Manufacturing & Operations Tutorial: Step-by-Step
The Production Module is the heart of a manufacturing business. This module manages the transformation of Raw Materials (RM) into Finished Goods (FG). The goal is to track Assembly (Building), Disassembly (Breaking down faulty goods), and Full Costing (including VAT and Overheads).
The goal of this module is to convert raw inputs into high-value finished goods while maintaining strict quality control and cost accuracy.
Purpose of the Tutorial:
This document provides a real-world simulation of a food manufacturing cycle. By following this guide, users will learn:
How to handle Material Procurement with VAT.
How to execute an Assembly (Manufacturing Order).
How to perform a Disassembly (Unbuild) for quality rejections.
How to calculate the Final Landed Cost
Company Overview:
Company: Gulf Bites Ltd.
Product: Chocolate Cookies
Batch Size: 1,000 cookies
VAT on Raw Materials: 5% (purchase)
Step 1: Procurement
Before production starts, make the opening stock of raw materials.
Also,
Direct labour cost - $40 (per day)
Factory overhead: (daily / 8 Hours)
Rent— $80
Electricity bill— $20
Gas bill— $60
** If the cost is paid monthly, convert all monthly costs into daily or hourly costs, then allocate them to the product.**
Add Product:
Before starting, ensure all items are in the system. A list of previously prepared bills of material for certain products is displayed. Click the Add NEW button to start a new one.
Add new product with details:
Navigate to:
Sidebar > Product > Add product
For the bill of materials and assemblies, ensure product type:
Never diminishing: We activate this button when adding services.
Assembled product: Enable this if the product is manufactured by assembling multiple components through the production module.
Component product: Enable this if the product will be used as a raw material or as an input in the assembly of another product.
Obsolete: Enable this to mark a product as discontinued so it cannot be used in new sales, purchases, or production
Serialized: Enable this if each unit of the product must have a unique serial number for individual tracking, warranty control, and traceability.
Batch Tracked: Enable this if the product needs lot/batch number tracking for inventory control and traceability.
Saleable: Enable this if the product can be sold and included in sales orders or invoices.
Purchaseable: Enable this if the product can be purchased from suppliers and included in purchase orders.
Here, we add direct labour cost & factory overhead as suppliers, and will include the assemblies.
Opening Stock/Purchases:
Before starting production, ensure materials/components are available.
Navigate to:
Sidebar > Inventory > Add opening stock
Or,
Sidebar > Purchase > New Order
Sidebar > Inventory > Receive Purchase Order
Opening stock list:
Here is the Total inventory amount: $680
How to Manage Batch:
When adding a new product, ensure the batch track button is active.
Stock adjustment with managing batch
Batch number
Total Quantity
Expiry date
Save
How to manage serial:
When adding a product in the system, ensure the serialized button is active.
Manage Inventory with serial number:
Manage serial
Prefix
Padding number
Auto-generate serial number
Add serial number
Bill of Materials (BOM)
Chocolate Cookies – 1 Batch (1,000 Cookies)
Product: Select the assembled product
Duration type: Per Assembly
Bill number: Auto-generated
Expected duration: 8 hours
Quantity of final product: 1000 pcs
Production Hours Per Day: 8 hours
Tax: If applicable
Production Days: Monday
Comment: If any
Component product: Select the component product
Quantity: Component product quantity for the batch
Wastage Quantity: The amount of wastage quantity by individual component product.
WQ type: Wastage quantity by flat amount or percentage
So, here are our bill of materials details
Product name Total Quantity Wasteage(%)
Baking Powder 2 kg 2
Butter 15 kg 2
Chocolate chips 10 kg 5
Eggs 10 Dozen 0
Flower 50 kg 10
Sugar 20 kg 5
Can Auto Assemble: If you enable this button, create a BOM automatically when product inventory is low.
Auto Assign oldest batch/serial: Enable new batch to assign with the oldest batch or serial automatically.
Can auto disassemble: To disassemble the BOM automatically, enable this button.
Obsolete: If the BOM is not used anymore, then enable this button.
After save & close, the BOM will be stored in the Bill of Materials list:
Here, the action button for
View the BOM
Edit The BOM
Delete the BOM
Add Assembly:
Now assemble a new production order.
Navigate to:
Sidebar > Production > Add assemble
Source Warehouse: Select the warehouse where raw materials were issued for this batch. (Main Warehouse)
Destination Warehouse: The warehouse where the manufactured product will be stored. (Main Warehouse)
Product: The final product is made from raw materials.(Fresh Crispy Cookies)
BOM: After selecting the product, the Bill of Materials number is selected automatically. (BOM-260311-000001)
Assemble Quantity: Number of total final products. (1000 pcs)
Can Assemble Quantity: The ability of final production with given raw materials.
Assembled by: The date of assembly.
Expected Duration: Expected time duration for this assembly. (08 hours)
Actual Duration: Actual time to complete the assembly.
TAX: Input the Tax rate if applicable
Comment: Any comment about the assembly.
Duration Comment: Any comment about whether it changes the duration.
Component Product: Availability to add more component products if required.
Assembly line: List of Component products and their details.
Supplier cost: The supplier cost details and add new supplier cost from here.
By-products: Set the assembly cost by-products unit.
Attachment: Assembly-related document or file attachment availability.
Batch: Manage the assembly batch.
Add direct labour cost & Factory overhead:
We have added these costs as supplier costs here.
By Products:
A by-product is a secondary or incidental item produced during the manufacturing of a main product. While the Main Product is the primary focus of production, the By-product also has some commercial value and can be sold in the market.
Handling by-products is crucial because it affects both your Inventory (stock increases for two different items) and your Costing (the by-product can reduce the cost of the main product).
Create purchase (if needed):
Shows the availability of the product
Mark the short product
Click " Create Purchase " and make a purchase
List of Assemblies:
Displays all assembly transactions, check & change the assembly status. View, edit & delete the assembly.
Change the status:
Inventory report:
Now we can see the inventory status changes.
Final product quantity 1000 pcs
By product quantity 2 kgs
All other component products' stock has reduced.
Add Disassembly:
When disassembling, not all raw materials can be fully recovered. Some may be lost.
This loss is called production loss, and the system is counted as uncategorize expenses.
Here,
Select the product
Input disassemble quantity
Component product quantity count automatically & Manual input availability
List of Disassemblies:
Shows all disassembly transactions, detailing which finished products were broken down and components recovered. Change the status. View, edit, & delete the disassembly.
Change the status & View status:
Report Section
Inventory Report:
Final Product transaction report:
By product:
Income statement report:
Uncategorize expense
Trial Balance:
Uncategorize expense
Direct labour cost & Factory overhead as accounts payable (due to unpaid)
Balance Sheet report:
