STOCK ITEM CLASSIFICATION AS RAW MATERIAL, WORK IN PROGRESS, FINISHED GOODS
As discussed earlier, Tally is flexible and can be used in any business organization. The user can classify stock items as per his requirements. In manufacturing concerns the user will primarily have three broad classifications (Stock Groups) i.e. Raw Materials, Work in Progress, Finished Goods. All items that that are procured to manufacture a particular item is called Raw Material & is grouped under the group 'Raw Materials', where as, a product whose shape has changed, but has not reached its finished stage is called Semi-finished item. These items will be grouped under the Group 'Work-in-Progress' and any item that is changed its shape / nature completely and reached the final form is called finished Goods and is grouped under 'Finished goods' group.
The user can also create ledgers with the name Raw Materials, Work-in-Progress and Finished goods under the group Stock-in-Hand. Once the user has de-activated the option 'Integrate Accounts with Inventory', based on the Closing balances entered by the user, Tally automatically displays the total of closing balances of all the ledgers grouped under the group Stock-in-Hand.
BILL OF MATERIAL WITH AUTO ADJUSTMENTS OF STOCK
In many industries, especially assembly units there are number of components involved in the manufacture of finished items. It is extremely difficult to issue stock items each time a product is manufactured. Such situations can be handled in Tally by using Bill of Material. To create a bill of material, create a new item (finished or intermediate product) and specify the components that go in to manufacturing of that finished / intermediate product. Now, using manufacturing journal, specify the quantity of items to be manufactured. Tally immediately selects all items that go in to manufacturing of the finished product and automatically adjusts (decreases) the stock. Any additional manufacturing cost like wages, power, water charges etc, can be added to the value of the manufactured product.
How to create Bill of Material ?
-> Select Inventory Info -> Select Stock Item -> Select Create -> In items creation screen, select F12 and activate bill of material. -> Specify item name, Unit of Measure and other details and activate Bill of Material for Item. Specify all the items that go in to manufacturing / assembly of the finished product along with quantity. Save screen.
How to create Manufacturing Journal ?
->Select Inventory Info -> Select Voucher Types -> Select Create -> Specify name of the Journal (Mfg Journal) -> and other details -> activate the option 'Use as a Manufacturing Journal' and save screen.
How to enter a manufacturing Journal ?
Select Voucher Entry -> select Alt+F7 (Stock Journal) -> Opt for Mfg Journal -> select the finished product which is to be manufactured / assembled -> specify Qty -> Tally automatically picks up all stock items which constitute the finished product and also displays the total cost of components. The user can now add additional cost like Power charges, water charges etc. Tally will displays total additional cost, total effective cost and effective rate for each finished product.
JOB-WORKING CONCEPTS - Including Sub-Contracting
A Job-worker is one who procures materials from your company, changes its shape and form, converts it into a semi-finished state and returns the material back to you. Tally user can handle Job-Working / Sub-Contract concepts with the help of Locations (warehouses). Each job-worker or each sub-contractor can be equated to a location. The user can use Stock Journals to transfer material from the company warehouse to a Job worker / sub-contractor and back. Hence the user can keep him self informed of the qty of material issued as well as qty of stock items lying with the Job worker. Materials can also be transferred from one Job worker to another, to process the material further before the material comes back to the company warehouse.
How to handle Job-working concepts in Tally ?
Create each Job worker / Sub-contractor as a Location.
-> Activate 'Maintain multiple locations' in F11 (features) -> select Inventory Info -> select Locations (Warehouses) -> select Create -> specify the name of the Job-worker / Sub-contractor and save screen. Create any number of job-workers.
How does Tally handle Job work process ?
Select Voucher Entry -> select Stk Journal (Alt +F7) -> In Source column (left side), select items to be dispatched from company warehouse (Main location) along with the Qty and in the destination column specify same items and mention Job worker (location). Again using Stock Journal shows the movement of materials back after any particular process for e.g., the company can issue raw silk (raw material) to a Job-Worker (Location). The Job-Worker will process the raw silk, convert it to yarn and send Yarn back to the company.
ADDITIONAL COST OF MANUFACTURING WITH NOTIONAL VALUE AND PERCENTAGE
When a product is manufactured, other than the component cost, there are manufacturing cost like water charges, wages, electricity etc, which will have to be added to the cost of the product. In Tally, the additional cost can be added to the product while entering stock Journals or at the time of entering a manufacturing Journal (use B.O.M). The user can specify additional cost as a % of the component cost or even specify a notional value.
Procedure :
Select F11 (features) -> activate 'Track additional cost to purchases'.
Now, while entering Stock Journals, select the manufactured item in the destination column (right side of the Stk Journal) and specify qty and value -> Tally, now displays another screen and the user can enter additional cost by specifying % or providing notional value. Tally also allows user to add additional cost by using Manufacturing Journal.
REORDER LEVELS
It is imperative that Companies maintain sufficient inventory stocks to run their business. Hence many companies would like to maintain reorder levels. Tally offers a facility to maintain reorder levels. The user can define reorder levels as well as Min order quantities for all items. The user can define Reorder levels as well Min order quantities as per his requirements or it can be defined based on the consumption pattern for a given period (i.e. Days, Months, Weeks, Years). Tally provides information on all inventory items that have gone below reorder levels.
Procedure :
-> Select F11 (features) -> activate Purchase Orders and save screen -> next, select Inventory Info -> select Reorder level -> select All items (or particular groups) -> specify Reorder level and Min order level for each item (levels can also be maintained based on the consumption pattern of the item over a particular period) and save screen.
How to view a report ?
-> Select Display -> select Statement of Inventory -> select Reorder Status -> select any group or all -> Tally display complete details along with closing balance, Purchase orders pending, Sales order due, Reorder levels Shortfall and also order to be placed -> to view only those items which have gone below reorder levels select Reorder Only (Alt + L). The user can drill down to lower levels of reports from reorder status report, for e.g. the user can drill down to 'Specify Reorder Level' screen from the Reorder level column in Reorder Status Report.
STOCK AGEING ANALYSIS
This is another important report, which is useful for the management to know how fast inventory of various stock items are moving. This allows the management to decide the production schedule. This report shows ageing period for each and every stock item. The report by default shows ageing by date of Purchase. But the user can select the style of ageing by selecting the option ' Ageing Style' (i.e. By date of Purchase, By Mfg date, By Expiry Date, To be expired). The user can also change the period of ageing by selecting F6 option. It can also be used with the combination of expiry date for perishable goods and Pharma industry.
Procedure :
-> select Display -> select Inventory Books -> Ageing Analysis
Select F6 option for changing period,
Select Alt + S for changing ageing style
Select Alt + B for Expired Batches only
BATCH RELATED REPORTS
Tally provides for batch wise reporting. If the customer looks at the ageing analysis he can view all items with their batches along with their date of Mfg and Expiry date. The user can also get a report of items that have already expired or likely to expire so that he can move them fast by offering discounts etc. The user can also view ageing reports for all batches.
Procedure :
-> Select Display -> select Inventory Books -> select Ageing analysis -> select any groups or all -> Tally displays all stock items with their batch details, Mfg date and expiry date -> select Expired batches (Alt+B)-> Tally will display only those items have already past their Expiry date.
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