Non Inventory Items for Manufacturing in Business Central

Non-Inventory items are those products that you don't want to keep specific stock of, but you do need to show on Bills of Material or add to Purchase Orders. This kind of item is used extensively in manufacturing. Microsoft has been enhancing and improving the use of these for some time. I want to talk a little bit about why they are used and in what conditions.

Why Would We Want Non-Inventory Items

Some manufacturing companies need a lot of little parts with relatively low cost per unit, and relatively easy (short) delivery. Most of the time, its best if these are expensed when purchased and are costed by rolling them into your overheads. These "consumables" are usually bolts, lubricants, connectors and other similar materials.

If you have a part that is a tiny percent of the cost of your production, and is very easily obtained, it should probably fall into this category.

As a manufacturer, we want to include these items on the Bill of Material. This is mostly so they end up on a pick list. It's pretty normal for the production department to produce a pick list as a piece of paper (or sometimes a Warehouse pick as an electronic version) to go to inventory control.  Inventory handlers then select everything that's needed for a job - put it in a box or cart - and send it to the production floor.  

Small cost items that are easily ordered need to be included, but doing the item ledger entries to transact them is a lot of overhead that adds almost no value. They are critical for getting the job done, but the time to track them individually and cost them to the job is really wasted.  

In Business Central terms, a non-inventory item is not in inventory (duh).  It is purchased and immediately expensed. There's no quantity anywhere to go find and use, and there's no costs in the system to be processed.  They can be put on purchase orders and bills of material, but for the latter it's more informational than transactional.  This gives them a low "IT" overhead in that they don't create G/L transactions or item ledger movements.

Improvements to Non-Inventory Items in 2021

As I wrote in a blog post a few months ago about improvements in Business Central for manufacturing in 2021, there have been a few new features added to Non-Inventory items in newer versions.

Locations for Non Inventory Items is now allowing users to record the location where these are being purchased. This is helpful in situations where the manufacturer has to stock these consumable parts in different locations.  It might be that bolts are being purchased for two separate warehouse locations. The ability to indicate this on a purchase order is new, and much needed in those cases where this happens.

A second more exciting feature relates to adding non-inventory items to the requisition worksheet. It's useful to give someone on a shop floor (such as in maintenance) the ability to add consumable items to the requisition worksheet.  I think there's an exciting possibility to combine this with Microsoft Power Apps and generate an eKanBan ticket by scanning an empty bin and having it automatically added to a requisition worksheet.