A product recipe or bill of materials (BOM) details the ingredients (materials and subassemblies) and quantities required to manufacture a product. It includes all necessary raw materials, subassemblies, and production instructions, serving as a blueprint for the manufacturing process.
Recipes can be created for products and their variations. You can create a specific recipe for each product variant.
You can add both materials and subassemblies to product recipes. In Katana, subassemblies are products, not materials. Each product can be a subassembly and also sold to customers. There is no difference between products and subassemblies in Katana.
Product recipes uses
Automatic inventory adjustments - Katana makes automatic inventory adjustments based on the list of ingredients for a product (which is based on the product recipe by default) when you create and complete a manufacturing order (MO).
Manufacturing cost calculations for your products - The cost of a product includes materials and subassemblies, which are calculated based on the quantity used and the average cost of the ingredient in stock. The other main part of manufacturing cost comes from production operations.
Checks the availability of materials for MOs - If creating MOs, you can immediately see whether required materials and subassemblies are available in stock. If ingredients aren't available, you can create purchase orders (POs) for materials or MOs for subassemblies.
Examples for product recipes uses
You receive a sales order (SO) for 1 table and need to start making it. Let's say the product recipe for the table includes 1 tabletop, 4 legs, and 8 screws with purchase prices of 100 USD, 20 USD and 0.1 USD, and supply delivery times of 1 day, 2 days and 0.5 days, respectively. In the inventory, you have 3 tabletops available, but do not have any legs or screws.
Note: The ingredients cost of a product is calculated based on the average cost of materials and subassemblies in stock. If the In stock quantity for an ingredient is zero, there is no average cost, and the default purchase price of a material or the manufacturing cost of a subassembly is used in calculations. For simplicity sake, let's assume the average cost of materials is equal to the purchase price.
The manufacturing cost of your product will include the cost of these materials (100 + 20 x 4 + 8 x 0.1 = 180.80 USD). The cost of production operations will also be added to the manufacturing cost.
When you create a MO, you can see that you have the relevant amount of table tops available. But you do not have enough legs or screws, so you need to create POs for those materials.
When you complete the MO, your inventory will be automatically decreased by the amount of required materials and increased by 1 table.
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