A Xero Solution for Manufacturers: Xero + CRM + Inventory

A Xero Solution for Manufacturers: Xero + CRM + Inventory

This is an example of how we have set up Xero for a particular set of requirements of a manufacturing client.

THE PROBLEM

Mr Manufacturer buys in components and assembles them into Products that he then supplied to wholesalers. He doesn’t want to invest in an inventory system like Unleashed at the moment.

He does need to keep track of how many component parts he has in stock so that he doesn’t run out when trying to make up products. When he invoices his clients he only wants the names of the finished products on the invoices as one line – not each component individually invoiced!

His other priority is getting a CRM in place so he can track leads and have access to information about his customers when he’s on the road. He wants to be able to see who has bought what, and when, so he can provide better service and identify opportunities more effectively.

He wants to see sales per wholesaler (he has 3 main wholesaler customers). Each wholesaler has 20-30 locations/branches around NZ and he wants to be able to see what the sales are for each individual location/branch.

He also wants to see 4 different types of Sales such as “ Red Widgets, Multi-Coloured Widgets, Black Widgets”. He also wants to see sales by Region – ie. Auckland area, North Island, South Island.

INTEGRATING THE CRM WITH XERO

There are a number of CRMs that integrate with Xero, including at least a couple that pull through sales data directly from Xero and display it within the CRM – this way the sales person has access without logging into Xero. Exsalerate is one example of this. This CRM pulls through the data by Xero Customer, and displays total sales per customer over various time frames. Exsalerate appears to currently be the most advanced in this respect. It can also pull through sales data from more than one GL code. e.g. 4 different divisions of widget sales.

None of the CRMS currently integrate with Xero Tracking. To enable this functionality:

  • We set up 4 GL codes for the different types of Widgets being sold purely for the reason they can be then seen though the CRM. Normally this would be done with Xero Tracking but can’t be used in this instance due to the lack of integration options.
  • We set up each branch of each Wholesaler customer as a separate contact, so that these can be reported on individually through the CRM.

The sales person will be able to see total sales per individual branch and proportion of sales of each type of Widget. There is no integration available at the moment which would allow the sales person to see sales per item from Xero.

XERO REPORTING

There will be some reports that are available through Xero, and not through the CRM. Because each individual branch is set up as a separate customer, we would suggest using Xero Tracking to report on the three big wholesale customers overall. Ie. the Tracking Category would be Wholesaler, and there would be 3 options. A P & L can then be generated for each Wholesaler overall. These would be set up as 3 custom reports so they are readily available and don’t have to be changed each time.

The 2nd tracking category in Xero could be used for Region and reports generated in the same way.

In Xero it’s possible to default tracking categories for each customer. This means each branch can have it’s defaults set up for the Wholesaler it belongs to and the region it’s in. Setting defaults means that manual entry of Xero tracking is not required each time.

Depending on the invoicing requirements of the 3 big wholesalers we might set up custom invoice templates. This is common where wholesalers have particular requirements such as an overall address appearing on the invoice rather than the address of the individual branch. This is an easy solution to get around the fact that Xero cannot store more than one address per Customer.

Reports on sales per item are readily available in Xero so no customisation required there.

Each of the 3 wholesalers would also require a statement overall, combining all the invoices from all the branches. We would set up a custom report using Accounts Receivable, and filtered by Tracking Category, and this would replace the need for a Statement – as Xero can only produce normal statements per individual contact (branch/ location).

XERO INVENTORY AND KITTING

Xero Inventory does not have the capacity to track kitting where a product is made up of multiple components. We have a potential solution that relies on the business having a very diligent culture. (and having the time!) We would normally recommend the use of an addon such as Unleashed because it ensures accuracy.

When the individual components are ordered from suppliers these would flow through normally as part of Xero Inventory functionality.

To keep track of Inventory for the products made up of several components we would set up draft Quotes as a quick way of templating the different kitting requirements for inventory. Each time a combined product is invoiced to a client, an internal invoice with no value would need to be created to record the component stock adjustments. This is only practical where there is not a high volume of small sales – ie. a manufacturer producing to order for wholesalers.

Conclusion

There is generally more than one way to do things. The setup in Xero can often get around issues in ways that may not be immediately apparent, but the success of the implementation is also dependent on how well the Xero user follows process.

If you’re looking to make Xero work for your manufacturing company, please get in touch with us. We love helping small businesses figure out creative ways to get Xero and Xero Apps working the best it can. More time doing business – less time on admin!

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