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I buy unfinished products and send them to a Subcontractor for finishing.  The unfinished product costs me $100 per unit and the finished product costs me $150 per unit, plus $15 shipping. This means the true cost to me per unit is $100 plus $150 plus $15 or $265 per unit.

Can Odoo help me keep track of all this INCLUDING when the price of all three changes?

I want to see on my products worth their full value of $265 (as well as any variances as other  costs change.

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Yes.

Subcontracting Bills of Materials along with Automated Inventory Valuation and Landed Costs are the concepts you will want to understand.


SETUP:

1. Setup an account to manage the value of Inventory (*1) you send to Subcontractors:



You will need several Product Categories (*2).  One to manage your products (Unfinished and Finished), one to manage Shipping services and another to manage Subcontractor inventory when not returned.

2. Set them up like this:




3. Create two Products (*3):




4. Create a Bill of Materials (*4) for the Finished Product:



5. Add the Subcontractor on the Purchase tab of the Finished Product along with the Price you pay:

 


6. On the Unfinished Product, check on Resupply Subcontractor on Order:


7. Setup your Shipping Service Product (*5) and Subcontractor Inventory Service Product:



On both, make sure to check Is a Landed Cost on the Purchase tab:



8. Change the Location Type of the Subcontracting Location so you can set a Stock Valuation Account (Incoming) for it:


Change it back to Internal Location before saving – the change is just temporary to let you configure the Accounting Information.


WALK THROUGH:

After the Purchase, Receipt and Billing of one Unfinished Product:


After the confirmation of the Purchase Order for one Finished Product and the delivery of one Unfinished Product to your Subcontractor:


After the receipt and Billing of the Finished Product (with $15 worth of shipping on the Bill landed back on the product):


After the processing of Landed Costs (*6) for the $100 worth of Subcontractor stock sent:



Inventory Valuation:


Finally, if you have shipping costs associated with the Unfinished Product (either paying when the product is received or paying when the product is delivered to your subcontractor – or both – you can land those costs as well).

 


NOTES:

(*1) This is so you can monitor the value of Unfinished product(s) that you still own, but that are outside your warehouse.  If all goes well, you land this amount back into the Finished product cost. if not, you can reclass this amount to a receivable so you can ask to be compensated.  If your subcontracting process spans accounting periods, you may need to accrue this amount if you don't know for sure that you will get acceptable Finished product(s) back.

(*2) Each time you want a different account used in a Landed Cost adjustment, you need a separate Product Category.

(*3) The costs for each product is initially $0 – Odoo will manage this field for you, updating it based on the FIFO or AVERAGE method you choose when setting up the Product Category. Be sure to add a Vendor to the Unfinished Product with the price you currently pay ($100 per unit). Add Reordering Rules to both products if you want Odoo to draft Purchase Orders for you.

(*4) You may need to activate Subcontracting if it isn’t already active:


(*5) You may need to activate Landed Costs if it isn’t already active:


(*6) You can land both the shipping and the subcontractor inventory during the same adjustment if easier.


Additional documentation you may want to review:

https://www.odoo.com/documentation/user/14.0/inventory/management/reporting/inventory_valuation_config.html

https://www.odoo.com/documentation/user/14.0/manufacturing/management/subcontracting.html

https://www.odoo.com/documentation/user/14.0/inventory/management/reporting/integrating_landed_costs.html

https://www.odoo.com/slides/all

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If your unfinished product is only used to send to a subcontractor you can also set the inventory account used for posting when delivered at the Product Category level instead of using the location.

Wow what a great walkthrough! I wish I, or my BSA, had found this during our initial deployment. This should certainly help with getting us back on track.

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Can you clarify how shipping Cost is getting added to Product since Receipt transfer doesn't populate in the  landed cost list.

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