When a customer orders a product that requires special processing, that processing adds value to the original product, which creates a new product. To sell the product to the customer, create a product record for it and define all of the associated pricing information.
After the product record is created, you must enter a work order and define the processes and products required to produce the finished product. If it is a one-time order, you can create an individual work order to have the processing done. If the customer plans to order the same product on multiple occasions, you can create a work order template to save time when entering subsequent sales.
Once you have defined the steps required to build or alter a product, you must add the materials used to create the product. Materials include not only the parts, but also the small expense items, such as nails, paint, or glue. You need to add materials proportionate to the finished product. For example, if you are assembling a door, you need 1 door, 3 hinges, 9 screws, 1 doorknob assembly, 1 striker plate, and 1 door frame. If an outside vendor is assembling the door, you might not need to supply the screws, because the vendor might consider this an expense item and include it in their processing fees.
If you process work orders in-house, your setup and labor are recorded in a Work In Process (WIP) holding account. If you do not process your work orders in house, you must pay a vendor to perform the work, which creates a payable. Vendors charge you for things like setup, labor (processing), and, unless you use your own transportation, freight and handling.
If you send a work order for outside processing, you must ship the materials out of stock to the vendor, and receive the finished product into stock so that they can be sold to the customer. This is all handled in the warehouse system, which uploads the information to the work order system so that you can monitor the status of the order.
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