into the thousands and requires properly disciplined production personnel to utilize and work the system.
Option 2- an inexpensive solution where material production and maintenance is kept outside the accounting system. In the accounting system, you enter a build assembly record that a quantity is produced after the item is put together . It doesn’t matter if the item is a final or sub-assembly. The computer will subtract the raw components from stock, add the new assembly to stock and calculate the cost of the item by taking the extended cost of each raw component plus optionally assigned overhead and labor costs.
With option 2, the computer will advise you if there is enough raw components to build the item even if it has already been done. If you receive a warning that there is a shortage of a component, it is most likely that the stock on the component is not being properly maintained in the computer. So even if the manufacturing process is being handled outside the accounting system, there still is a check and balance for accuracy in inventory control.
Cost between the two options alone shouldn’t drive your choice. If you have the resources to install the MRP and work order system, you must also have the right personnel willing to and/or capable of maintaining it.
You are looking for someone who understands your business and will help you navigate your needs. It’s your money and business on the line. Give us a call at (773)502-5771 to get you on the right track.
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