1. Work Orders: the foundation of MRP
2. Registration of production events
3. The How-to of Work Order registration
4. Reservation of materials and resources for Work Orders
5. Issue of materials to a Work Order
6. Registration of operations
7. Registration of outsourced services
8. Acceptance of finished products to a warehouse
9. Monitoring Work Order completion
10. Material Requirements Planning
11. Operation Scheduling
12. Basic functions
13. Basic datasets
Planning a successful implementation of Trawers ERP in a manufacturing
company requires good knowledge of the software's operation.
Below we describe the elements of our MRP system and how they operate
together to assist and automate the manufacturing processes.
1. Work Orders: the foundation of MRP
Records in the Work Order Master provide the system with information on
what we want to produce, in what quantities and when. In essence, they are
orders for producing a specified number of finished or intermediate goods.
When a Work Order is opened, the system reserves (allocates) materials
and other resources (e.g. labor, work centers) for this order.
During the production processes, the system records events related to
the Work Orders, including:
* the issue of materials
* the execution of production operations
(direct labor), setup and finishing labor.
* all surcharges, e.g. division and overhead costs (registered
automatically with the operations)
* any outsourced services, e.g. galvanizing, painting, brushing etc.
After the product is manufactured, the costs of the events are summed up
and make up for the actual cost of the product.
The product can then be accepted at a warehouse and sold as a final product
or used as an intermediate product in another Work Order.
2. Registration of production events
Trawers records events related to circulation of material resources, i.e.
material (component) inflow and product outflow, and other resources,
such as human labor, work centers and outsourced services.
Resources are defined in separate normative bases, i.e. the work center,
machine, operation template and routing bases.
During the production processes, both in-house operations and outsourced
services are recorded and associated with these bases. This enables
detailed tracking of costs for each particular resource, and for effective
planning and scheduling of works at work centers.
In order to record events, it is necessary to establish work centers and
typical operations (routing templates) and fill in the Routing Masters.
3. The How-to of Work Order registration
There are several ways to register a new Work Order:
1. Manual: if the manufacturing process used is MTO (make-to-order, works
are ordered by customer), the Work Order will be associated with
a customer and a relevant sales order.
2. Manual: if the manufacturing process is MTS (make-to-stock), the Work
Order will not be associated with a customer.
3. Automatic: if the software is also used to create a Material Requirements
Plan, orders can be added automatically to the Work Order Master based on
items from the plan.
The third method is recommended, as it ensures that each requirement will
be included and that for each product with a deadline, an order will be
created.
Purchase orders should also be generated automatically based on items in
the plan.
4. Reservation of materials and resources for Work Orders
When a Work Order is opened, the system allocates resources which are
necessary for such order.
Resources will be reserved according to the Work Order BOM and Work Order
Routing.
What is the difference between Work Order BOM and BOM ?
WO BOM is a copy of BOM. BOM is fairly constant, as it is the master copy
of the product structure.
A WO BOM can be changed if for instance, there is a shortage of one of
the components, or the customer wants to change the color of casing.
Similarly, Work Order Routing is a copy of the Routing definition.
The 'reserved' status of materials is visible in the Item Master.
Other reserved resources can be seen in the Scheduling module.
The software established the requirements for each individual resource
and compares it with the work-load potential of the work centers.
There are many reports which can be used to identify shortage of materials
mnd prepare any necessary purchase orders or Work Orders in case of
intermediate products. The software can suggest a purchase or manufacture
of goods.
5. Issue of materials to a Work Order
Materials can be issued from warehouse to a specific Work Order.
The dispatch notes (warehouse issue documents) can be posted immediately or
later. It is recommended to post the documents immediately, so that the
changes in amounts are reflected in Item Masters in real-time.
Materials can be issued in the following ways:
1. Issue of individual components. Dispatch notes are issued along with
the warehouse issue. Warehouse issue is carried out on the basis of
a Material Limit Chart, which is part of the operational documentation
created in the program.
This type of issue is suitable if only small quantities of materials
are issued at a time and if the operations are scheduled over a longer
period of time.
2. Collective issue in series according to WO BOM. The software creates
a multi-item warehouse issue document for materials which are included
in the WO BOM.
This method is similar to backflushing (automatic issue). Usually
the collective issue is carried out after accepting a final product
at the warehouse. This type of issue is recommended when the
manufacturing process is fairly short and simple and the issue of all
components can be recorded in a single go, after the manufacture is
completed.
Also see: Backflushing Just-In-Time.
6. Registration of operations
The performed operations are recorded based on job cards or directly at
the work centers.
When the operations are performed on production machines or when the Run
Times are difficult to record, e.g. for dispatch, inspection, packaging,
periodic review operations etc., the software can calculate the Run Time
after the quantity of the final or intermediate product is specified
(Backflushing Mode).
7. Registration of outsourced services
Outsourced services are recorded in an Outsourced Service Cost document
and associated with the WO Routing.
8. Acceptance of finished products to a warehouse
Acceptance of products is performed with the Finished Product Receipt
function. Also here, it is recommended to post the documents immediately,
so that the changes in amounts are reflected in Item Masters.
Products can be accepted in batches. There is no need to include the total
quantity in one go.
Product valuation is performed according to the Standard Cost, Estimated
Cost, Actual Cost or Standard Fixed Cost depending on the set parameter.
Estimated Cost is the recommended option.
9. Monitoring Work Order completion
The Work Order and Work Order Cost modules include many reports which
facilitate monitoring of Work Order completion. There are collective
reports, such as WO completion and Total WO Cost, and itemized reports,
e.g. Work Center Components and Outsourced Service Cost. The full records
present reports on the progress of work at individual work centers with
detailed records of pending operations.
The collective (comparative) reports show Standard (Estimated) Cost, Actual
Cost and differences in quantities and percentages, and the value of Work
in Progress, i.e. materials which have been issued from warehouse but has
not yet returned as finished products.
10. Material Requirements Planning
Material Requirements Planning includes all activities which ensure that
materials will be supplied in required quantities and on time, i.e. when
they are needed for manufacture.
a) The following reports are available:
Component shortage, Purchase requirements according to standards,
Component availability
These reports are sufficient for identifying shortages in case of short
production cycles and fast deliveries. The reports are used to make
decisions on which materials need to be restocked.
b) MRP Calculations
Material Requirements are calculated taking into account all sources
of requirements: sales orders, forecasts, Work Orders and purchasing
standard specifications, e.g. buffer stock.
Additionally, the BOMs are exploded from top to bottom.
MRP calculations should be applied in case of longer production cycles,
products with multi-level BOMs and when fast delivery from vendors is
not available. The software will determine what needs to be purchased
or manufactured and when.
Less urgent Work Orders can be halted if the materials are more needed
for a deadline which is nearing its deadline.
For the results to be accurate, the datasets must contain accurate data.
BOMs have to contain accurate product definitions, the records in the WO
file have to correspond with the actual progress on-site, the warehouse
issue documents have to be posted, the Item Master must contain accurate
and correct information regarding delivery lead time and supply
standards.
11. Operation scheduling
Scheduling is the establishing of order of execution for work center
operations.
There are three scheduling methods available:
1. Finite Capacity Scheduling
This method assumes that resources at work centers cannot be changed,
e.g. the machine's work load cannot be increased.
The software will adjust operation dates to work center capacities.
2. Infinite Capacity Scheduling
This method assumes that resources at work centers can be changed (by
adding extra shifts, increasing employment etc.)
The software will not change operation dates. The order of execution for
work center operations will be established irrespective of work center
capacities.
This is the default option.
3. Manual scheduling
In this method, the order of execution of work center operations is
established without consulting the program. The start and end dates of
operations are input manually and do not change.
Which method to choose ?
If the resources are limited and we have set realistic lead times, then
the automatic change of dates is a reasonable option.
If the orders have short deadlines and the resources can be increased,
Infinite Capacity Scheduling is the method of choice.
The scheduling process operates in conjunction with the Material
Requirements Planning process. Scheduling may result in changed operation
dates, which affects the material requirements. The two processes must
alternate: each rescheduling should be followed by MRP calculations and
vice versa. The number of times these processes should be repeated depends
on the operation lead time, product complexity, customer expectations and
other factors. The right procedure can be established once the processes are
put in practice.
12. Basic functions
Basic functions used in manufacturing companies are contained in
the following systems:
MG Warehouse management
Management of material resources and final products
BM Bills of Materials
Defining BOMs
RO Routing
Defining routing for product manufacture
Material Requirements
Defining material requirements
Work Orders
Management of manufacturing processes
Sales and receivables
Recording sales orders from customers
Purchase and payables
Purchase of materials and services
Main Ledger
Record of income and expenditure; settlement of accounts for
production
13. Basic datasets
The following sets accumulate basic data within the field of manufacturing:
System Set Content
-- ------------------------ -------------------------------------
MG Item Master Indexes Materials, products, intermediate
products and services
MG Item Site Master Levels and turnovers for warehouse items
BM Bills of Materials Standard components in product
manufacture
RO Routing Standard operations in product
manufacture
RO Work centers Locations where operations are performed
ZP Work Orders Orders for product manufacture
ZP Work Order BOM Materials to be issued to orders
together with numbers and values for
issued materials
ZP Work Order Routing Operations to be carried out to orders
together with numbers and values for
completed operations
ZP Transaction documents Records of events: issue of materials,
acceptance of final products,
operations by employees
and collaborators