Small and medium business | Business Central, N...

Business Central – Best Strategies for Initial Item Setup & Costing (High‑Mix / ETO)

(3) Share

Report

Posted on by RE-15050947-0

Hi all,

I’m keen to learn from those who’ve been through a fresh or reset Business Central manufacturing setup, particularly where initial item setup and costing choices had long‑term consequences.

We’re revisiting our foundations following a 2‑become‑1 consolidation, and it’s clear that many of the problems we’re now solving were effectively locked in during the original setup phase — especially around costing methods and item design.

Our environment:

Manufacturing / ETO‑leaning

Very high mix, low repeat

Sub‑assemblies common

Large volumes of order‑specific parts

Finance needs credibility without over‑engineering operations

What I’d really value input on is:

1. Costing method selection (early decisions that matter)

We have set out engineering / production business up at averaging costing (we consume specific material against released production orders in a project based business - feel free to comment) which are lot tracked
Standard Cost vs FIFO vs Specific / Actual:
- What has actually held up in high‑variance production

Have people run hybrid approaches successfully (e.g. standard for bought‑out items, actual for manufactured)?

At what point did costing become “noise” rather than insight?
How do i 'fix it'?

2. Initial item setup principles

When starting clean:
- Did you define strict rules for when a part must be an item?
- Or allow item creation to grow organically and tidy later?

Any success using:
- Generic/template items?
- Dimensions or variants to absorb uniqueness?

What item attributes turned out to be essential vs clutter?

3. Sub‑assemblies: cost drivers or cost confusion?

Did you:
- Cost sub‑assemblies as standalone items, or
- Treat them mainly as routing structures and roll costs up at top level?

How do you stop sub‑assemblies becoming a cost reconciliation nightmare when every job is different?

4. BOMs, routings & “truth”

During setup:
- Did you prioritise speed & simplicity, or theoretical accuracy?

How accurate did BOMs/routings need to be on day one to give finance confidence?

Any strong lessons on:
- Over‑engineering routings early?
- Missing setup/overhead costs that surfaced later?

5. Finance vs operations alignment

How did you align finance expectations with operational reality during initial setup?

Did you define:
- “Cost we care about”
- vs “Cost we accept will be approximate”?

Any governance models that helped avoid constant re‑work?

6. What would you lock down sooner next time?

Looking back:

What setup decisions would you freeze early if doing it again?

What would you deliberately:
- Leave flexible?
- Prototype outside BC first?

Any clear anti‑patterns you'd warn others to avoid?

What actually works

What breaks at scale

What you wish someone had told you before go‑live

All perspectives welcome — especially from those who’ve lived with their setup choices for a few years.

Thanks in advance.

I have the same question (0)

All responses (7)

Answers (0)

Sort by

Suggested answer

YUN ZHU 100,212 Super User 2026 Season 1 on at

Like (0)

Report
Copy link

Link copied!

Business Central supports multiple costing methods, depending on the company's finances. While IT firms can offer advice, changing long-standing costing methods can lead to audit issues.

Design details: Costing methods

https://learn.microsoft.com/en-us/dynamics365/business-central/design-details-costing-methods?wt.mc_id=DX-MVP-5004336

Thanks.

ZHU

Was this reply helpful? Yes No
Suggested answer

Rajvi Shah 250 on at

Like (0)

Report
Copy link

Link copied!

Hello,

Below Link is also helpful to understand and define the costing methods.

https://learn.microsoft.com/en-us/dynamics365/business-central/setup-best-practices-costing-method

Was this reply helpful? Yes No
Gerardo Rentería Ga... 26,110 Most Valuable Professional on at

Like (1)

Report
Copy link

Link copied!

Hi, good day
I hope this can help you, and give you some hints.

How Business Central Costing Actually Works (and Why It’s the First Thing You Should Understand) Part 1 - Dynamics Power Play

Best Regards
Gerardo

Was this reply helpful? Yes No
Suggested answer

Assisted by AI

OussamaSabbouh 15,188 Super User 2026 Season 1 on at

Like (1)

Report
Copy link

Link copied!

Hello,

For your setup, the one thing I’d lock down early is the cost model: in a high-mix, low-repeat, ETO-leaning business, broad Average costing usually creates more blur than insight, Standard only works if you have the discipline to maintain it, and Specific is best kept for genuinely identifiable/high-value cases, so a simple hybrid often holds up better; just as important, define strict rules for what becomes an item, keep subassemblies only where they are reused enough to deserve being real cost objects, and make BOMs/routings accurate enough to explain cost to finance rather than theoretically perfect, because the setups that hurt most later are usually loose item creation, over-engineered routings, and unclear agreement on which costs must be precise versus which can stay approximate.

Regards,
Oussama Sabbouh

Was this reply helpful? Yes No
RE-15050947-0 18 on at

Like (0)

Report
Copy link

Link copied!

Thank you for the replies everyone.

Do you have any approached to 'fixing' the costing method of the items? These items are interwoven with configured parts so ideally we need to change the item numbers themselves, even if we have to take all of the items out, re-suffix and reenter as the new entity?

Was this reply helpful? Yes No
Suggested answer

Ben Baxter 7,045 Super User 2026 Season 1 on at

Like (1)

Report
Copy link

Link copied!

I would strongly encourage you to talk with your Business Central consultant company. While AI and the forums are a good place for small questions, specific Item setup and especially costing methods and ETO environments should be handled by your professional support company. You have flexibility in your setups to achieve specific results, so you need a consulting session to ensure you're putting the right pieces in place before committing to your re-launch on Business Central.

P.S. Make sure whoever you're talking to has a strong understanding of applying BC to ETO environments. It is more complex than just winging it and hoping for the best.

Best Regards,

Ben Baxter

Accent Software Inc

Was this reply helpful? Yes No
Suggested answer

Teagen Boll 2,184 Super User 2026 Season 1 on at

Like (1)

Report
Copy link

Link copied!

If you want to fix the costing on the items it will be a pretty lengthy/complex fix. You effectively have to remove the inventory from the system and add it back. Easy enough on paper but you will have goods that are received not invoiced, parts in WIP, reservation entries etc. One approach is you can create entirely new items with the proper setup and start using those and "deprecate" the old item records. You'll have a lot of old records and master data still and won't have history tracked.

In your case, your setup sounds very complex. I would really recommend working with someone who specializes in ETO scenarios. If your setup is very messy what you may even need to do is a re-implementation (in a worst case scenario).

Best,

Teagen Boll

Work: Catapult ERP

Social: LinkedIn

Was this reply helpful? Yes No