Manufacturing and Production

Manufacturing & Production

• Production Workflows
• Bill Of Materials (BOM)
• Designer Bill of Materials
• Production Costing, Planning and Scheduling
• Shop Orders
• Material Requirements Planning (MRP)
• Manufacturing Resource Planning (MRP II)
• Master Production Scheduling
• Capacity Requirements Planning
• Job Costing
• External Manufacturing
• Defect & Rework Tracking
• Nesting and Batching

Manufacturing and Production processes may vary widely but all businesses share the same need to know where each process is at and whether it is making or losing them money.

In developing our software Abel has tended to follow the approach of the American Production Information Control Systems (APICS) who define manufacturing as a series of interrelated activities and operations involving the design, material selection, planning, production, quality assurance, management and marketing of consumer and durable goods.

Drawing on our experience from working with manufacturing and production businesses, Abel® makes tracking complex workflows simple. It includes a full suite of Production Scheduling, Capacity Planning, Bill of Materials (BOM), Manufacturing and Plant Orders, Product Costing, Material Requirements Planning (MRP), Manufacturing Resource Planning (MRP II), and Stock and Inventory Management functionalities.

For ease of planning, all elements of the job including sub-assemblies, of tasks and supply chain management can be graphically exploded into a single view. All phases of work are captured and costed-in so you can match resource against demand and assess performance against deadlines and profitability.

Production Workflows

Manufacturing and Production workflows vary greatly according to the industry and required outcomes. Production items may be:

• Manufactured to order or stock
• Assembled from inventory stocks, purchased components, or sub assemblies
• Modified or repaired
• Produced from raw materials received
• Externally manufactured for processes completed outside the plant

Each separate process must be costed correctly to enable the manufacturing or production departments to assess their performance whether employing profit or breakeven accounting. To satisfy the costing process, raw materials, inventory stock, related expenses, labor and machine can be controlled through various requisition and capture processes, part and final completion processes, back flushed, direct cost purchase, or any combination of these.

Work In Progress (WIP) is captured in real time and is supported by additional collection means such as hand-held devices, barcode scanners, time clocks, touch screens, etc. Part and final completions transfer out of WIP in real time, either to an associated production process, inventory stock, or directly to the customer dispatch process where the transferred time and materials or budgeted cost will be used for cost of goods sold. Variances between actual and budget are generally retained within the production department though can be easily consolidated if required.

Bill Of Materials (BOM)

Multi layered BOMs provide the standard and suggested recipes to produce and manage complex manufacturing and production orders. In addition to raw materials, inventory stocks and related expenses, the BOM structure also contains the sub-processing requirements (e.g. sub-manufacture and external processes) as well as the work group and work centre routings and the operational requirements for each stage of production.

Operational requirements can be linked to work instructions and diagrams. After the production order has entered the planning state, the contents of the exploded BOM can be further fine tuned to satisfy your specific usages, routings, inventory purchases, etc.

Routings via work centers can include setup, runtime and cleanup times for both labor and machine, with setup times being modified according to plant production sequencing. For the smaller manufacturer, work centres are not mandatory and plant scheduling can be performed at the work group level, via labor and/or machine entries in the BOM.

Abel’s BOMs can optionally be configured for version control with effective dates and an authorization process so changes to BOMs and their attached files (e.g. CAD drawings) can be managed as the business requires. Previous versions of BOMs can be retained or overwritten according to requirements.

Designer Bill Of Materials

Many organizations require a one-off manufacturing process that progresses through quotations, orders then into the manufacturing production process. Multi-level designer BOMs are provided to satisfy this requirement.

Designer BOMs can be created against any production line on a customer quote, customer order or at any of the planning or production order stages. Designer BOMs can be manually loaded, created from skeleton BOMs or externally loaded from other designer software tools such as Computer Aided Design (CAD).

Full explosion of designer BOMs can occur at initial load time or when the customer’s order enters the planning or production order stage. Designer BOMs incorporate the same full functionality as the standard BOM.

Production Costing

An essential part of any manufacturing or production process is the maintenance of accurate costings to provide the production department and accounting staff with performance cost comparisons both during, and at completion of, each stage of the process.

Firstly, a budgeted or estimated cost of manufacture or production needs to be established for the completed work whether it be finished goods, assemblies or repair processes. The budget is required to calculate breakeven or profit based accounting within the department or work group. Budgeted costs can be established from the BOM costings, specified inputs to the processes, fixed costs that can include labor only, machine only, materials only, overheads only, the actual time and materials costs, or any combination of these. Where fixed cost is used, this is frequently the result of the sales department requesting a fixed cost quote (in whole or in part) from production prior to providing the customer with a price.

Having established an expected cost of production, actual costs need to be accumulated into Work in Progress (WIPs) as the manufacture or production process is progressed. Actual costs result from purchased items, stock usage, expense items, labor timecards, machine usage and sub-assembly costs. Any or all of the costs, excluding sub-assemblies, can be back flushed. As Abel is fully integrated, costs are instantly posted to the Production Order WIP and to the General Ledger WIP account in the Balance Sheet.

As orders are part or finally completed, postings are credited against the orders, WIPs and to the General Ledger that reflect the finished goods into stock, finished goods to be dispatched to customers, repaired items to be dispatched and invoiced, and sub-assemblies costed upwards to their parent order. Where possible the manufacturing and production variances are declared and posted. Variances can be totalled or split by labor, machine, materials, overheads and sub-assembly work.

Make-to-stock items commonly enter inventory stock at standard or budgeted costs. Make-to-order items are usually transferred to the customer dispatch process at budgeted cost and this establishes the cost of goods when invoiced. Product builds and repairs frequently use time and materials and/or fixed costs to establish cost of goods at invoice time. However, with Abel any costing process can be used according to your accounting rules.

Various online views and reports are available for analyzing these performance results. Drill-downs into the sources of the costs and variances are available in full detail.

Production Planning

It is normal practice that an organization requires that manufacturing and production orders are progressed through a planning stage to ensure stocked materials are available and labor and machinery is not over committed. Although orders are ‘rough cut’ scheduled into their correct position according to work order constraints, it is frequently necessary to ensure materials are either available in stock or going to be available before progressing an order into the plant.

Abel provides extensive visibility of stocking levels showing on hand, allocated, reserved, on order and shortage quantities. This information can be viewed as first come first allocated, first reserved first allocated, or current available positions. Materials coming from stock may be placed on a reserved queue during the planning stage or as the order is progressed to plant production. It is usually during the planning stage that non-stocked materials are ordered from suppliers, with expected arrival dates controlling the final scheduled position for production. However, please also see Abel’s Material Requirements Planning (MRP) function below.

Where the plant has restricted labor or machine availability, or where a customer is desperate for a partial delivered quantity, or where the full quantity of a stocked item is insufficient for a full production run, it is possible to progress a partial quantity into production leaving the remainder in planning. Sub-assemblies can also be progressed separately from the parent order either in whole or in part. The same splitting processes are also available during the plant manufacturing and production phases.

It is not essential that all manufacturing and production orders are progressed through the planning stage. Where all raw materials are held in bulk silos, or where smaller build or repair jobs are needed, these can either enter the plant production stage directly, or may be entered directly into the plant and scheduled accordingly. When extra one-off jobs are urgently required as a manufacturing or production extension or when plant rework is needed, a separate order can be easily created directly into the plant and linked back to its associated manufacturing order. (See also Abel’s Nesting and Batching function below)

Production Scheduling

Some organizations require full work centre routing and scheduling, others are content with work group scheduling without routes, while others do not require any scheduling. In Abel the work centre or work group dictates the basis of scheduling i.e. labor, machine or quantity using either Finite or Infinite processes.

Each BOM contains the capacity usage information to be consumed at each work centre route. Set up and clean times, fixed time per build unit, and run rate per build unit are available for labor and machine. Additional scheduling information such as begins after previous start, begins after previous end, schedule for parallel completions, standing times, constrained position, and downstream and upstream associations can also be specified within the BOM route.

Abel provides a unique function for organizations wishing to schedule by work group. Labor and machine times can be specified within the structure on the BOM and when exploded will accumulate upwards to the work group and become available for scheduling. Alternatively BOM operations or tasks can contain the labor and machine times and are exploded and accumulated as above.

Work centres can be specific or generic. As customer quotes and orders are created, Abel automatically calculates the earliest promise date using the exploded BOM, constraint work centres and minimum times for this calculation.

Manufacturing that is external to the plant can also be scheduled using external manufacturing orders. (See also Abel’s External Manufacturing below).

Company and branch calendars specify working days. Default day of the week start and end times, available labor and machine hours, maximum quantities, number of employees, default crew size and the number of machines are entered against the work centre and work group. This information may be entered as global or specified by branch. Where daily times need to be modified because of maintenance downtime, employee sickness or scheduled overtime, overrides are available in Abel for this purpose.

Abel’s unique scheduling process provides pick and drop positioning that incorporates variable setup times according to previously scheduled jobs and labor overlaps dependent on crew sizes. Unlike other ERP systems in use, Abel provides comprehensive workflow management and flexible capacity planning.

Shop Orders

Abel’s Shop Orders are an “umbrella” process used to track a complex manufacture or assembly process and bring all the sub-manufactures together so you can manage them more easily. Shop orders complement Abel’s standard scheduling functionality, making it easier to co-ordinate multiple manufactures to meet the customer’s required date. Abel creates a schedule and also provides the ability to optimize the schedule around a constraint work center.
You can use Shop Orders to:

• Manage complex manufactures for a single customer order line
• Split a large manufacturing run into lot sizes that your plant or equipment can handle
• Group similar work for different customers to improve efficiency in the plant. e.g. If you are pre-making a sub-component that is used in several manufacturing orders, you can select plant documents from different sources that use the same component and add them to a shop order document.

Abel’s Shop Orders provide a very powerful top down view of complex jobs giving you a consolidated view of the manufactures and other tasks and showing the status for each.

Material Requirements Planning (MRP)

MRP helps organizations to maintain low inventory levels and is used to plan manufacturing, purchasing and delivering activities. MRP makes recommendations to release replenishment orders for materials in order to efficiently manage supply and demand.

Abel’s implementation of MRP uses BOM and inventory data together with the Master Production Schedule to calculate time-phased requirements for materials.

To achieve maximum efficiency, Abel’s MRP tracks changes to BOMs, sales budgets and inventory on hand at runtime and only recalculates where necessary. Doing this minimizes the large processing time that MRP can demand.

The outputs of Abel’s MRP process are:

• The quantity of all components and materials required to fabricate items
• The date the components and materials are required. Time-phased material requirements planning is accomplished by exploding the BOM, adjusting for inventory quantities on hand or on order, and offsetting the next requirements by the appropriate lead times
• Recommended purchase orders

Abel’s MRP can also be used for planning Activities. You can create Activity budgets and Bills of Materials and Abel will generate time-phased MRP Activity schedules. For example you could use MRP to create schedules for activities like spraying a kiwifruit orchard. The BOMs would include the chemicals, equipment and labour required for each activity.

Manufacturing Resource Planning (MRP II)

MRP II is a method for the effective planning of all resources of a manufacturing company and is a direct outgrowth and extension of closed loop MRP.

Abel’s MRP II utilizes hard pegging, which enables all demands to be traced by week to their resulting material and capacity requirements and, inversely, for all requirements to be traced back to their original demands. This provides the ability to fully report all detail on material or machine requirements and makes it easy to determine which demands can be shifted to smooth out over or under capacity or supply issues.

Abel’s MRP II incorporates all of following functions:

• Production Planning (sales and operations planning)
• Master Production Scheduling
• Material Requirements Planning
• Capacity Requirements Planning
• Support systems for capacity and materials. (See also Inventory Management, Bill of Materials, Production Scheduling and MRP.)

Master Production Scheduling

Abel provides the Production Planner with a set of tools to prepare a master production schedule for feeding into the MRP process or just to provide the production plan. Each manufactured item can have a sales or usage budget entered according to the production planning requirements. Each item can also have its production frequency, start date, minimum quantity, and production multiple data entered to facilitate a realistic production plan including quantities and dates.

Capacity Requirements Planning

Capacity requirements can be generated for work centres or work groups or both of these. The accuracy of the output loadings information depends on setting up the routings and labour and machine usage data on the bill of materials. Labour and machine capacity data is also entered against each work centre and /or work group. Capacity loading reporting is produced from both MRP II and production scheduling and these will provide sufficient information to determine if plant constraints or capacity problems may exist.

Note: The capacity requirements output from MRPII is optional.

Job Costing

Job Costing is a separate work order process in which costs are collected and multiple dispatching and invoicing can occur as the job progresses. In Abel these Job Orders are typically used for repair or warranty work, and they can also be used to create new or modified products which are put into stock or dispatched out to a customer. The costs can be estimated on a fixed price basis or on a time and materials basis and quoted selling prices can be held for use in the invoicing process.

External Manufacturing

Abel has external manufacturing orders to account for tasks and processes which are performed by a manufacturer who is external to your manufacturing plant. These orders allow for the materials to be sent out with the job, or for a separate store to be held at the external site, or for the external site to supply the materials. Abel can track the costs that are added by the external manufacturer and closing the external order results in the costs being integrated into the main production order. External Manufacturing Orders can be scheduled as for any other type of production order. All Abel’s plant documents can be built in other currencies. This is useful for external manufactures that have overseas suppliers.

Defect & Rework Tracking

Tracking defects and rework can be a major exercise in many organizations. Compliance processes and paperwork management are often costly and time consuming.

Abel provides support for defect resolution in a single screen accessible from the original manufacturing work order. This enables you to track and report on multiple defects for the work order and corrective action taken for each defect. You can also attach the defect to the Bill of Materials for future reference.

Abel can record a description of the defect or non-conformance, the defective parts, the work centre where the defect occurred and the personnel responsible for actioning the remedial work. You can send a message to any person in the organisation with the defect details attached.

Abel captures your analysis of the corrective action to be taken and you can initiate appropriate activity direct from the defect screen:

• Rework/repair orders
• Manufacturing orders to rebuild or replace the defective item
• Return to supplier documents for defective parts
• Engineering change requests
• Program change requests
• Bill of materials change requests

Nesting & Batching

Nesting combines several small processes to form one larger process. Abel provides the ability to view and select combinations of work orders that can be batched together in larger processes. The Production Planner can choose any combination of work orders to nest together based on their sharing a commonality such as the same raw material or the same work centre to create a combined final order. This functionality can significantly reduce your manufacturing costs.