Outsourced manufacturing scenario question

Question

Has anyone dealt with the following type of outsourced manufacturing and if so, how did you or how would you handle it in Acumatiça?

Company purchases the primary raw material in volume and drop ships it to the outsourced manufaturing vendor (treated as a warehouse in Acumatica). When production orders are needed from that outsourced vendor, the outsourced vendor mixes additional raw materials not owned by the company with the raw material owned by the company and then packages the product (more raw materials) before shipping to the company and invoicing the company for those fully packaged items without the cost of the primary raw material.

At this point, the product is coming into the system without the cost of the raw material. I suppose that we could have the items coming from the outsourced vendor be treated as a component item for a production order after the item arrives fully packaged into the warehouse. The needed raw material could then be transferred from the vendor warehouse to the company production warehouse and used in an after the fact production order that combines it with the purchased item from the vendor.

Is this the best way to approach this type of scenario? Any other possible ways of responding to this scenario other than customization?

Best,

David Eichner, CPA

dgodsill97 · Accepted Answer

A production order is needed in order to have the cost of the raw material they purchased as part of the cost of the product the vendor is supplying. The bill would specify the the vendor warehouse as the source for the component. If assuming they want to document all of the components used set the subcontract source to Vendor Supplied; VS items are not included in the cost.

Basically, they are buying a subassembly which has their supplied raw material being issued from the vendor warehouse, vendor supplied material (which are not issued), and a service charge.to create a PO to pay the vendor.

Kandy Beatty · Answer

HI @DavidEichnerI implemented something similar to this. A client used a gas to coat things and they didn’t have a separate warehouse for the gas but just a location for it. You could use the warehouse also. Bring it in as a component as you stated. You could have them allocate exactly what is needed at that cost to add to the production order at the time of usage since you will still need to factor costing into the production unless they are not doing that. (Crazy, but I’ve seen places do that as well.)Are they not planning on keeping any stock on hand? If so, will they have replenishment for that? I think if they have stock on hand and replenishment set up, it would be easier to maintain but if this is something that they only order on occasion when needed, then a the approach you are thinking of would work.I think you have the correct solution since it’s an outsourced product.

Outsourced manufacturing scenario question

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