Okay, since you are suspicious that I’m just trying to get details about your business, let me give you my suggested approach with the level of detail I have with me.
First a few statements:
- A BOM is only useful for you for material planning purposes.
- You cannot use a BOM to make manufacturing entries (which is why No. 1 above)
Here’s what I would do:
I would create an Expense Account called Silver Molding Consumption and Yield.
The silver that I’d issue for molding, I would issue out using Stock Entry Purpose Material Issue and charge it to Silver Molding Consumption and Yield Account.
Now as I make silver leafs, I will use Stock Entry Purpose: Material Receipt and charge it to Silver Molding Consumption and Yield Account.
As I reclaim Silver Scrap, I would charge it again to Silver Molding Consumption and Yield Account.
A general ledger report of the Silver Molding Consumption and Yield Account would give me the imbalance in this account. The imbalance would be because of better or worse than expected yields of Silver Leafs and Recovery of Silver Scrap.
You need to watch this account, build a valuation model that sets the valuation for the next period of watch (you can begin with a weekly period and then move it to Fortnightly and Monthly). Steady state you can keep the period at Monthly or if your yields are steady even quarterly.
Another approach would be to build the BOM to resolve into Silver for everything - Like Each Silver Leaf (and you could be making dozens of different types of silver leafs) translates in the BOM into X Grams or Kgs of raw silver. Similarly Silver resolves into X Grams of raw (recoverable in this case) silver. In this approach,instead of using Stock Entry Material Receipts and Issues, you’d drop the Silver into a Virtual warehouse (say Silver Molding Warehouse) and then you’d pull out each item separately using a BOM. So, let’s say you dropped 1000 Grams of Raw Silver into this virtual warehouse. And you pulled Silver Leads out of this warehouse that accounted for 835 Grams of raw silver. And you recovered scrap that translates into 140 grams of raw silver. Now at the end of the cycle, the stock balance report of Silver Molding Warehouse will show 25 Grams of Raw Silver. You take it out of the warehouse by making a Material Transfer into a Unrecoverable Silver warehouse or you make a Material Issue and charge an account called Unrecoverable Silver. Keeping a tab of this account will tell you whats the wastage of silver in your process so that you can add that as a percentage into your costing.
You deal with a precious metal. Chances are you have very good controls on the floor. But ensuring that the data is captured into a structured data solution such as ERPNext will help you analyze the yields and ensure that you can optimize the yield while ensuring that you are costing your products appropriately.
Anybody that’s lasted this long reading this piece: two messages:
- Think out of the box
- It’s possible to hack ERPNext to make it fit for almost every business and every vertical. But you need to start with business goals first. Else you end up agonizing over Item Masters and BOMs.
Hope this helps.