Table of contents
- How do you handle customer-supplied fabric accounting when there is one warehouse?
- How do you receive the brand’s fabric so zeros do not mix with prices?
- How do you record the fabric norm with loss?
- What happens in the assembly and in piecework pay?
- How do you return the leftover to the brand and agree the figures?
- What should you check before launching such a scheme?
- What does the owner see in the reports?
- What does this give the shop?
- Scenario limits
- FAQ
- The fictional shop Loomline sews from the fabric of five brands and also makes its own line. It receives the customer's fabric with the "Processing" checkbox: the price is zero and the batches carry a cost of 0.00.
- Out of 1,200 m of brand fabric, 600 garments take 600 × 1.8 × 1.05 = 1,134 m. The shop returns the remaining 66 m with a document, and the brand sees the same figure the shop does.
- The cost of its own hoodie is €13.29, where an average price mixed with zeros showed €7.10. The margin is 39.6% instead of an imaginary 67.7%.
The company is fictional. Every action in Bimp is a real product feature.
Customer-supplied fabric accounting in garment manufacturing in Bimp rests on one checkbox. The customer’s fabric is received with the “Processing” mark, the price stays at zero, and the cost of the shop’s own garments is calculated without someone else’s meters. Below, a fictional shop follows the path from the receipt of 1,200 meters to the return of 66 meters of leftover to the brand.
A brand calls on Friday and asks how much of its fabric is left after the hoodie batch was sewn. The storekeeper opens a notebook, then goes to measure the rolls. The numbers differ by 40 meters, and the argument about them lasts until the next order.
How do you handle customer-supplied fabric accounting when there is one warehouse?
Loomline (a fictional company) is a garment shop of 30 people. It sews from the fabric of five European brands and also makes its own line of basic clothing from its own fabric. The fabric of all six owners lies in one warehouse.
The storekeeper keeps the customer’s meters in a notebook and posts its own through the accounting system. Two things suffer. The brand gets a mismatch in the balance, because the notebook counts differently from the rolls. And the cost of the shop’s own line is distorted, because the customer’s fabric with no price falls under the same item as its own.
Here is how it looks in numbers. The warehouse holds 1,000 m of own fabric at €6 and 1,200 m of customer-supplied fabric at zero. The average price per meter comes to 6 × 1,000 / 2,200 = €2.73. The shop’s own hoodie uses 1.89 m of fabric (a norm of 1.8 m plus 5% loss), so the fabric in its cost is valued at €5.15 instead of €11.34. The accountant sees a margin that does not exist.
How do you receive the brand’s fabric so zeros do not mix with prices?
The receipt of customer-supplied fabric is made with the “Processing” checkbox. In the “Supplier order” and in the “Goods receipt” it lifts the ban on a zero price, and batches with a cost of 0.00 are created automatically for the received goods (Production overview, Goods receipt, Release 122).
At Loomline the brand delivered 1,200 m. The receipt was made without prices, and 1,200 m went into the warehouse in zero-value batches. No debt to the brand arises for the fabric: operations with “Processing” do not change the counterparty balance (Release 122; since release 123 zeros are also allowed in the “Customer order” and “Sales of goods”, Release 123).
How do you record the fabric norm with loss?
A specification describes what a product needs. For the hoodie it is the brand’s fabric with a norm of 1.8 m and a loss of 5%, own hardware at €0.50 and two stages: “Cutting” with a rate of €0.15 and “Sewing” with a rate of €1.05. A loss of 5% means 1.8 × 1.05 = 1.89 m is planned per garment (Specifications).
The manager creates a “Production order” for 600 garments with the type “Own processing”. This type removes the block on zero material cost, and the brand’s fabric can be reserved for the order. The reserve ties the meters to a specific order, so they cannot go to another batch (Production order, Reserve materials).
The fabric requirement for the order is 600 × 1.8 × 1.05 = 1,134 m. Of the 1,200 m delivered, 1,134 are reserved and 66 stay free.
What happens in the assembly and in piecework pay?
An “Assembly” is posted based on the order (Assembly). The fabric is written off from the zero batch and the finished garments go into the warehouse. If more was used than the norm, the quantity is corrected right in the document. Say the shop used 1,140 m instead of 1,134, then the leftover for the brand is 60 m.
Piecework pay for the sewers is accrued with a separate “Piecework pay” document based on the posted assembly, and the amount goes into the cost of the garments (Piecework scenarios). Per garment that is 0.15 + 1.05 = €1.20, and for the batch 600 × 1.20 = €720. Hardware for the batch costs 600 × 0.50 = €300. Shop overhead (rent, electricity) is split with a “Cost allocation” document (Cost allocation). Say €150 falls on the 600 garments, which is €0.25 per garment.
The summary of the batch for the brand looks like this:
| Item | Per garment, € | For 600 garments, € |
|---|---|---|
| Brand fabric | 0 | 0 |
| Hardware | 0.50 | 300 |
| Piecework pay (cutting 0.15 + sewing 1.05) | 1.20 | 720 |
| Shop overhead | 0.25 | 150 |
| Total | 1.95 | 1,170 |
The cost of sewing one garment from the brand’s fabric is 0.50 + 1.20 + 0.25 = €1.95. The batch costs the shop 300 + 720 + 150 = €1,170. The fabric is absent from this sum because it belongs to someone else.
How do you return the leftover to the brand and agree the figures?
The leftover is returned with a “Supplier return” document. It is created based on the receipt, and the “Processing” checkbox is inherited: the material is written off at zero cost (Supplier return). The shop hands 66 m to the brand, the brand sees 1,200 - 1,134 = 66 in its own records, and there is no mismatch.
A brand delivered 1,200 m of fabric. The shop tracks it in a notebook, the balance mismatch reaches 40 m, and the shop’s own line is costed with an average fabric price mixed with zeros.
A receipt with the “Processing” checkbox creates zero batches. A specification with a norm of 1.8 m and a 5% loss, a “Production order” of the type “Own processing”, an assembly, piecework pay based on the assembly and the return of the leftover close the cycle.
Notional calculation. 600 garments take 600 × 1.8 × 1.05 = 1,134 m, and 1,200 - 1,134 = 66 m must go back. The shop’s own hoodie costs 1.89 × 6 + 0.50 + 1.20 + 0.25 = €13.29 instead of €7.10 with a mixed price. At a selling price of €22 the margin is €8.71, or 39.6% (the mixed price would have shown 67.7%).
What should you check before launching such a scheme?
The first point is the “Processing” checkbox in the supplier order and the receipt: without it the system will not accept a zero price. The second is the production type in the production order and the assembly, which must be “Own processing”, because otherwise materials with zero cost are blocked. The third is the norm and the loss percentage in the specification: the reserve is calculated from them, and they also decide how many meters remain for the brand. The fourth is the date of the return. It is better to return the leftover right after the order closes, while the rolls are still in the shop and can be compared with the figure in the system.
What the owner sees in the reports is described below.
What does the owner see in the reports?
The “Stock Movement” report keeps the brand’s fabric by batch. For the order it looks like this: receipt 1,200 m, written off in the assembly 1,134 m, closing balance before the return 66 m, after the return 0 (Stock Movement report). A filter by batch number shows the movement of the customer-supplied fabric alone and does not mix it with the shop’s own.
The “Cost of Produced Goods” report puts the specification plan next to the actual output (Cost of Produced Goods report). Now the shop’s own line is costed honestly. 400 hoodies take 400 × 1.89 = 756 m of own fabric at €6, which is €4,536. Add hardware 400 × 0.50 = €200, piecework 400 × 1.20 = €480 and overhead 400 × 0.25 = €100. The total is €5,316, and per garment 5,316 / 400 = €13.29.
What does this give the shop?
The shop works for five brands, and each delivers fabric with its own receipt. So the storekeeper no longer keeps a notebook: the answer to “how much is left” comes from the documents and the report. Before closing an order, the manager sees whether the quantity to return matches the quantity in the warehouse, and the Friday call from a brand takes a minute.
The brand gets the leftover together with a document. The argument about 40 meters is settled by the batch report.
The owner sees the margin of the own line as it is: 39.6%. With the mixed fabric price it came out at 67.7%. The decision on the hoodie price is now made on the right figure. To each of the five brands the shop shows how many meters were used, how many remain and what sewing one garment costs without the fabric.
For more on how to keep records of customer-supplied materials, read Toll Manufacturing Accounting: How to Track Customer-Supplied Materials. The Warehouse management page covers the stock features of Bimp more broadly.
Scenario limits
The scenario covers records of the customer’s fabric, a norm with loss, output, piecework pay and the return of the leftover. How to invoice the brand for the sewing service (the price per garment) is not covered here. If the warehouse holds both customer-supplied and own meters of the same fabric, the result of the write-off depends on the costing method in the company settings, so test it on a demo database. Button names and the production type field in some help articles carry a verification status, so check them against your version. Bimp is a cloud ERP for manufacturers, built in Ukraine, and all the figures in this case are notional.
FAQ
How do you receive customer-supplied fabric at a zero price in Bimp?
Turn on the "Processing" checkbox in the "Supplier order" and the "Goods receipt". It allows a zero price, and the received goods get batches with a cost of 0.00. Since release 123, zero prices are also allowed in the "Customer order" and in sales documents.
Does the customer's fabric affect the cost of a garment?
No. In a "Production order" and an "Assembly" of the type "Own processing", materials are reserved and written off from zero-cost batches, and the cost of a garment consists of own materials, piecework pay and allocated costs.
How do you return leftover fabric to a brand?
With a "Supplier return" document created based on the goods receipt. It inherits the "Processing" checkbox and writes the material off at zero cost. The balance with the counterparty does not change.
Does the shop owe the brand money for the fabric?
No. Operations with the "Processing" checkbox do not affect the counterparty balance: in settlement reports the amounts are zero or empty.
In a demo we show how a customer's fabric goes from receipt to the return of the leftover, using your own product as the example.
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