Mind Your Own Business – Inventory Auto Build and Multi Location Options Question

Q. I am trying to understand the Inventory system. I went through the manual and tried to record my inventory items, and have some questions for you. Here is my situation: I am a handbag designer. I buy leather, hardware and liner material from different vendors, then I send it to a manufacturer to make my designs. I need to keep track of the inventory I purchased, what I sent to a manufacturer, and calculate the cost of a finished product (cost of the bag). How do I set up the inventory to enter these items and track all the transactions?

A. Firstly – is the Premier Version you are using from MYOB USA? Unlike MYOB NZ the USA version has a multi-location for inventory which in your case is what I think you will need to use. Please check the Inventory window and see if you have a Location option.

From your question I have put (in bullet format) a sequence of steps which I understand will suit you best.

• As you Buy and Inventory products. IE Leather (per meter), Buckles (per each), Zips (per each) Liner (per meter), etc., you would need to set up your Inventory codes to reflect this. In the Inventory – Set Item window, click on I Buy and I inventory these items. The items that you inventory would be placed into your Primary Inventory Location and would be entered through the Purchases window to record quantities and the cost of the products. You then send products to a Manufacturer who fabricates or assembles the final product that you Sell. The Manufacturer is not charged for these products but instead charges you to make the handbag. If you set up a Secondary Inventory Location you will be able to track what you have supplied to the Manufacturer. You could identify the Location by using the Manufacturers name (and could set up as many Locations that you need for each Manufacturer that you may use).

• To track the stock movement for each Manufacturer you would simply use the Move Items function in the Inventory window. This will simply remove the stock from your Primary Location and place it in another location of your choice. If you do it this way, the stock or products remain as your assets but you are able to track where they are at any given time.

• You then need to use the Auto-Build Item function using the Manufacturers Inventory Location. This reduces the products or stock that they have inventoried in their location as they assemble each handbag. To use the Auto-Build function you would need to know approximately what each handbag needs to be assembled.

• So from the Manufacturers Inventory Location you would Auto-Build the handbags something like this:

Profile Window: I Sell this item

Description: Handbag Black AAA

Auto-Build: Item – Leather X 1.0 meters

Item – Buckle – each X 2

Item – Zip – each X 3

Item – Liner X 1.0 meters
Item – Labor $ xxx (this would be the amount they charge you to make the handbag).

This Auto-Build item would be the cost price to you where you would then add your mark-up on- sell the item.

• In the Sales window you would simply sell the Auto-Built item from the appropriate Location at your sell price. When your Manufacturers products or stock has been used up – you would simply Move Items from your Primary Location to the Manufacturers Location and start again. Also I suppose you will have to take into account a percentage for material that cannot be used like off cuts etc. This can just be coded to an Expense Account when you Count Inventory for each location.

You can view other FAQ’s from an entry level to a more advanced level by visiting http://www.onlinemyobtraining.com and to also look at all the FREE stuff available to you.

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