How to organize accounting for raw materials and semi-finished products in Torgsoft

Accounting for materials and raw materials is a fundamental element of production automation in Torgsoft, as it directly affects planning, stock control, cost calculation and timely order fulfillment.

Raw material accounting covers the entire cycle: from receipt and reservation in warehouses to write-off after finished goods are produced or waste is disposed of.

I. Receipt and preparation of materials

The first step in raw material accounting is its receipt (inbound) to the relevant Accounting Center.

1. Warehouses (Accounting Centers). It is recommended to create separate level 2 Accounting Centers, for example, "Materials warehouse" and "Finished goods warehouse" to conveniently allocate resources.

2. Receipt document form. Raw materials can be received by creating an inbound invoice manually or via import.

3. Units of measure. It is important to receive materials in those units of measure in which they will be used and written off in the Bill of Materials (for example, in meters or liters, not in rolls or boxes).

4. Packaging materials. Packaging materials (boxes, bags) are also accounted for as raw materials and are added to the Bill of Materials so that their cost is included in the cost of finished products.

II. Structuring materials in the Bill of Materials

The Bill of Materials (BOM) defines how much material is needed to produce one unit of a product, which is key for automatic calculations. In the BOM, materials are divided into categories: "Material", "Waste" and "Semi-finished product".

1. Accounting for semi-finished products

A semi-finished product is a material that is not purchased ready-made but is produced within the same production process.

• A separate Bill of Materials is created for each semi-finished product.

• When launching production of the final product, the system automatically takes into account the need for materials and operations required to manufacture the semi-finished product itself.

• The system automatically creates a separate Production Act for the semi-finished product when a Production Act for the final product is created.

2. Using material analogs

Analogs are identical interchangeable materials (for example, the same fabric in different colors) that can replace the main material when it runs out in stock.

• Analogs are added to the main material in the BOM, and the user can view their stock status.

• Important difference: analogs can be used only when working with a Production Act. When creating a Routing Sheet, only main materials are used and analogs do not participate in the production process.

III. Raw material reservation

Material reservation is a mechanism that prevents situations where the same material is planned to be used in several production processes at the same time.

1. Operating principle. Reserved material is considered allocated to production and becomes unavailable for selection when forming new Production Acts.

2. Storage location. Reserved materials are automatically moved to a level 3 Accounting Center, which is created by the system.

3. Reservation methods:

•   Automatic. Activated in the settings. The system automatically reserves raw materials when a Production Act is created (including those created based on Routing Sheets).

•   Manual. Materials can be reserved at any stage of production by selecting the Production Act and clicking the corresponding button.

4. Releasing materials. When finished products are produced or a product is written off, reserved materials are automatically written off. When a Production Act is deleted, reserved materials are returned to the main warehouse.

IV. Planning material purchases

The "Production planning" mode allows the manufacturer to automatically calculate the need for materials for a planned batch of goods and generate purchase orders to suppliers.

• Requirement calculation. The system compares the Required quantity of materials (based on the BOM) with the Available quantity (current warehouse stock plus reservation under the Production Act) and calculates how much needs to be Ordered. This quantity can be adjusted manually.

• Order creation. With a single click on "Create supplier orders" the system generates orders for each supplier, automatically filling in the supplier based on the last purchase.

• Accounting for analogs in orders. Important: when automatically generating supplier orders, the system does not take analogs into account and includes only main materials.

V. Write-off and accounting for consumption

Materials are written off only after the fact of finished product manufacturing or defect write-off has been recorded.

1. Automatic write-off

• When products are released, Torgsoft automatically writes off materials and analogs (if they were used) after finished goods are produced or defective items are written off.

• "Write off all material". This action is available in Production Acts and allows you to write off all materials under the act at once before starting the release/write-off of items (not applicable to Routing Sheets).

2. Write-off via Routing Sheet

When using Routing Sheets, write-off can be performed through special operations:

• "Weighing" operation. When this operation is scanned and the batch weight is entered, weight-based materials are written off proportionally to the weight, and piece-based materials (for example, buttons) are written off entirely for the whole batch at once.

• "Write-off" operation. Allows you to manually specify the quantity of material to be written off. If this operation is performed several times, only the quantity specified in the last execution is taken into account. Unlike "Weighing", this operation does not create a warehouse write-off document; it is created only when finished products are released.

3. Accounting for waste

The quantity of the main material in the BOM must be specified taking potential waste into account.

• Posting waste back to stock. If the "Post waste back to warehouse" option is enabled, the system creates a write-off document for the total quantity of material and a warehouse receipt document for the quantity of waste. In this way, waste is returned to stock.

• Receipt options. Waste can be received as the same material (if it is liquids or bulk substances suitable for reuse) or as a new material (for example, fabric offcuts as "Filler").

VI. Stock control and movements between Accounting Centers

Torgsoft provides control over the availability of raw materials at different stages.

1. Blocking production without materials. The system will not allow a Production Act to be created if there are not enough raw materials in stock and will notify the user about this.

2. Stock analysis. The level of raw material sufficiency for a particular Production Act is displayed as a % of material available.

3. Viewing stock. Available materials can be viewed in the menus "Analysis — Stock status analysis", "Warehouse — Warehouse status" and "Analysis — Stock balance analysis".

Analogy:

Material and raw material accounting in Torgsoft can be compared to the work of a head chef in a large restaurant. The Bill of Materials is their recipe, clearly specifying how much of each ingredient (material) is needed for a dish, including mandatory preparations (semi-finished products) and the possibility to substitute some vegetables (analogs). Reservation is like setting aside the exact amount of meat and spices for today’s orders so they are not used up for tomorrow’s banquet. And Production planning is the automatic creation of a purchase list that compares what is left in the fridge with the needs for all future orders, forming an accurate order for the supplier.