ERP Fabrication Module Design Overview
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This document describes a fabrication module design that extends standard ERP production processes. Fabrication involves combining manufactured components with purchased parts to create finished inventory items in batches. Key concepts covered include fabrication work orders, component inventory, bills of materials specifying fabrication requirements, routing plans detailing work center processes, and accounting for actual costs while using standard costs where needed. The goal is to track costs from raw materials to finished goods for fabricated products.
ERP Fabrication Module Design Overview
- 1. Fabrication Module Design Overview Daniel Brody Jan 2007
- 2. Fabrication Concepts • Fabrication is a value- added process that takes components that have been manufactured using standard ERP control and combines them with purchased or outside manufactured components to make a Batch or Lot of finished inventory items. • Fabrication extends the standard ERP paradigm and could work independently of ERP • A ERP production work order may be completed when the required components are released to component inventory (make to stock for fabrication)
- 3. Fabrication Concepts • A fabrication work order may be a new control document that is independent of the original production work order or an extension of an existing production work order. (if the original production work order was for a batch of finished goods item) • The final product is specified in the sales order line, with the required quantity, delivery date etc. • The final product could comprise the assembly from several production work orders, plus several purchase orders and external processing
- 4. Overview • Steel products are processed to a semi-finished stage using standard ERP processing • They are then received into a Component Inventory for inclusion in a fabrication BOM and routing process • Fabrication occurs and creates a finished goods product or sub-assembly component that can be inventoried Steel Components are created using SEMS Instead of being shipped they are received into component Inventory Fabrication lots are picked and assembled based on BOM and Routing The finished Lot is shipped from inventory
- 5. Fabrication With ERP input Sales Order Lines Work Order Grouped for Production Work Order Complete normal SEMS production processes Begin Fabrication Process Schedule Fabrication when all components available Work Order N Receive Completed Steel items into Component inventory
- 6. Fabrication independent of ERP input Begin Fabrication Process When all components are available Routing based on standard Product Routing Bill of Material for finished product based on standard product BOM Work Center 1 Work Center N Finish Fabrication
- 7. Work Centres • A work center has a competence and capacity to complete a defined task • Machine work centers are grouped into an administrative work centre to add labour costs and provide a throughput capacity and accounting point • Capacity is rolled up to the Administrative work center Machine 2 Work Centre Machine 4 Work Center Machine 3 Work Center Machine 1 Work Center Administrative Work Centre
- 8. Work Centers • Processes – serial – machine 1 operation has to be completed for an order then machine 2 operation can begin • Quality control usually occurs after a batch is completed – Parallel - Operation of Machine 1 work center overlaps with the Operation of Machine 2 work center for example – These grouping are dynamic and user defined Machine 2 Work Centre Machine 4 Work Center Machine 3 Work Center Machine 1 Work Center Administrative Work Centre
- 9. Bill of Material • Bill of materials (BOM) specify what inventory items are needed to fabricate a finished goods item or a sub-assembly • Sub Assemblies may be inventoried or not inventoried – phantom • BOM can have multiple levels or specify a sub- assembly with an independent BOM
- 10. Bill of Material • Company is the highest entity – within the group of business entities • Parent is the finished goods part code • Component is the code for this inventory component (n number of components) • Line no is the sequence to display this line • If A is made from B and C and C is made from D and E, the parent for E and D is C, the parent for B and C is A. The line number is a unique identifier under the parent.
- 11. Bill of Material • Position relates to the position on the design drawing of the finished item or sub-assembly • Operation_no defines the grouping of components that when they are completed the accounting can be performed – back flush. – To receive an item into inventory, all back flushing must be completed • Lead time adjust – an amount of time to postpone purchase of required component or cooling or curing time needed before component can be used in fabrication.
- 12. Inventory BOM type describes the general category of the inventory – do we buy it, make, it, sell it, get someone else to make it, use it as a component to assemble something else – 0 -We made it from parts (manufactured or purchased) – 1 - Made from Steel by us – 2 – Made from parts manufactured outside – 4 – Sub assembly that is not recorded in inventory – 5 – Steel raw material – 6 – Purchased from supplier – 7 – Customer supplied this component – 9 – Any documents or drawing that we keep in inventory and send with the product – instructions etc. • BOM Type – 0 – Internally Manufactured Assembly – 1 – Manufactured Parts – 2 – Externally manufactured with supplied components – 4 – Fictitious Assembly (phantom) – 5 – Raw Material – 6 – Purchased Parts – 7 – Customer Supplied – 9 – Documents
- 13. Inventory • Stock Type describes how to manage the rules of accounting for inventory, – stock is accounted for on each Fabrication work order on a per basis – Floor stock is assumed consumed based on the BOM – nuts and bolts for example, – Consumables are Grease, Paint, Welding rod etc. that are costed against the Fabrication work order based on standard percentage and operation number • Status controls if this Inventory item can be used in a BOM. If any item in a BOM becomes inactive the BOM is inactive. • Stock Type – S - Stock – FS – Floor Stock – CN – Consumable • Status – A – Active – I - Inactive – D – Discontinued – S – Superseded – T – Terminated
- 14. Back Flush • Typically accounting for inventory occurs after an administrative work center completes it’s tasks and creates a new inventory item or batch of items. • Sometimes it is desirable to assume completion of preceding routing steps by the fact that the finished item has been completed. Back flush points are identified in the BOM by operation number. • If a batch is back flushed, the associated routing plan and BOM is used to explode back to inventory usage and work center loading used. • If no other labour time, machine time or wastage inefficiency has been entered against this fabrication work order, the standards in the routing and work centers are used, otherwise the entered values are used.
- 15. Product Category • Product Category is assigned to every item on the Inventory. • The main function is to divide the Inventory Cost Report by category, and is used as a search parameter for inquiry. • An example would be “plow blades” or “cab assemblies”. • The general ledger accounts assigned to every product category facilitates automatic posting of sales and work in process to general ledger.
- 16. Routing • Operation_no is the sequence number of the operation to be performed • Work center is the machine work center – (administrative work center is defined for the machine work center) • Process_Code defines the process to be performed cut, assemble, press, QC etc.
- 17. Routing • Routing type is “parallel” or “serial” • Vendor number is for external process only • Revision level of the routing shows which version of the routiong was used – (maintained by the revision sub-system) • Set up time to set up the machine for operation in minutes in this routing
- 18. Routing • Queue days is time in days for moving the order from one work center to another – or through an external process • Machine time is the amount of time in minutes required to process 1 part • Labour time is the amount of time in minutes required to process 1 part
- 19. Accounting • Actual costing is used to determine real costs of the work order through to a component or finished goods level of inventory. • Where actual costs are unavailable (i.e. there is no genealogy for a specific subcomponent), standard cost is used. • Standard (or actual – Ron) costs are used to post items into inventory • The total actual cost is rolled up to the finished item • Purchased components are added to the cost roll up at average cost • All cost components of the finished goods items in the sales order line item are totaled to allow comparison of quoted price versus actual total cost