QuickBooks provides two item “types” that can have a list of component items – an Inventory Assembly and a Group. How do they differ, and when is it best to use one instead of the other? Today I’ll list the features of each and how you can use them.
Inventory Assembly Item
If you are a manufacturer you understand the basic concept of an inventory assembly item. This is the item that you are manufacturing. You pull some parts off the shelf, assemble or process them, and end up with a new part. Fairly straight forward. Let me list a few properties of an inventory assembly item in QuickBooks:
- Inventory Assembly items contain a bill of materials (BOM), which is a list of the component items that you use to create it.
- The BOM can contain other inventory assembly items, inventory parts, non-inventory parts, service and other charge items. You cannot include a group item.
- You can have up to 100 component parts in the BOM with Premier, and up to 500 component parts with Enterprise.
- QuickBooks Pro does not support this item.
- When you sell an inventory assembly the sale decreases your quantity on hand of the inventory assembly itself, but has no affect on the component parts of the inventory assembly.
- When you add an inventory assembly to an invoice (or estimate, sales order, etc.) QuickBooks will only list the inventory assembly item itself, it will not show the component parts.
- You cannot change the composition of the inventory assembly item at the time you sell (or build) it. You can only change it by editing the BOM in the edit item window.
- There is a special transaction called a “Build” that will consume the component parts (reduce the quantity on hand) and increase the quantity on hand of the inventory assembly. I discuss this in my starting with the basics post.
On the surface, a Group item seems very similar. There are significant differences, however. I’ll list properties of a group item in the same order as I did for the inventory assembly item:
- Group items contain a list of component parts. It is not called a bill of materials but it is very similar.
- The component list can contain more item types – all the ones available to an inventory assembly item plus subtotal, discount and sales tax items.
- You can only have 20 component items in a group item.
- Group items are available in Pro, Premier and Enterprise.
- When you sell a group item the sale decreases your quantity on hand of the component items at that time. The group item doesn’t have a quantity of its own, so there is no effect on the group item itself.
- When you add a group item to an invoice (etc.) QuickBooks will list each of the component items on the screen. You have an option to show all of the components on the printed version of the form, or just show the group item itself.
- You can change the composition of the group item at the time you sell it. Once you add it to the invoice you can add or delete component lines, change quantities, and so forth. This does not affect the list of components as they are shown in the edit item window.
- There is no special transaction for a group item – you don’t “build” it. There isn’t a quantity on hand for the group item itself.
Understanding the Differences
It’s important to understand the differences between them because they take different processes to produce, and they show up in different ways in your reports.
An inventory assembly item is a real part – you build some and put them on the shelf, then you sell them or use them as a subassembly in another inventory assembly item. You will see the inventory assembly show up in your sales reports, but you will not see the component items show up as sales.
A group item is really just a shortcut, not a real part. You don’t have a balance on hand, you don’t see it in sales reports. It doesn’t exist, it is just a convenience to you to move a number of different parts through the sales process. You’ll never see the group item in your sales reports – you will see the component items showing up there.
In the traditional QuickBooks view, the inventory assembly item is what a manufacturer is working with. A group item is usually used more by distributors that are putting together standard kits or boxes at the time you are shipping.
However, group items can be used in some interesting ways to resolve certain kinds of problems for many manufacturers – and I’ll go into that in more detail in another article.