Tracking QuickBooks BOM Revisions
In most manufacturing businesses you will find that the structure of the Bill of Materials for items will change over time. Today I’ll discuss how QuickBooks deals with these changes.
Changes happen. A component part may become obsolete and be replaced by a newer one, there may be engineering changes to improve the product, you may have new government requirements that add or change the configuration. In major manufacturing software products you often will find a revision control feature, or a way to track changes in your products. QuickBooks doesn’t truly provide this feature unfortunately, but it does handle changes relatively gracefully.
One of the concerns I often hear is “if I change my BOM will it affect my existing builds?”. That is a good question – because there are times when you can make a change to QuickBooks that will have an effect on actions that you’ve taken in the past. Sometimes this is good, often it isn’t. To understand how changing your BOM affects QuickBooks we have to understand the difference between a list record and a transaction record.
- List records tend to be descriptive in nature. The item list, the customer list, the vendor list for example. You have descriptions of the record, information about accounts that are to be used, and so forth. This generally is information that is not date sensitive.
- Transaction records relate to changes in information. Assembly builds, invoices, purchase orders for example. There is a date that the transaction relates to, and there are changes in information such as the consumption or supply of a quantity of items in the item list.
When you create your bill of material for an Inventory Assembly item, you are creating a list record. It is a description of the component parts for that item, and it doesn’t relate to time. What you see now is what you get. When you issue a “build” transaction to build the assembly item you are creating a transaction record. You enter a date that the build occurs on, a quantity, and the item to build.
How Changes in a BOM Affect Builds
When you issue a “build” transaction the program looks at the current state of the BOM for the inventory assembly item. It will copy the list of component parts into the transaction. If at a later date you make a change to the BOM in the inventory assembly item, that change has no effect on existing builds. If you issue a new build then the changed BOM is used.
This is what we normally would hope for – and in a small way it gives us revision control. You can see a history of the changes to the BOM for the item by looking at the part list in build transactions over time.
The downside is that it also means that you can’t easily correct mistakes after the fact. If you find that you have issued a build for a BOM that has an error, and you want to correct it, you can’t just change the current BOM. You also have no way to directly change the existing build transactions. Your only options are to make a manual inventory adjustment or to delete the build transaction and issue it again (keeping in mind that the new build, regardless of what date you use, will use the current BOM structure).
As a side note – be careful about deleting a build. If the item you are building is a subassembly that will be used as a component in another build you may create a cascading series of problems. Since build transactions are date sensitive, and your inventory balances are date sensitive, if you delete a build of a subassembly you may find that this creates a shortage for the build of a higher level assembly. If you decrease the supply of a part so that there aren’t enough to support an existing build, QuickBooks will change that existing build to a pending build. That subsequently affects the balance of that other assembled part, and you can have a series of problems.
Shortcomings
There are a number of shortcomings in this system – including some bugs (as of the date that this is being written).
- QuickBooks doesn’t have a way of printing a manufacturing work order – you can’t print the expanded BOM for an assembly you are building (with the quantities of parts being used). All you can do is print a simple BOM report for a single assembly. You can find a way to print this with third party products like CCRQBOM or the ODBC driver and a report program.
- Once you have changed the BOM in the item list you have no way of printing a report that shows what the component list was at the time the build was issued.
- Although you can see the historical BOM when looking at a build transaction, third party programs that access the QuickBooks database cannot. There is a bug in the QuickBooks programming interface (which all third party products must use, including the ODBC driver) where an inquiry to a build transaction will show you the current BOM, not the part list that was used in the build transaction itself.
Improvements in QuickBooks Enterprise
Note that in current versions of QuickBooks Enterprise include some nice features that can help here.
- When you build the assembly, Enterprise allows you to change the quantity needed. This does not affect the BOM – it just affects this build.
- Enterprise will print a workorder or job traveler – a listing of the parts needed to build one assembly, and info on the number of assemblies to build. You can edit the report, although the selection of fields is verylimited.
Related posts:
- QuickBooks Manufacturing Tutorial
- QuickBooks Shuts Down When Issuing a Build
- QuickBooks Manufacturing Bill of Materials
- Understanding QuickBooks Inventory Cost
Category: Manufacturing and Inventory, Working with QuickBooks
About the Author (Author Profile)
Charlie Russell is the founder of CCRSoftware. He’s been involved with the small business software industry since the mid 70′s, and remembers releasing his first commercial accounting software product when you had a one-floppy disk drive system, loading the program from one floppy and then replacing that with the other floppy to hold the data. He has a special interest in inventory and manufacturing software for small businesses. Charlie is a Certified Advanced QuickBooks ProAdvisor and participates extensively in the QuickBooks Community user forums under the ID of CCRussell. Visit his CCRSoftware web site for information about his QuickBooks add-on products. Charlie can be reached at charlie.russell@sleeter.com
He is also the author of the California Wildflower Hikes blog and a regular blog contributor to the Intuit Inner Circle.
Connect with Charlie at Google
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Mr. Russell, Please advise. I recently landed a clean up job for a new company. Client knows he has set up issues and his 1st qtr #s are a mess. He was trying to use the inventory parts and assemblies in QBPremier 2011, but this is a recycle yard. He is actually reverse manufacturing. I.E. brings in an scrap item, processes and sells out 6 other items. His inventory values are weight based, but had no controls in place 1st qtr. He has negative inventory all over and a COGS $ on his 1st qtr P&L that is well above gross sales.
I can mathmatically back into beginning balances which were not set up and that will help with some of it. I have reviewed all your articles on inventory & mfgr ….other suggestions welcome. Thanks
Carol, it is very hard to give you a forensic analysis of your situation through blog comments like this. I’m not an accounting professional, and even if I was I don’t have enough information to give specific advice. You’ve got two big issues (at least). How to fix the problem you have with inaccurate information, and how to set them up so that they are using the system properly.
QuickBooks doesn’t do “reverse manufacturing” (at least as far as I would define it) at all, as you point out. Using inventory assemblies most likely isn’t going to do much for you, although there are some situations where they can be useful depending on how much post processing they do. In some cases you may want to look at non-inventory items instead of inventory parts, BUT if there are regulations in place that require them to track quantities that might not be possible. If they hold the items any length of time you also may need to stick with inventory parts.
It is complicated, and way beyond what I can help you with in a comment here.
Sounds like time for a third-party product. I know that Fishbowl Inventory will allow reverse assembly, and I am fairly certain that you can have a BOM and then remove items, like BOM says 4 doors, but this car has one damaged, so only get three doors off this one.
Carol, I think it might be possible to use inventory assemblies to perform “reverse manufacturing” for example if your client buys used cars and turns them into doors, engine, rear-bumper, side-mirrors and tires you could have an inventory part called “4-door saloon” and and inventory assembly called
“4-door saloon WIP” whose BOM will have “4-door saloon” as an item and “0.20″ as the quantity
and inventory assembly for each of the parts produced e.g.
a) “car door” whose BOM will have “4-door saloon WIP” as an item and “0.25″ as the quantity,
b) “engine” whose BOM will have “4-door saloon WIP” as an item and “1.00″ as the quantity,
c) “rear-bumper” whose BOM will have “4-door saloon WIP” as an item and “1.00″ as the quantity,
d) “side-mirrors” whose BOM will have “4-door saloon WIP” as an item and “0.50″ as the quantity and
e) “tires” whose BOM will have “4-door saloon WIP” as an item and “0.25″ as the quantity
When your receive a used car you build five “4-door saloon WIP”, you then proceed to build each of five parts that are desired.
Its ugly but …
It would be a lot simpler use a quantity/value inventory adjustment (perhaps two, might be simpler to figure out), one to reduce the inventory assembly and a second to increase the inventory parts, rather than entering that complicated series of “builds”.
This post provides great perspective on what you get and what you don’t with QB BOM. Thank you. Quick related functional quesiton. I can’t figure out how to actually change my build assembly. Quantities are easy enough to change, but what set of key strokes allow you to fully remove an item from a build assembly?
If you have Enterprise you can. Edit the BOM right as you issue the build. If you have Premier the you have to edit the BOM In the edit item window before you issue the build. Or do a inventory adjustment after you issue the build