In the broadest of strokes, manufacturing businesses are organized in two basic ways when it comes to inventory. In one case, you build items according to a production schedule and carry an inventory of finished, or partially finished, goods on the shelf. In the other case, you build just in time, or as it is sometimes called, build to order. In either scenario, Auto Build Assemblies can help keep your QuickBooks assemblies straight with a minimum of data entry on your part.
If you build according to a production schedule, you simply enter your schedule into the Quantity to BUILD column of the Auto Build Schedule spreadsheet, as shown below:
After executing Auto Build Assemblies, QuickBooks will match what your production floor just built. If your bills of material are organized in a hierarchical fashion, with a top level assembly comprised of many lower level assemblies, you need only enter the quantity for the top level build and let the "drill down" feature of Auto Build Assemblies take care of building all the required lower level assemblies. All costs will be carried up through to the top level assembly. You will then have an accurate quantity on hand from which you can sell your individual products, or use them in additional builds if you so choose.
In a just in time environment, you will most likely just have the individual components sitting in inventory when an individual sale gets made. At that point you will produce only what has been sold. If you create an invoice or a sales receipt for the assembly item, you will initially show a negative quantity on hand for the assembly. Production takes care of physically building the assembly and the finished product will be delivered to the customer. The "software" assembly, however, still needs to be built within QuickBooks. What you can do is to continue making these sales throughout the day, allowing the quantity on hand for all of your assemblies to keep going more and more negative. At the end of the day, you can set the Quantity to HAVE column of the Auto Build Schedule spreadsheet to be all zeros, as shown below, and then execute Auto Build Assemblies.
The program will instruct QuickBooks to build all assemblies back up to zero, thereby updating your inventory for all individual components. If you want to run Auto Build Assemblies more than one time per day, you can of course do that as well in order to achieve an even tighter loop with your inventory.
If you are using QuickBooks in a restaurant environment, you might think it is too much trouble to track your inventory in QuickBooks. QuickBooks provides a wonderful, and wonderfully affordable, inventory solution for your restaurant. The key pieces of software needed to accomplish this are:
- QuickBooks Premier or Enterprise
- any Point of Sale (POS) system compatible with QuickBooks
- Auto Build Assemblies
The reason you need the Premier or Enterprise version of QuickBooks (rather than Pro, Simple Start or Online) is that only these two versions have the capability of working with assemblies. In a restaurant environment, as assembly is nothing more than your recipe. For example, you could create the following assembly for a Cheeseburger:
- 1/4 lb. hamburger meat
- 1 slice of cheese
- 1 bun
- 1 oz. onions
- 1 oz. pickles
- 1 oz. ketchup
- 1 oz. mustard
- 1 oz. mayonnaise
and if the order is a to go order, you can include your papergoods such as:
- 1 foil wrapper
- 1 paper carton
Each of the items in your ingredient list will have a cost associated with it which is derived from the price you paid when you bought it from your vendor. That gives your cheeseburger a total material cost.
What happens next is that you need to upload your assembly names into your POS system and assign each a button to be pressed when the item gets sold. After doing this, you will have a button on your POS screen that reads “Cheeseburger”. Throughout the day, you will be selling cheeseburgers, with your cashier ringing them up on the POS system and the cook taking each of the ingredients out of storage and delivering the completed cheeseburger to your customers. Where does your accounting system stand while all this is going on?
Your POS system is a stand alone system. It is connected to QuickBooks in that it can import all the item names, along with the sales prices for each, so that your button can say “Cheeseburger” and know the price to charge. However, the sales that are rung up throughout the day exist only in the POS system, not in QuickBooks. At the end of the day, the sales need to be exported from your POS system and imported into QuickBooks.
Because you don’t premake the cheeseburgers and have them sitting in inventory waiting for your customers to arrive, at the beginning of the day QuickBooks shows zero cheeseburgers in stock. You do, however, have 100 lb. of hamburger meat, 500 slices of cheese, 200 buns, etc. QuickBooks knows this because you puchased each item from your vendor and recorded the transaction in QuickBooks.
Lets say you sold 75 cheeseburgers in a day. At the end of the day, after you export those 75 cheeseburger sales from your POS system into QuickBooks, QuickBooks now shows that you have negative 75 cheeseburgers in stock. Meanwhile, your quantity on hand for hamburger meat, cheese, and buns remains unchanged at 100 lb., 500, and 200 respectively. Why?
The reason is because the cheeseburgers have to be “built” in QuickBooks. Of course, the real cheeseburgers were built earlier in the day by the cook and served to your customers. These are the software cheeseburgers and, until they are built within QuickBooks, your inventory numbers will not match what you really have in your kitchen. When an item is built, each component item is pulled out of stock and the resulting assembly item is added to stock.
Manually entering the build information for these assemblies into QuickBooks will take a person many hours. You will enter 75 cheeseburgers, 50 hamburgers, 125 french fries, 100 milkshakes and on and on for as many items as you have on your menu. Furthermore, this will have to be done at the end of each and every day.
This is where Auto Build Assemblies comes in. Auto Build Assemblies reads your QuickBooks data and sees that you have negative 75 cheeseburgers in stock. It knows, because you have set it up this way on the Auto Build Schedule spreadsheet (see the screenshot in the Manufacturing section that shows all zeros in the Quantity to HAVE column), that you want to end the day (and begin the next day) with zero cheeseburgers in stock. It therefore automatically instructs QuickBooks to build the 75 cheeseburgers. It does this for all the items on your menu and you can set it up to run automatically every night at a particular time no matter what.
That way QuickBooks will accurately reflect the inventory you should have on hand and you can do a physical count as often as every day if you like. You will be able to maintain much tighter control on your inventory, making use of the software you already have and are familiar with, and with a minimum amount of time and energy spent doing data entry.
The food production industry primarily deals in batches. Raw ingredients are brought in and go through various batch processes before emerging as a finished product ready for sale. Take for example a bakery. The basic stages of large scale breadmaking are as follows:
- scaling and panning
What makes the food production industry unique is that, throughout most of these stages, the ingredient list does not change. A basic ingredient list for bread could be:
- white flour
- wheat flour
All of these ingredients get added at the weighing stage of the process. The only additional components, the packaging materials, don't get added until the final stage. So how does QuickBooks keep track of this process?
The answer lies with assemblies. Each stage in the production process can be its own assembly, with the components for each assembly being the assembly from the stage before plus whatever labor and equipment charge went into changing the batch up to the next stage. That way the cost is added to the batch as it moves through the production system. At the stage called "scaling and panning", the batch gets unitized into individual loaves of bread. This is nothing more than establishing the correct quantity of the previous assembly item to go into each loaf of bread.
This method of setting up QuickBooks, although highly accurate in its allocation of costs, could be tedious to implement in practice due to the back office labor of "building" each assembly as it moves through the various stages. This is where Auto Build Assemblies comes in.
Auto Build Assemblies allows you to enter a production schedule into the Auto Build Schedule spreadsheet and then it handles the actual building of all the assemblies for you. Due to its "drill down" capability, it allows you to combine certain of the breadmaking stages into a single data entry operation if you do not need to generate cost reports at each interim step. For example, let's say you just wanted to enter 1,000 loaves of 16 oz. packaged wheat bread. The Auto Build Schedule spreadsheet would look like this:
Auto Build Assemblies will see that the component for each loaf of packaged bread is a loaf of sliced bread, and the component for a loaf of sliced bread is a loaf of cooled bread, and the component for a loaf of cooled bread is a loaf of baked bread, and all the way until you get to the raw ingredients of flour, yeast, etc. which are the components of the weighed "bread". All required ingredients will be pulled from stock and each assembly built in turn, automatically, with any labor and equipment costs added in, until we get to our final finished product.
Sometimes retail is straightforward in that the items you buy from your suppliers are simply put on the shelf and sold individually. In this scenario, QuickBooks assemblies and Auto Build Assemblies would not play a role. But in other scenarios, what gets sold is considered a single item by your customer, but is really a combination of items you purchase from vendors. This combination is an assembly and Auto Build Assemblies can help make working with them much easier.
Take for example a T-shirt shop that applies decals using a hot press. The customer chooses a shirt of a certain style, color, and size and then chooses from one of many decals. This combination of components can be recorded in QuickBooks as an assembly. Because each of these T-shirts is made to order, you would follow the just-in-time scenario outlined above in the Manufacturing section, where your Auto Build Schedule spreadsheet would be populated with all zeros in the Quantity to HAVE column.