At first glance you might say either "Right, I need assemblies, kits and groups," or, conversely, "These don't interest me." But wait a minute. First understand what they are and then decide if assemblies, kits and groups are right for your business model. You may be surprised. During the NetSuite implementation we consult with clients about how best they can take advantage of the functionality in assemblies, kits and groups. We have very few clients who have not adopted as least one of them. Assemblies are the most complex of the three. You build an assembly using some combination of Inventory Items, Non-Inventory Items, Service Items and other Assembly Items. There are several benefits to Assembly Items. First you can track the physical inventory of the assembly and each of its members. Second, when you build the assembly you decrement the member inventory while incrementing the assembly inventory, both the physical inventory and the value of the various inventory accounts on your books (Raw Materials Inventory, Processed Goods Inventory, etc.). Also, you may assign the assembly a different price than the sum of its members. This enables you to take into consideration the cost of the effort involved in assembly. You might also want to capture as part of the COGS for the Assembly Item some cost of the assembly. This is why adding a Service Item may be useful. With the Service Item as part of the assembly, you can add a set amount to the item for direct labor costs. the offset is a credit to a payroll adjustment account, to make sure you don't double dip labor costs. Normally an Assembly will have at least one inventory item, because by making an assembly you are moving physical inventory and charges from one inventory asset account to another. If you do not have an Inventory Item in the Assembly you are probably better off with a Kit or a Group So Assembly Items are excellent for managing both inventory and the direct costs of inventory, including labor. NetSuite has also made it easy to Build an assembly in the system, and even unbuild it if necessary. You also have the option to change the number of a given component member on the fly, if necessary. Lastly, you can also use Lot and Serialized Inventory Items in an assembly, give the assembly itself a serial number. Kits are less functional than Assemblies but they still serve a useful purpose. The main distinction is that kits do not have separate Asset and Cost of Goods Sold accounts. This means that you cannot build kits ahead of time and move Inventory from Raw Materials to Processed Goods, for example. Also, when you sell the kits you may charge a price greater than the sum of its members, but the COGS account will be charged with the sum of the member's costs. So why choose Kits over Assemblies? A Kit is probably something that you really do not spend any extra labor on, other than pick, pack and ship. You simply want to sell a couple of items together, but price the Kit independently of the member items. Kits also allow you to charge the revenue to a different income account, which is helpful if you want to track revenue by single Items vs Kits of Items. Finally, Groups are very much like Kits in most respects, but with one important difference. A Group's price always depends on the group's members. In fact, you cannot assign any accounts to a Group, at all. Groups are used when you simply want to sell Items together but do no want to track any special Inventory or Income data. Groups are useful in a variety of instances. For example, you can create a group that includes an Assembly Item and an Service Item, like a support contract or a warranty. You have already done all of the work necessary to manage the Assembly's cost and inventory accounts, so the group is simply a way of combining two items for sale. Very little setup work and easy to create, even on the fly. Now if you do not have physical inventory at your business, then you probably do not need Assemblies. But you might still have need for Kits of Non-inventory Items, or even Service Items. The advantage of Kits and Groups for your business is that you can much more quickly create a sales order, whether that's done by a customer on your web site or a Customer Service rep in your business. Also, by Kitting products you can cut down on order mistakes and inconsistencies, and give customers greater clarity in how your products and services complement each other. |
