BOM and Route setups - AX 2012 R2

Situation: AX 2012 R2. Client has custom items made for their customers. An item may have some variants available. Client orders the base item directly from one vendor and has it shipped to their (the client’s) warehouse. The client then sends this base item to a 2nd vendor for finishing. The 2nd vendor then ships the finished item back to the client’s warehouse. Client needs to track the ‘status’ of this item to know where it is (at vendor #1, in their own warehouse, or vendor #2). The item is then picked up by the customer. They do not ship to their customers. The item is not stocked and the client does not provide the materials to the vendor. The items come from the vendor’s own inventory.

I’ve set up the items to be Predefined Variants and have started setting up the BOM’s and Routes. I am thinking it should just be a 2 line BOM (1-base item, 2-finishing) with a 2 line route (1-vendor #1, 2-vendor #2).

Regarding the BOM I believe that the first line item in the BOM will also need to have a BOM attached to it with an item that is setup as a “co-product” and the Item model group should be specified to NOT be a stocked product (no checkmark), WITH “financial negative inventory” and “Accrue liability on product receipt” checked. This is so we can order from the first vendor, receive the base item and then ship it to the 2nd vendor and receive the finished item.

From here we should be able to create a sales order, creating Production orders for both vendors, correct? Or should it create one purchase order from vendor #1 and a production order from vendor #2?

Hopefully this is very clear. My eyes are starting to cross from trying to work this out… Thank you!!!