Is anyone familiar with how to handle inventory costing and profitability based on ownership? I’ve got a situation where my client does something they call bill to production. Sales order is put into the system for an item, they build it, once its build, their customer is invoiced, the item they built’s cost needs to go to 0.00$. My client then will hold that inventory until their customer asks for the item. we’ve tired different ways to handle but nothing seems to satisfy their need. I can clarify additionally if needed.

I’ve used WO/Assembly for that process, then sell this assembly to the client (yes, you can have SO before that for the same assembly). Except for we always wanted to have COGs, not sure why you consider your costs at $0, don’t you derive your margin form Sales Price - COGs?

we do need to see COGs - Maybe I can clarify a little more. The assembly item is build with cost (cost from raw materials + labor, etc) so once its built on the WO, it has some cost associated. However my client’s process is that once that assembly item is built, they invoice the customer from the sales order. At that point, the assembly item becomes “customer owned”, thats where my client wants the assembly’s cost to go to $0 b/c they don’t want it valued on their books. Once my client’s customer says they want that assembly item, they ship it out. I hope that provides more insight to the process. I’ve tired something similar with what they do now, using a customer owned inventory location; I created a TO to move it at 0.00 rate. When we invoice, it captures the financials there, and I can ship it off the same sales order, However when I look at inventory profitability, it shows 100% profit since there is no cost of the item anymore.

It sounds to me like you should use the regular native functionality to invoice and fulfill the assembly when it’s built Then come up with a secondary custom process to actually “ship it” So when built post an item fulfillment against the sales order which will reduce inventory to $0 and post to cogs Then invoice right away which will be your revenue offset to cogs Then you just need some internal process for your warehouse team to manage when/what to ship. Maybe a custom record or some custom fields on the SO to manage the physical shipping

I see what you’re saying Maven, They thought of using a secondary item code by adjusting it and using it as some placeholder, but then are less fond of that due to having multiple item codes for the same thing. there are other WMS nuances that make this idea also less practical.

It wouldn’t require a second item code but if your using WMS or any shipping integration your right this would not work How about this When WO is built post an inventory adjustment to COGS account that removes the assembly at its cost then adds it back in at $0 This will give you your COGS impact but also leave the assembly in inventory at $0 value Then post the invoice right away as well which will give you your COGS vs Revenue for gross profit Now your SO is in Invoiced but not shipped status. When the customer is ready you can use the regular WMS processes to pick and ship the assembly. Which would now be at $0 so no extra GL impact