Kits are simply a way to group Products for purposes of selling them as a single unit in an Opportunity or Billing. A Product can be sold either as an individual Product or bundled in a Product Kit.
Product Kits are unique in that they exist solely to group existing Inventory Products and do not exist as a separate physical product. In other words, Product Kits are non-physical intangible Products and as such are not kept or tracked in inventory. Instead the Product Parts, that make up the Product Kit, are the tracked inventoried items (via inventory movements). Since the Product Kit itself is not physical inventory and does not have inventory movements, it cannot be allocated to a Sales Order or received in a Purchase Order. The Product Parts though have to be on the Sales Order as they are the products that get allocated or added to a Purchase Order when additional Inventory is required.
Because of the aforementioned involved in manually creating a Product Kit Sales Order and Billing correctly, it is a best practice that Sales Orders that include Product Kits only be created from an Opportunity. It is also recommended that the Product Kit itself not be included in the Sales Order, i.e. only the Product Parts are included on the Sales Order.
Another important aspect to using an Opportunity that include Product Kits to create Sales Orders, is that it helps to ensure that the Product Parts that are required by the Sales Order are included in it. It also provides the chance to include or exclude optional Products on the Sales Order or Billing, based on your individual needs.
The flow chart below shows the best practice flow for using Product Kits.
Do you want to:
Use Product Kits with Sales Orders
Sales Orders that include Product Kits should be created from the Opportunity.
- Open the Opportunity that includes the Product Kit to be included in the Sales Order. Click Create Sales Order.
- On the intermediate screen, the checkboxes (on the left-hand side of the list) are used to include (checked) or exclude (not checked) the product. To ensure proper Inventory Movements, ALL of the Kit’s Product Parts should be included in the Sales Order. As noted in the overview, it is also recommended that the Product Kit itself not be included in the Sales Order, so its checkbox is NOT checked. (Note: the Product Kit will be included in the Billing because the Billing is created from the Opportunity not the Sales Order.) This simplifies the Sales Order and the Allocate process. Click Create to create the Sales Order.
- The Sales Order can now be used to Allocate the Product Parts required for the Product Kit.
- The Products Parts required to make the Product Kit need to be allocated to the Sales Order. Put in the Quantity for the Product Part by the Warehouse and Location. The Quantity Available and Committed (unavailable for this Order) is provided for each. Save when complete.
- This allocation will generate the Sales Order Inventory Movements that will reduce the Inventory Quantity Available. Note the Unit Cost is the standard-unit cost currently assigned to that Inventory Product Part. See Allocating Inventory to a Sales Order for further details.
- At this point, the Billing can be created.
Bill Product Kits
Normally most clients wish to only have Product Kits displayed on a Billing (and not the underlying component parts). If that is the case, then it is a best practice that Billings that include Product Kits should be created from the Opportunity.
- Open the Opportunity that includes the Product Kit to be Billed. Click Create Billing.
- Creating the Billing from the Opportunity will pre-populate the Quantity, Price, and Product directly from the Opportunity. If the Revenue GL Account was assigned on the Product Kit (recommended in Kit Product Setup), it too will be pre-populated. See Create a Billing from an Opportunity for further details. Click Create when complete.
Note: Only the Product Kit is included in the Billing; the Product Parts are omitted.
- Posting the Billing will generate the GL Transactions to book the Revenue and Accounts Receivable and related Expense (Cost of Goods Sold) and Inventory.