Production Management — From Raw Materials to Finished Goods, Accurately Know the Cost of Each Product

Table of Contents

Introduction to Features

You produce goods for sale — baking, sewing, formulating cosmetics, assembling components — but at the end of each month, you can't answer the simplest question: how much does it cost to make one of my products? Ingredients are recorded in one place, labor is calculated mentally, and machine costs are "estimated." When you sell, the profit is also just a guess.

From today, you don't have to guess anymore.

GTG CRM now has a Production Management module integrated with your existing Inventory, Purchasing, and Accounting systems. You define the product recipe (Bill of Materials - BOM), production orders automatically calculate the exact amount of raw materials needed, deduct from inventory when starting, and automatically calculate the cost of finished goods = materials + labor + overhead upon completion. Finished goods are entered into inventory at that exact cost, and the cost of goods sold entry is posted directly to the accounting ledger — no more finished goods with a "cost of 0 đồng".

List of production orders with status and cost for each order

Problems Businesses Face

Old Method	Consequences
Recording raw materials in a notebook, mentally calculating labor costs	Don't know the true cost, misprice products, think you're profitable when you're losing money
Not knowing if there are enough raw materials for upcoming orders	Running out of stock mid-production, or tying up capital in obsolete raw material inventory
Finished goods entered into inventory with a "cost of 0" because the software can't calculate it	Inaccurate profit and loss reports, incorrect Cost of Goods Sold (COGS)
Inventory, purchasing, accounting, and production in separate software	Multiple data entries, inconsistent data

GTG CRM consolidates everything into one process: define recipe → issue production order → deduct raw materials → calculate cost of goods → enter finished goods into inventory → post to accounting ledger — a seamless flow within the same system you use for sales and invoicing.

Key Features

1. Multi-level Bill of Materials (BOM) — the product's "recipe"

BOM definition screen with list of materials, quantities, scrap rates, and production stages

Define once, use forever: list each raw material (quantity, unit, scrap percentage) and production stages (which team produces it, setup time + run time).
Multi-level: a component in the recipe can itself be a semi-finished product with its own recipe — the system will break down all levels.
Activate when ready: maintain multiple versions of a recipe, only use the activated version.

2. Production Orders Automatically Calculate Raw Materials and Cost of Goods

Detailed view of a production order — required materials, stages, and cost of goods upon completion

Automatically expand recipe: select the product, recipe, and quantity — the system calculates the exact amount of raw materials and production stages needed (including scrap).
Deduct from inventory upon start: raw materials are deducted from inventory when you click "Start"; shortages are immediately flagged.
Automatically calculate cost of goods upon completion: enter the quantity produced and actual time spent — the system calculates unit cost of goods = (materials + labor + overhead) ÷ quantity produced, and finished goods are entered into inventory at that exact cost.

3. Cost of Goods Recorded Directly into Accounting (COGM)

No more finished goods at 0 cost: self-produced goods always have a cost basis, ensuring accurate Cost of Goods Sold (COGS) and profit/loss reports.
Automatic journal entries: the cost of goods manufactured (COGM) is automatically posted to the general ledger, matching your chart of accounts.
Accounting and production are unified: no manual reconciliation between two separate systems.

4. Material Requirements Planning (MRP) — including for specific customer orders

MRP screen suggesting purchase orders and production orders based on demand

Set inventory levels (minimum / reorder point / target) for each product, then run Planning (MRP): the system compares demand with inventory and suggests purchase orders (what to buy) and production orders (what to make).
Based on open sales orders: enable "consider demand from sales orders" to plan based on customer orders already placed — the system deducts placed orders from inventory and work-in-progress, suggesting production for the remaining shortage.
Understand the reason for suggestions: each suggestion clearly states its source (inventory levels, sales orders, or both).

5. Production Against Orders — directly linked from sales orders

From sales order: open the order, view the Production Plan tab — it shows how much has been ordered, how much is in stock, how much is in production, and how much is still needed. Click "Create Production Order" for the shortage, and the order is directly linked to that sales order.
Track progress: the plan line on the sales order shows "In Production" and then "Ready" when completed; a reminder is given for delivery if not yet produced (this does not block you from delivering).

6. Quality Control and Cost Variance Analysis

Quality checks: record inspections upon receiving raw materials, during production, or on finished goods (pass/fail, action taken: accept / rework / scrap / quarantine). Open a Non-Conformance Report (NCR) with corrective actions and close it upon completion.
Variance from standard: if a standard cost is set for a product, each completed order clearly shows the variance (actual vs. standard for materials, labor, overhead) — you immediately know why a batch exceeded or stayed within budget.

💡 AI Assistant Support: explains cost variances, drafts corrective actions (CAPA), and interprets MRP results in easy-to-understand language.

Benefits for Your Business

Feature	Actual Benefits for You
Multi-level BOM	Standardized recipes, everyone produces to the correct standard and cost
Production Orders Automatically Calculate Cost of Goods	Know exactly how much it costs to make a product — price sales correctly
Cost of Goods Recorded Directly into Ledger (COGM)	Accurate profit and loss reports, no more finished goods at "0 cost"
MRP based on Customer Orders	No running out of raw materials mid-production, no tying up capital in obsolete inventory
Production Directly Linked to Sales Orders	Produce exactly what the customer needs, when they need it, deliver without shortages
Quality Control + Variance Analysis	Control waste, immediately know which batch is losing money and why

Who is it For?

Small and medium-sized manufacturing workshops: food, beverages, cosmetics, apparel, furniture, machinery, printing, home appliances.
Shop owners who also manufacture (cakes, handmade items, custom orders) and want to know the true cost to set prices.
Medium-sized businesses looking to move away from Excel/separate production software and consolidate into a single system with sales, inventory, and accounting.

How to Get Started

Navigate to Manufacturing within the system, define Units of Measure and Production Teams, build the recipe (BOM) for a product, and then create your first production order. Have a list of raw materials/BOMs in Excel? Drag and drop the file, and let AI automatically match the columns. See the step-by-step guide for Production Management, or read the real-world story From Raw Materials to Finished Goods — Know the Exact Cost of Goods, No More Guesswork in Pricing.