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Overview of
DNS ERP Production Module
In the era of shorter production cycles, more demand for new products and
heightened competition, the manufacturing industry finds help in a trusted
friend like “ERP software.”
After perfecting the CRM, sales, supply chain
management, etc., it is necessary to integrate the missing link and that is the
production floor. In a manufacturing company, typically, it is the ‘operations’
or ‘production’ that is the biggest cost centre. The whole success of a product
could hinge on how fast and efficiently the production is managed. ERP answers
the question, 'what to make' and 'when to make'. That is possible because sales
order (ORI OR OA) is used to create the work order (or job card) automatically
by the ERP.
All products have to be of high quality and good on functionality as well as
looks making innovation a business requirement, a survival mantra.
Usually the R & D or design team prepares the Bill of Materials. The actual
manufacturing should catch up with the pace set by the design and sales team. In
ERP, the Bill of Materials (BOM) module is the important pivot around which ERP
rotates. Therefore, we have the familiar story of a record-breaking demand, and
yet the company would send email or advertise asking the customers to be patient
while they bend over backwards to up their production and decrease the time to
market. The production has become a bottleneck of sorts and the ERP is the
answer to smoothen the flow.
ERP software not only helps in production in your own shop floor but also for
third party production (outsourcing). Material transferred to sub-contractor can
be linked to the Job order (labour purchase order) and Bill of materials. It is
possible to get an MIS to know what material is lying where. ERP takes care of
‘work-in-process’ (WIP) inventory.
Make to order- Make to stock
Make-to-order means the product is made as per the order (and specification) of
a particular customer. Whereas ‘make-to-stock’ means, you make, stock and sale.
At the time of making (production) user may not know the exact name of the buyer
(customer). This concept is repeated here in the production module. This is also
discussed in the sales module.
There are companies where they have both kinds of products. They make as per
sales order as well as they have some standard products also. Some company will
have standard products but will make minor changes to suit specific requirements
of the customer. ERP will take care of all these permutations and combinations.
The main trigger for all activities is the sales order or the OA (order
acceptance transaction) or the ORI (order receipt information).
The example of a company making sofa sets is interesting. They have 15 standard
designs of sofa sets, such as, three plus two plus one, three plus one, two plus
one, and so forth. In addition, there are 200 hundred varieties of fabric that
goes on the sofa and various colors. Now the customer will select one of the
standard design, but then the fabric type and color is selected. The ORI will
capture the standard design of the sofa and in addition the fabric type and
color. See case study for more details.
The MRP module is used to make the work order automatically from the ORI or
internal ORI.
Production is carried out as per the order received from customer, customer PO
is our Sales Order; this is called ORI OR OA – Order Receipt Information.
ERP captures two kinds of Production methods:
1. PROCESS PRODUCTION
Only one input item (child item), which undergoes various manufacturing
processes and finally another item (father item) is produced.
2. ASSEMBLY PRODUCTION
Two or more items (child items) are assembled and third (father item) is
produced.
In general, (not specific to any one company), ERP Production module (business
logic) is based on concept of ‘JIT’ (just in time) inventory management. For
instance, to ensure that excess material is not lying around on the shop floor,
ERP links production module, as much as possible, with BOM (Bill of Materials)
master data. However, in practice we find user finds it too sophisticated
(complicated), because user is not used to work in a disciplined manner. For
FMCG companies it is possible because it is making standard products. Some
companies make as per order (as per sales order). Usually, legacy method of
working is not tightly linked with BOM. In legacy, the material issued from
stores is based on ‘requisition’ from shop floor. Whereas, in ERP, we recommend
users to change, but there are people do not like change. This change requires
lot of commitment and positive attitude from the top management. Strong will
power is crucial. Sufficient IT infrastructure is necessary. Lots of time (and
money) needs to be invested in the training. Unfortunately, user is not prepared
to do the CRP (parallel run), and starts asking for changes without
understanding. These are generic observation and should not be taken as negative
remarks. On the other hand, companies that are more progressive take up these
issues very seriously and users are passionately ready to make 10 / 12 BOM and
do trial entries.
This section of the book, attempts to describe both kinds of methods in details.
However, I have observed that the production module always needs more
customization (relatively) than any other module. The time and effort will
depend on to what extent management would like to implement. Not everything can
be automated. One should approach customization of the production module
carefully, in a phased manner.
In ERP, there are number of ways material can be transferred from one location
to another. Options, which are most suitable to users, are selected. Each has
some pros and cons. E.g. I had explained how material can be issued from stores
to shop floor – User can use MIN, or Material Issue with BOM, Material Issue
without BOM but at least ask the father item (or FG item name), or user can
select simple STC like you have shown in the diagram or STC with BOM, etc. etc.
Even in case of PE (Production Entry) ERP has many options that can transfer
material from ‘machine shop’ to ‘FG location’…instead of using STC (Stock
Transfer Challan). STC will be no doubt simple but we recommend PE to do the
stock transfer of the father item, because it will be linked to WO (Work order
and BOM). In other words, it is too tightly integrated (active) transaction.
Assembly Production
Key procedures are as follows
1. BOM masters
2. Work Order
3. Production Entry
4. Production QC
Production Master
The following menus appear under Other Masters menu:
Production module depends on the Inventory module; therefore, relevant major
masters are repeated here:
1. BOM master
2. Item Master
3. Location Master
4. Customer Master
Machine Master
Location
Management can track location wise inventory. User can make such physical
locations (or at least logical locations). There is no limit; user can make as
many locations as required.
In case of Production-Entry, the ‘consumption location’ and ‘produced location’
should be noted carefully.
Material can be given from stores using any of the following transactions:
• Stock Transfer from stores to shop floor with link to BOM is
recommended. Make BOM, make Work order and then make STC (link to BOM). This
must be followed by Production entry. This is recommended.
Otherwise other transactions are - MIN, STC, Production Issue, and MIN with BOM.
Production Transactions
Material can be produced by the following transactions:
• Production Entry or PE
This is important transaction to report that the item (SFG or FG) is produced.
The 'Production Entry' cannot be done if Work Order is not made. WO is the
parent document for PE. This is highly recommended.
• Production Slip
This is a simple transaction to report the production. Here there is no link to
BOM, Work Order, child items consumptions, etc. This is diluted transaction as
compare to PE.
Either way the item has to be produced before selling. There is an active lock
while making the Challan-cum-Invoice (CCI). If the item is not produced, one
cannot sell it.
Work Order
Work Order is a passive document, which is a communication between marketing and
production. Work Order does not change the inventory. Work order is prepared for
the item to be produced (may be finished goods or semi-finished item). WO will
also give raw material (child items) required to produce the father item. It is
compulsory to prepare the BOM. Without work order, production entry cannot be
entered.
Corresponding work order register will be prepared automatically by DNS ERP.
Marketing will save the ORI or OA when the customer PO is received. At this time
above specs may not be available. However, at the time of making the work order
these specs have to be entered.
The OLP will show the shop floor person details about the nozzle specification.
Work order is a passive transaction. In case for some reason user does not want
the item to be produced, then user can terminate the work order. Further
production entry is not possible.
Production Entry
Production entry can be done only if Work Order is prepared.
1. This is an active document. This will reduce the Raw Material / Packing
Material from the consumed location and add item being produced (may be father
item or FG) in the produced location.
1) Pending Work Order will be defaulted.
2) User will enter Work Order Number.
3) Work Order qty will be defaulted.
2. BOM revision number will be defaulted automatically from the BOM master.
3. Work order will be closed by production entry.
In short, work order means, marketing saying: “.. make this item, this much
quantity” and production entry means, shop floor saying: “.. I have made this
item, this much quantity”. PE will close the WO.
Sub-contractor OUT
Here the production takes place out side our shop floor (in Third Party’s
factory).
The work order will be prepared automatically by ERP. This is made by linking it
to BOM. This shows which child item will be sent to TP and which will be
received from the TP after production. Transfer of material is to be made accord
to the third party using Goods Delivery Note.
Item ledger of the third party location:
In ERP, the TP name is added in the Address Master. ERP will automatically know
this is not only a creditor but also an inventory location.
After the father item is received the GIN (Goods Inward Note) is made. This will
automatically do the Production entry to consume the child item from the TP
location.
Production Module Reports
Work Order Register: Shows list of Work Order for a given period.
Production Register: Shows list of Production Entry for a given period.
FAQ for production module
1. What is the difference between MIN and MIN with BOM?
a. MIN is a simple document to issue item from a given location. It just reduces
the item – no link to BOM or any other parent document. This is used when stores
want to issue material, which is not necessarily related with the production.
E.g., Stores can issue ‘coolant’ or cotton waste using MIN. It is an active
transaction and will automatically be posted in the inventory ledger.
b. MIN with BOM is used to issue items from stores to shop floor. However, here
there is a tight link with Bill of Materials. E.g. If there is a work order for
100 nos. Blue ball pen, ERP will explode the BOM and allow stores to issue blue
refill 100 nos. (as defined in BOM).
2. What is the difference between Production Slip
and Production entry?
a. Production Slip is a simple transaction that does not have link to BOM.
b. PE has link to work order (in turn, WO is linked to BOM). This is recommended
provided user has necessary BOM.
3. What is the difference between STC and STC with
BOM?
a. STC is a stand-alone transaction. Its purpose is to record material movement
from one location to another location.
b. STC with BOM is very useful to control issues from stores items, which are
directly used in producing Finished Goods (or semi finished goods). This is
recommended for production consumables, provided BOM is prepared. This
transaction must be followed by PE to consume the child items from the shop
floor.
4. What is SAN?
a. Stock adjustment note is used to add or reduce stock from a given location.
Obviously all such transaction passwords are given only to that user who has the
necessary authority.
5. What is ATO?
a. ATO means assembled to order. The production work order is linked to the
sales order information (ORI OR OA). For instance, in a furniture manufacturing
company, the ORI OR OA captures information about the kind of fabric customer
wants (red or blue). The work order will show the fabric details to the tailor.
b. Most automobile ancillary manufacturing companies make the sub-assemblies as
per the order so this is called ATO or assemble-to-order.
Work Order Register
Production Entry register shows list of Production entries for given period.
Process Production
Master information to store the process flow. This is prepared from the PFD or
the Process Flow Diagram.
Production Master.
Machine master
MACHINE DESCRIPTION
HY-525
CS-26
HTD - 16
CS-8-1
CSM-30T
GRN-200
SEG-3
BENCH GRINDER
Operator Master
Name of operator is stored in the operator master
Production module depends on the Inventory module; therefore, relevant major
masters are repeated here:
Item Master
Item subcategory Master
UOM Master (under inventory master)
Process Production Transactions
Work Order
Work Order is a passive document, which is a
communication between marketing and production. Work Order does not change the
inventory. Work order is prepared for the item to be produced (may be finished
goods or semi-finished item). WO will also give raw material (child items)
required to produce the father item. It is compulsory to prepare the BOM.
Without work order, production entry cannot be entered.
In WO, one button is provided viz. ‘WO Close’. When user has to close the
previous WO then he has to open the WO from open window and then click on WO
Close button. Message will appear 'work order is closed successfully'. Then it
will not be seen in production entry, production planning & stage wise
inspection transaction. In report, it will give the status as pending or closed.
Production Planning for process prodcution
When the work order will be prepared then the
production person will do the daily planning according to machines that are
available to him and according to work order quantity and the process that has
to be done.
The steps are as follows:
1. First, click on new button at the right side corner.
2. Then select the work order number for which the planning is to be done.
3. When you select the work order number, item code and work order quantity gets
defaulted automatically.
4. Then select machine name for the respective process that has to be done.
5. In the process drop down the process defined in the work order, which are
required, will get defaulted. The user has to select process one by one and then
define its plan quantity and shift and click on add button. This procedure has
to be done for each process.
Process Production Entry
Production entry can be done only if Work Order is prepared.
This is an active document. This will reduce the Raw Material / Packing Material
from the consumed location and add item being produced (may be father item or
FG) in the produced location.
1) Pending Work Order will be defaulted.
2) User will select the Work Order Number.
3) Work Order qty will be defaulted.
4) User has to select the Production Planning number (PPC No) from the drop down
list
5) The coiling process will get defaulted. The user has to insert the quantity
actually produced.
6) The user has to insert the time required for manufacturing that item i.e.
start time & end time.
7) The total quantity produced goes in the next stage.
8) The further process should be done in stage wise inspection.
Note: The Raw Material required quantity will default automatically from the BOM
master.
As per user's requirement, the work order will not get closed at the production
entry done for coiling. All the processes are done and after final process, the
work order will get closed.
Stage Wise Inspection
Stage wise inspection transaction will help to transfer the material from one
process to another process. Simultaneously it will ask for accepted quantity and
then only it will show in next production process, e.g. coiling process.
The steps are as follows:
1. First select the WO no
2. Then select the PPC no
3. The process will get defaulted as shown below. Here the coiling is done so it
will automatically show that it will be transferred from coiling location to
Tempering location.
4. At the same time, it shows the previous stage quantity (see the screen dump).
The user has to enter the accepted quantity and click on add button.
5. Then save the document. Next time when you open the same document then it
will show that in tempering the quantity is been added and take next stage of
hooking.
6. Put accepted tempering quantity and then only it will go to next location of
hooking.
As you start going to next stage, ERP will start showing the status as shown
below
Production Reports
Work Order Register
Shows list of Work Order for a given period.
Production Register
List of production entries.
MRP
Material Requirement Planning report or
Material Requirement Planning: MRP report gives the quantity required of raw
material or bought out items to fulfill a given ORI (Order Receipt Information).
Production Indent
Production indent report gives the F. G. quantity to be produced. This is used
to prepare the Work Order for production.
Production Stage Wise Report
In this report, it will give all the details how an WO has gone through
different stages. It will give respective information as WO no, WO date, what
process done, on which machine, how much produced, in what shift and total
produced.
This report is in production-> production report->stage wise inspection report.
Click
to download a write-up on integration of various business processes in
BOM, production, outsourcing (third party).
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