Turnkey
With turnkey or turnkey project, the contract manufacturing plant will source all raw materials on your behalf and charge one fee inclusive of materials and labor. Only a purchase order will drive your supply in this process.
Tolling
With tolling, the contract manufacturer will supply little to no components required to build the end item and will only charge a fee for the labor. It is your responsibility to plan for and either stock or transfer the components needed for the assembly process.
It is possible to have a mixture of tolling and turnkey process.
For the same we will create both the Inventory and Assembly record in NetSuite.
Inventory Item
Use purchased inventory Items for any components of the finished assembly item which are supplied to the sub-contractor as part of the process. It is a component of the finished good(Assembly Item) part.
Finished Good Part
Assembly item with Bill of Materials made up of Inventory items consumed in house and inventory items consumed at the sub-contractor. These are considered to be components of the Assembly Item/BOM. In addition, if tolling charges are necessary the Assembly item /BOM may have a charge item associated with it as a component.
Other Charge Item Type
it is possible to use tolling charges within NetSuite when performing a contract manufacturing process. If you intend to handle tolling charges within the system, then you will want to set up an other charge item. We use a non-inventory charge item to act as a component of the finished assembly item. This is used to represent the costs associated with the subcontracting step or the tolling charge and drives a PO to the subcontractor. Again, it is a component of the finished good part or the assembly item.
By creating an other charge item for resale as a special order item, NetSuite can automate the PO creation process for additional charges. By setting the item as special order NetSuite will automatically produce the purchase order upon release of the work order to the contract manufacturer for the tolling charges.