Workflow of a manufacturing company
When it comes to producing goods for resale, there will usually be a process that is followed from start to finish. The order may vary slightly depending on whether products are produced at the request of a customer or whether there are materials or finished goods already in stock. Here is an example workflow:
- A purchase order is raised for raw materials from the supplier/vendor.
- Goods are delivered with a bill from the supplier.
- A sales order is received from a customer.
- A BOM is created to produce finished goods from raw materials.
- Work-in-progress calculations are required.
- Products are manufactured and stock is adjusted.
- Goods are dispatched to a customer, and the customer invoice is generated.
Note
Work-in-progress reflects the value of products that are still being manufactured but are not part of the finished stock values on the balance sheet.
Let's work through the entire process above using the tools...