What you're describing is moderately complex. If you want to capture in the software what is really happening in the business there will be a number of processes that will need to be carried out, as there are a number of different processes happening in the business.
You are on the right track. If you want to do know where you stock is, you should be running with multi-locations. The procedure then becomes:
1. Raise a PO with Supplier 1.
2. Specify delivery location as Supplier 2.
3. Raise PO's for fabric from Supplier 4.
4. Raise a Stock Transfer from Supplier 2 to Supplier 3.
5. Raise an Assembly for stock at Supplier 3, including the goods purchased from Supplier 4.
6. The finished goods are specified as found at your location's offices. When you build the assembly the goods are then taken out of Supplier 3 location into your location.
Now there is a fair bit of admin overhead involved in all this. It may be worthwhile to see if you can simplify what is happening here. One suggestion among many possible ones, perhaps keep your locations down to two:
Head Office
External Goods
Receive any goods that don't get directly shipped to your head office to 'external'.
Use Assemblies to Build the goods at 'external'.
When the goods physically arrive, raise a stock transfer to move the goods from 'external' to head office.
In the above you're down from 6 steps to 3. However, the simpler you make it, the less detailed the questions you can ask. If someone wants to know, how much stock do we have at Supplier 2 or Supplier 3, you won't be able to answer this question. All you'll know is the total amount of stock found at location 'external' (to the head office).
So you have to weigh the pro's and con's here.
Also, turning on multi-locations if you've never used it before, but have been running as single location, is not a straightforward as beginning with multi-locations. There are a number of issues and traps you have to watch out for. Please read this technical bulletin which goes through the most important issues to consider and what you need to do about it:
http://www.capitaloffice.com.au/forum/v ... .php?t=547