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Overview of 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.”

 

Video clip of Zaveri introducing ERP concepts to users in India.

  • 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 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 production

  • 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.  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.


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Home Parent Page Process Production Assembly Production

 

Home Parent Page Account Bill of Materials Cost sheet CRM module Excise Export Helpdesk Material Management ERP ISO 9000 Payroll Plant maintenance PPC Production Purchase Sales Security SMS using ERP ERP helps job working Subcontractor module Supply Chain VAT Warranty Module

Home About ERP Backup Campus ERP Crossword Puzzle 1 Crossword Puzzle 2 CXO DNS ERP DNS Source Doctor ERP ERP Audit trail ERP Modules list 1 of 2 ERP Modules list 2 of 2 ERP Book excerpt eManufacturing ERP Library ERP Testimony ERP CASE STUDIES ERP flow diagram ERP levels IMPLEMENT ERP Mobile Apps MIS News eCommerce ERP Paperless Office RFID SAP Year Ending

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