Kits & Bill of Materials | Inventory Control Overview

Kits, which are also known as a Bill of Materials, are a collection of items that can be sold at one time by selling just one part number instead of having to enter all the part number of all the items being sold. They can be used for small scale manufacturing businesses, to selling groupings of inventory in a furniture store.

DYNAMIC KITS Dynamic kits remove the inventory (raw materials) from stock as the kit is sold. By definition, there are never any kits in stock, only raw materials, and when the kit is sold, each of the items within the kit has it's items removed from stock. If you explode a dynamic kit onto an invoice, it ceases to be a kit, but all the items are on the invoice. This will allow you to then substitute some items for others if required by the customer.	STATIC KITS Static kits are built before the customer arrives. When you create a static kit, the system will remove the raw materials from stock and then add the kit into stock so that it is available to sell. This is useful for a small manufacturing operation that want to record how many items have been built and are ready for sale, and to quick view which raw materials are left over. The system can analyze the inventory and let you know how many kits you can build from the raw materials in stock, and/or which materials you need to purchase in order to build a certain number of kits.	TAG ALONG KITS Tag along kits are a variation on Dynamic kits, as the raw materials are sold as the kit is sold. However, if an item is sold with another item unconditionally, you can then build a tag along kit instead of having to build the item and insert it within a kit too. This is useful for selling items such as bottles of pop that are always sold with a deposit.

EXPLODING KITS

As the word Explodes indicates, when you "explode" a kit onto an invoice, it will place all the individual items onto the invoice so each can be individually priced and will also allow you to substitute one item for another. If you are selling computer system, this is especially useful, because a customer may order a standard system, but then substitute the hard drive for a larger one. If you explode the kit itself onto the invoice, it will normally be priced at zero and each item will instead be priced. This will give you the benefit of being able to see what is sold and keep track of how many package deals you sold over time. If you sell a static kit, you do have the option to explode it onto a work order, but each item will remain unpriced. This will allow the staff putting the order together from the work order to know which items to supply with the kit. The customer's final invoice can remain unexploded and not show the details. If you are selling serialized items within the kit, you must explode the kit in order to correctly select which serial number was supplied.

KIT PRICING

Normally, when you sell a kit, the cost will be the sum of the individual parts that make up the kit. If the value of one of the components increases, the value of the entire kit increases, and hence the list price if you are using a percentage markup or margin. However, you can define the price of the kit is stored with the kit instead of being a collection of the parts. This is useful if you purchase the kits from the manufacturer as a set and get a better price by buying the kit instead of just the components.

For example, furniture stores often buy beds as kits of bedsprings and mattresses, and get a better deal by buying both. Now for the more complex stuff. If you have a dynamic, exploding kit where the cost is stored with the kit, the kit itself will be place on the invoice and priced out, and each item belonging in the kit will be added to the invoice and priced at zero. If you have a dynamic, exploding kit, where the cost is the sum of the parts and you include the kit within itself, then the kit will be added to the invoice and priced at zero (It will look like a heading) and then all the items will be added to the invoice and be fully priced.

Note that if you are selling package deals, you can define the printed invoice to not print the prices of each item, but instead only show the quantity of each and then on the bottom of the invoice, show the sub total, taxes, and grand total. This gives you the benefit of having the prices of each component on the screen, detailing the invoice for each sub category in the general ledger, but only showing the customer the package price.