Accounting for raw materials in production: reservations, write-off, movement in warehouses

When all the information for product manufacturing is entered into the program, production acts are created, and production is launched, the manufacturing process must be controlled, and production accounting must be maintained. Just like in a store, in production, goods are accounted for, goods, orders, settlements with suppliers, salaries are tracked, but also raw materials, intermediate products, packaging materials, and equipment are accounted for. In addition, products need to be distributed across warehouses at various stages of production, quality control of the manufactured products must be carried out, and labor compensation usually includes output. In Torgsoft's accounting program for production, all these nuances are accounted for and automated, making accounting easy.

For information on material receipts, settlements with suppliers, filling out technological cards, creating production acts and route sheets, recording the production process, calculating costs, and shipping finished products, read the previous article from the Torgsoft Production series.

In this article, you will find answers to the following questions: (Navigational list by menu items)

▪️ Features of raw material accounting. Why reserve materials?

▪️ How to reserve materials for production needs?

• Automatic material reservation

• Manual material reservation

▪️ Movement of raw materials and products across Accounting Centers

▪️ Material stock control

▪️ How to account for packaging materials?

• How to check the available quantity of materials?

Features of raw material accounting. Why reserve materials?

In production, it is necessary not only to receive purchased materials and write off used ones, but also to account for raw materials at the transitional stage — when the material is still available but cannot be used because it has already been involved in the production process and is scheduled for a specific product.

To avoid a situation where the same material is simultaneously counted in multiple production processes, raw materials should be reserved. A reserved material is considered occupied in production, and it is not possible to create a Production Act or Route Sheet for it. This allows constant monitoring of raw material availability and helps establish systematic or continuous product production.

How to reserve materials for production needs?

Materials can be reserved automatically when creating a Production Act, or manually — at any stage of production. The program calculates the amount of materials required to produce the product specified in the Production Act, reserves the materials, and sends them to the 3rd level warehouse:

The materials are stored there until they are used and written off.

Automatic material reservation

To avoid manually checking if all necessary raw materials are reserved and not missing anything, Torgsoft allows you to set up automatic material reservation when creating the Production Act. To do this, activate this function in the Torgsoft program menu "Document" — "Finished Product Production" — "Settings" — click "Automatically reserve materials when creating a production act":

A checkmark will appear next to this field:

Now, the program will automatically reserve raw materials for each Production Act, including those automatically created by Route Sheets.

Production Acts for which material is reserved will be automatically marked with the icon :

To view which material has been reserved, go to the "Material Reservation" tab. In this tab, the already reserved goods are displayed on the left with the corresponding green mark. On the right, there is another list of materials with an orange mark — these are raw materials attached to Production Acts where reservation has not yet been made. This happens when the "Automatic material reservation" function was activated after some Production Acts were created. For "new" acts, the program automatically reserved the material, while for "old" acts, it created a list of materials awaiting reservation, so you can reserve them too, if necessary:

To reserve materials awaiting reservation — select the necessary materials and click the "Reserve material" button — the "Product Reservation" window will open, where you can specify the required quantity for reservation or leave the proposed amount suggested by the program — click "Reserve".

The program will move these items to the reserved material list.

You can also cancel material reservation by clicking the corresponding button:

Manual material reservation

Raw materials can also be reserved manually at any stage of production. To manually reserve materials, in the "Production Acts" tab, select the required document and click the "Reserve materials for production act" button :

Movement of raw materials and products across Accounting Centers

Raw materials in production go through a complex path — from receiving to transformation during production into semi-finished products or finished goods, and some materials are written off as waste. So, how to distribute raw materials across accounting centers and where do they go at each stage of production?

✔️ Raw materials are conveniently received at the accounting center for material storage. Therefore, it is advisable to create the required number of accounting centers (2nd level) at the beginning of production, such as "Material Warehouse", "Finished Products Warehouse", "Store". There is no need to create a 3rd level warehouse — the program will automatically create it when needed. (link)

✔️ All reserved materials are automatically moved by the program to the 3rd level Accounting Center and stored there until they are written off. The 3rd level warehouse is created automatically by the program.

✔️ If you delete a Production Act or material from an act, the program will return all corresponding reserved materials to the main Accounting Center, such as "Material Warehouse".

✔️ When you record the completion of finished products or the write-off of the product in the program, the program will automatically write off all reserved materials for that product.

✔️ In case of cancellation of finished product release or cancellation of the write-off of the product, the materials are automatically returned to the list of reserved or awaiting reservation materials. (If the "Automatically reserve material for production act" function is activated.)

Release of finished products, waste write-off, cancellation of release and write-off

Raw materials in production should be written off upon their use, i.e., after the production of each batch of goods. Torgsoft automatically writes off used materials in the required quantity after recording the production fact using the "Release finished products" button. If any product turns out to be defective, this must also be recorded, as materials were used for it. The product is written off using the "Write off product" button.

The release and write-off of products are carried out in the "Production Acts" tab. Select the Production Act and click the appropriate button "Release finished products" or "Write off product" — fill in the opened forms, specify the quantity of produced or defective goods:

To cancel product write-off, click the corresponding button in the same tab:

You can cancel the production fact in this same window "Production Acts" at the bottom — in the "Finished Product Releases" tab:

Material stock control

The Torgsoft program does not allow you to create a Production Act for raw materials that are not available or are reserved. The program controls the quantity of available materials and calculates how much raw material is needed for a product batch.

If you try to create a Production Act for a larger quantity of goods than the available raw material, the program will inform you about which materials are missing and exactly how much:

Thus, the program helps you promptly notice material shortages, purchase them, and avoid production delays.

How to view the available material quantity?

Also, in Torgsoft, you can always view the available material quantity in various ways.

1. In the "Analysis" menu — "Warehouse status analysis"

Go to the "Warehouse status analysis" menu — select the goods you want to view, for example "All goods" — double-click with the left mouse button to set the accounting center for viewing stock:

View the stock of goods:

Close the report or print it, and it can be used for planning the next product batch and creating a raw material purchase list.

2. In the "Warehouse" menu — "Warehouse status"

In the "Warehouse" menu, click "Warehouse status":

A window will open with all the goods received at the warehouse for the corresponding accounting center, in this case "Footwear — Production":

3. In the "Analysis" menu — "Stock analysis"

If you need to generate a report on stock levels and save it in Excel, run the stock analysis by product type. To do this, in the main Torgsoft menu, click the "Analysis" button — "Stock analysis" — "By product type":

A window titled "Stock analysis by product type" will open. In it, click on the "Action" menu — "Select accounting centers" — in the window that opens, check the boxes for the required accounting centers — click "Select":

Set "Grouping type" so that the program organizes products by main types, or subtypes, and by price if needed — click "Update", and the program will generate the report:

The report can be viewed and saved in Excel or HTML format using the respective buttons:

How to account for packaging materials?

In production, packaging materials such as bags, boxes, sacks, crates, and bottles are often used. These also need to be included in the cost of finished products and fully accounted for. How to do this?

Packaging materials in production are treated like raw materials, and their accounting is done in the same way as for raw materials, so this process is also automated. Packaging materials can be received along with raw materials for production, or as a separate item, added to the product's Technological Card, and Torgsoft will account for these materials, their usage for each finished product, calculate the required purchase quantity, reserve, and write them off as they are used — just like raw materials.

How to sell own products to intermediaries and customers if you do not have your own online store.

Free video tutorials for learning from Torgsoft.

Purchase the production accounting program from Torgsoft's online store.

For information on purchase planning, calculating the required quantity of materials, creating orders for suppliers, and automatic incoming based on orders, read the next article in the Torgsoft Production series.

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