Due to long lead times, we want to stock some material at a vendor for use in their production process. We would purchase the material and send it to the vendor. They would produce our item and sell it to us at their price less the material cost. We don’t really want to have to issue jobs for this process.
My thought was to sell the raw material to the vendor and discount it out to $0.00. The vendor would then produce our item and sell it back to us at Gross Price less material allowance (which we would discount out).
I can’t find anywhere on our P.O. where we could enter a discount amount in order to preserve the costing.
Does anyone have a better idea?
Thanks in advance.
Kerry TravisControllerInternational Name Plate Supplies Limited
There is a PO sent to the supplier for completed material with a “processing only” price.
The raw material needed can be sent to the supplier with a pack slip using the miscellaneous shipment which will not affect inventory.
A new warehouse and bin was created and the raw material was move into this location for inventory purposes. You can mark it as non-nettable and update this manually monthly from the supplier. The supplier treats it as customer supplied material on their end.
I believe there is a supplier managed inventory option that could come into play for you as well, but the above is what I have seen implemented and used.
Kerry,
I have also seen @BoostERP recommendation done as well.
There is another option as well depending on how the vendor processing is done.
If you setup the vendor processing as a Subcontract Operation and then setup the materials associated with the Job as Buy Direct, then when your receive notice that the PO was delivered you would just process the PO receipt as normal, and instead of going into Inventory it will go directly into the subcontract operation on the Job as WIP. Then when you receive the SubContract Job PO for the processing the AP Invoice would only before that amount.
I’ve seen both ways done, it seems like lead time and how the material is purchased seems to affect which option is used.
